The future of customs clearance

Brexit gives impetus for blockchain-based customs clearance

Not least because of UK’s withdrawal from the EU and the export and import declarations required as a result in goods traffic with the UK, digitization of customs clearance has gained considerably in importance. In this context, scientists of Blockchain Europe, the research initiative to establish the European Blockchain Institute in North-Rhine Westphalia (NRW), are currently working on a generally digital and largely automated customs clearance. Roman Koller, customs sub-project manager at Blockchain Europe, on the actual state of affairs.

Roman Koller is scientific employee at Fraunhofer Institute for Material Flow and Logistics IML and customs sub-project manager at Blockchain Europe

Not least because of UK’s withdrawal from the EU and the export and import declarations required as a result in goods traffic with the UK, digitization of customs clearance has gained considerably in importance. In this context, scientists of Blockchain Europe, the research initiative to establish the European Blockchain Institute in North-Rhine Westphalia (NRW), are currently working on a generally digital and largely automated customs clearance. Roman Koller, customs sub-project manager at Blockchain Europe, on the actual state of affairs.

Today, many customs processes are still predominantly paper-based. Due to the large number of persons involved, this often causes a great deal of effort. This is where the BORDER Blockchain project (blockchain-based organization of relevant documents in external trade with regulatory compliance) comes into play: the flow of information in foreign trade is to be mapped by means of blockchain technology to connect customs and logistics processes more closely. This gives all persons involved transparency in the settlement process, the manual effort is reduced and time-consuming checks on site could be transferred to the digital space. Fraunhofer IML, which is responsible for the Blockchain Europe research initiative, is developing the solution together with the software company AEB SE based in Stuttgart.

To achieve this, the partners aim at making customs documents available digitally and paper documents obsolete. By means of the used blockchain technology it shall be possible to securely record digital processes and documents for all persons involved and – linked to the physical flow of goods – to update them.
The first step is the export accompanying document which is to be digitized and enriched with additional information along an export process by the players involved. This document helps the relevant customs office to confirm that an export is permitted and it sends it digitally to the exporting party. The latter still regularly prints the document currently and attaches it to the export shipment. The consignee in the third country is usually not digitally involved in the export process, only receives many relevant information with the goods, often on paper. Most commonly, the consignee has to digitally capture the data again for its import declaration. This is to change with a blockchain-based solution. That way, exporting parties (consignors), importing parties (consignees), logistics partners, transport companies, customs brokers and customs authorities, for example, could view customs-relevant information at any time and these could be accessed securely and in good time, even across borders.

Brexit can boost digitization

The project is still relatively at the beginning. To achieve first results quickly, the partners focus on agile proceeding. A first prototypical customs process is to be digitized via an agile SCRUM process. For further implementation, Blockchain Europe is still looking for companies that would like to participate – also including companies that are affected by Brexit. It makes sense to include this topic as foreign trade with the UK is currently in a state of upheaval anyway and opportunities for the application-oriented testing of new technologies are developing. Welcome are both professionals in customs clearance and companies that, for example due to Brexit, come into contact with the challenges of customs clearance in foreign trade for the first time. Together with Blockchain Europe, the companies can contribute to a generally digital customs clearance and test the planned prototypical processes in practice as validation partner. Brexit could prove as additional impetus for a boost of digitization in customs clearance.  

ABOUT THE AUTHOR

Roman Koller is scientific employee at Fraunhofer Institute for Material Flow and Logistics IML. Since September 2020 he has been customs sub-project manager at Blockchain Europe – the project to establish the European Blockchain Institute in North-Rhine Westphalia (NRW). He studied at TU Dortmund University and published first articles on »Blockchain und Smart Contracts« already in 2018.