The CBSA is piloting blockchain technology

Source: Canada US
Link: The CBSA is piloting blockchain technology

In October 2018, the Canada Border Services Agency (“CBSA”) announced “The CBSA Pilots Blockchain Technology“. The CBSA announced that it is participating in a pilot project being led by IBM and Maersk to evaluate the capacity of TradeLens. The pilot project has been designed to allow the CBSA to determine what role, if any, the TradeLens platform could play in its customs clearance processes.

Cision posted an announcement concerning the CBSA’s pilot project. Cision indicates that on an average day, “the CBSA processes over 58,600 commercial releases, 14,400 trucks, 240,000 mail items, and 127,400 courier shipments, collecting more than $88,200,000 (CDN) in duty and taxes”.

IBM also made an announcement concerning the CBSA’s pilot project.  IBM indicates that “the CBSA has the opportunity to investigate how to create a singular, trusted digital supply chain for all shipments entering Canada”.

This is important because for blockchain to be successful in the context of international trade reporting, there must be acceptance and confidence by key customs agencies around the world.  The CBSA must be confident that the information that it receives is accurate and that the information cannot be manipulated. If the CBSA becomes comfortable with blockchain technology, Canadian importers may benefit.

The time and cost of clearing goods for import or export adds a significant financial burden on Canadian businesses (and their international suppliers and customers) due to the numerous regulatory layers of authorizations to import or export goods, such as certificates of origin, phytosanitary certificates, health certificates, other certifications, import permits, export permits, licenses, approvals, etc.. The CBSA requires paperwork to risk access transactions and target their limited resources prior to the arrival of goods at the border (to be imported or exported). The CBSA determines whether the paperwork is complete, accurate and valid.  If something is missing, the goods can be detained and the entry/exit of the goods can be delayed or halted. The CBSA determines whether the exporter or importer has complied with all applicable Canadian laws and regulations.

Blockchain technology has the potential to ensure integrity of data from inputs to finished goods to imports/exports throughout the supply chain. Blockchain technology can fundamentally change the way information about goods that cross borders is managed, transmitted, reviewed and approved.  This could translate into reduced costs and risks to businesses.  This could be a game changer for some businesses that operate internationally.

Because of the significant benefits to businesses, many want to know how soon can blockchain technology be implemented and work for businesses.  Every one wants the cost and efficiency savings yesterday.

While the CBSA is developing and analyzing data, not much information has been revealed about the pilot project.  We have been able to uncover the following information, which seems to suggest that widespread implementation is still years away.

TradeLens has a blog, which is a great resource to follow developments. On May 19, 2019, TradeLens posted an article entitled “Canadian pilot project featured in blockchain documentary“.  According to the blog article, the pilot project involves Livingston and  and CN Rail.  On April 3, 2019, Livingston issued a press release about its involvement in the pilot project and describes it’s role as follows:

“Livingston will serve as the first customs broker to leverage the TradeLens platform for brokerage automation. Livingston’s role in the pilot will be to enter and access information on shipments and streamline internal procedures without compromising accuracy or security. The CBSA is participating in the TradeLens pilot to determine what role the platform could play in its business processes.”

“The pilot will serve to determine how Blockchain can optimize the speed and quality of customs and commercial data, while offering greater transparency into how cargo moves and streamlining the decision-making process for shipment release.”

IBM is noted as saying:

“The most important aspect of the platform is the ecosystem – building trust to enable collaboration with one another through a model that benefits everyone. Livingston’s participation in this initiative allows us to analyze the impact of blockchain on the logistics process by bringing in the role of customs administration, which involves the submission, examination and storage of reams of data on a daily basis…”

On April 29, 2019, the President of the CBSA, John Ossowski, (@johnossowski), tweeted as follows:

“Very pleased to report that the first transmissions for the #TradeLens pilot successfully went out last Friday. This is a big milestone for @CanBorder as it is our first time testing #blockchain technology.”

We will continue to monitor blockchain developments in Canada. For more information about blockchain in international trade, please contact Cyndee Todgham Cherniak at 416-307-4168 or at cyndee@lexsage.com.