U.S. Customs and Border Protection (CBP) is evaluating blockchain’s usefulness and efficacy in verifying certificates of origin from participants in the Central America Free Trade Agreement and North American Free Trade Agreement.
A blockchain is a decentralized digital ledger with content, or nodes, that are visible to participants but also notoriously difficult to alter without the consensus and consent of a majority of stakeholders. Blockchain is widely seen as a technology that can bring new levels of transparency to industries ranging from fashion and finance to shipping and logistics.
As first reported by GCN, a publication dedicated to information technology coverage, CBP is running its legacy system alongside a blockchain developed by the Department of Homeland Security’s Science and Technology Directorate—an effort that earned it one of the 2018 Government Innovation Awards.
CBP hopes that a blockchain-based system will reduce the amount of shipping data that needs to be resubmitted by multiple parties along the supply chain and improve communication among stakeholders.
“If the data is supplied upfront, the operators don’t have to go out ask for the data again,” Vincent Annunziato, director of CBP’s Transformation & Innovation Division, told GCN.
On a blockchain, CBP would gain visibility into a shipment’s origin as well as its most recent point of departure. According to GCN, the certificate proof-of-concept test is being conducted on a private blockchain through which all participants can view those who receive either a NAFTA or CAFTA certificate without being able to access sensitive details on a particular company’s clientele.
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CBP hopes the test will also enable interoperability between disparate blockchains, a continuing pain point in an emerging industry that sees many businesses developing their own fragmented systems. “We are trying to set up standards by which all of the companies and software can communicate to Customs without having to build out specialized nodes and a whole lot of customization,” Annunziato said, adding that “security is of the upmost [sic] importance.”
As of now, communication between blockchains is notoriously difficult, and a hindrance to enabling standardized, industry-wide systems.
What’s more, CBP is mulling an intellectual property rights component that would help consumers determine whether a product is authentic.
CBP’s blockchain news comes as UPS recently applied for a patent on blockchain technology designed to more efficiently route package deliveries throughout a global supply chain. Like CBP’s effort, the UPS patent aims to reduce the complexity of a shipping process that requires multiple stakeholders along the way. On top of that, CEVA Logistics reported a new partnership with IBM and Maersk’s TradeLens blockchain that’s designed to unify the siloed shipping industry.