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November 20, 2017
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U.S. Customs will devote more attention and resources to technology and e-commerce in 2018, agency's acting head says

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Kevin K. McAleenan outlined priorities for the coming year at last week's CONECT conference.

Taking advantage of technology advancements and dealing with the explosive growth of e-commerce will be top priorities for U.S. Customs and Border Protection (CBP) in 2018, according to Acting Commissioner Kevin K. McAleenan. McAleenan, who had a confirmation hearing earlier this year but has yet to be confirmed by the Senate, spoke Nov. 2 in Providence, R.I., at the Northeast Cargo Symposium put on by the Coalition of New England Companies for Trade (CONECT).

McAleenan said that CBP recently created an emerging technologies group examining how blockchain, the database that serves as an open ledger, potentially affects the agency's work. In a blockchain, every transaction is available for participants to see and verify, and the database cannot be changed without all participants' agreement. By providing a common view, it eliminates the need to transfer information between organizations through e-mails, spreadsheets, and direct electronic connections.

Technology will play a leading role in CBP's efforts to get its arms around the explosive growth of e-commerce. The skyrocketing popularity of online ordering, combined with last year's increase in the per-shipment value of imports exempt from fees, duties, and compliance requirements to $800 from $200, have contributed to a significant increase in cross-border shipments of small packages, according to McAleenan. The agency must be prepared for this changing environment, he said, adding that "it is our intent to have a defined path on how we move forward" with handling e-commerce shipments. Functionality will be added to the Automated Commercial Environment (ACE), the electronic trade processing system that has been in the works for more than a dozen years, to help CBP identify e-commerce trends, he said.

A big concern is what McAleenan termed "the dark side of e-commerce," including shipments of drugs, counterfeit products, and other contraband. The agency is taking steps to address the problem, including "improving the value and comprehensiveness of data" associated with e-commerce and other parcel shipments, he said. China, the source of many illicit items, is now sending advance shipment data for parcels, a development McAleenan called "a critical step forward."

CBP is looking to private industry to develop technology that could help it identify problems without opening the packages or hindering the processing of legitimate shipments, McAleenan said. CBP is also engaged with major e-commerce shippers like Amazon,com Inc. and eBay, as well as parcel carriers, "to make sure they take this seriously and understand that they co-own this challenge," he said.

McAleenan said he "intend[s] to declare victory" in late February when the last group of ACE's core trade processing capabilities goes live. The complex system automates not just CBP's import processes, but also risk assessments, export processes, and the collection and distribution of information under the International Trade Data System that connects all federal government agencies involved in international trade.

Toby Gooley is Editor of CSCMP's Supply Chain Quarterly.

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