If anything is important in the world of supply chain and logistics, it’s data. Give someone access to your data, and you give them a key to the kingdom, in a sense.
As you add trading partners, data privacy and security become paramount.
Enter blockchain, a technology that proponents say resists modification of data except by authorized parties. Security is baked in from the beginning, advocates say, and continues throughout a transaction. That’s one of the reasons why Purolator International, an American freight forwarder providing logistics services between the United States and Canada, has joined the Blockchain in Transport Alliance, a multinational organization dedicated to driving adoption of the technology in freight, transportation, logistics and affiliated industries.
“Blockchain is a much more secure way to identify where a shipment is moving through the supply chain,” says John Costanzo, president of Purolator International. “Is it leaving the manufacturer or distributor or has it left the Port of Shanghai or is it on a ship or on its way from L.A. to Minneapolis? Today, you’re dependent on systems of various companies for supply chain tracking data. These systems are good; ours is, certainly. We built it to serve our customers and for their security. We have a rate of less than one percent in loss or damage, but it’s not as granular as this will be with blockchain. So, I think this will be a huge change.”
BITA was founded in 2017, and Purolator was among the first to join, Costanzo says, and for good reason. The association is creating standards that could ensure all service providers work in a way that benefits all customers. “And getting in early gives a service provider the opportunity to be a player in establishing these important standards. It’s absolutely the reason we joined it early. Also, we want to understand how the customer’s view of this technology is being perceived. After all, the customer has insights into trends and where this technology is going.”
Another wish for 2019: approval of the United States-Mexico-Canada Agreement (USMCA), Costanzo says.
Pushed by the Trump Administration, the USMCA is designed to tweak or replace parts of the North American Free Trade Agreement which became effective in 1994. The USMCA was signed last November by the leaders of the three countries, but no legislative body, including the U.S. congress has approved it yet. Business leaders, certainly those in cross-border commerce, urge its passage, Costanzo says. E-commerce is one of the areas that will likely benefit from the agreement’s passage because the de minimis value of shipments between Canada and the U.S. will be raised.
Such valuation refers to the threshold value of a good below which no duty or tax can be levied, and clearance procedures are considerably relaxed. E-commerce companies as well as the e-commerce arms of retail firms often ship low-value goods, but it doesn’t take much to exceed current de minimis levels and face more rigorous clearance procedures. The higher the threshold level, Costanzo says, the better it is for low-value, high-growth segments like e-commerce.
Lobbyists for logistics and freight transportation companies are telling Congress that U.S. industry is fully behind the USMCA, Costanzo says. “We all are in favor of it; we want to see free trade, global trade — and certainly with Canada, the No. 1 market for the U.S. The easier it is for U.S. companies to gain access to the Canadian market, the better it is for the U.S. economy.”