Tax & Accounting Blog

Modernizing Global Trade

Blog, Global Trade, ONESOURCE April 13, 2018

It may sound like a cliché, but I am convinced that the future is just around the corner.

I mean the real future. The future we used to see in movies from the 80s, where technology had reached its highest point and was used for simplifying people’s lives, changing the way we lived.

Sounds promising, doesn’t it? Self-driving cars, vertical-indoor farming, and the migration to cleaner energies in our everyday life.

So why do our governments get involved in regulating our innovation? Should our governments be balancing fostering progress while protecting our industries?

Personally, I agree that governments should care for our manufacturing sectors, by looking at the upcoming changes in industry and consumption habits, I think they should evaluate how global trade will be situated in the future, instead of how it is now.

It is apparent that electric cars will replace regular cars, and that self-driving cars will be a real thing within the next 10 years. It is becoming more and more common to hear news about big companies – such as Google, Apple, Tesla and Uber – completing longer and longer rides without a person in the driver’s seat.

And it seems that driverless cars are not limited to just passenger transportation. Recently we saw freight moves by Embark’s autonomous trucking, completing test rides of refrigerators from El Paso, TX, to Palm Springs, CA, earlier this year.

It is also evident that automation will continue to increase the use of robots in the manufacturing process.

These days, robots are not only used for dangerous or monotonous tasks, but also for very specialized operations in almost all manufacturing industries. Examples of this are the “CoBots” – smaller collaborative machines that are designed to collaborate with human workers and enhance the production teams’ capabilities. We see this example in how Ford is utilizing this technology in their manufacturing plants in Germany to fit shock absorbers to cars.

Machines are now reconfigurable, cheaper and easier to use – companies like Maryland Robotics for example, is getting new deals to deliver enhanced high-quality robots for production lines at lower prices.

In addition, it seems the logistics industry – which has been operating the same way for over 60 years, is finally making its way towards modernization. This is an environment where thousands of pieces of paperwork is used to complete cross border trade, often delaying the process and further exacerbating compliance issues in maintaining the paper trail for audit requirements.

Companies have realized how unbelievable it is, that we are in the 21st century where we have cars that can drive themselves, yet we still have commercial chains operating by using hard copy documentation, also presenting opportunities for risk tied to fraud and human errors.

We are seeing momentum with big companies in the software and logistics industries evaluating opportunities to improve Imports and Exports through implementing new technologies to secure the flow of goods and money through data.

By example, in January 2018, it was announced an effort to focus on modernizing how we conduct global trade in the ocean freight environment. This announcement came in the form of a joint venture of the Danish Shipping Company Maersk – a global leader in container logistics – and IBM – a leading provider of blockchain technologies, supply chain visibility and interoperability solutions for enterprises.

They announced an effort to use blockchain technology to power a new platform, as well as employ other cloud-based open source technologies including artificial intelligence (AI), IoT (Internet of Things) and analytics, delivered via IBM Services. The goal is to help companies move and track goods digitally across international borders. Manufacturers, shipping lines, freight forwarders, port and terminal operators and customs authorities are expected to benefit from these new technologies and ultimately consumers.

Blockchain – technology has become famous for being the Bitcoin operating system. Further promoting adding blockchain into cross-border operations.

U.S. Customs and Border Protection (CBP) met last fall to discuss the potential uses of blockchain technology.  They identified 14 potential applications and then narrowed down the suggestions to two pilots scheduled for 2018.

One pilot will be the use of blockchain technology for the certifications of origin under NAFTA and CAFTA-DR.

The second project is the automation of carnets.

To meet the goal of launching a blockchain pilot in 2018, CBP will conduct user story refinement sessions and establish a timeline and milestones for delivery.

I can continue enumerating examples of how commerce and consumption habits will change in the future, and how they can be enhanced using technologies in the supply chains, but the trigger for this to happen is collaboration. Collaboration between the multiple players in Global Trade and most importantly, the government’s engagement with industry as we see with CBP, and not on the outskirts regulating.

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