Brokers Need 'Seat at the Table' as Blockchain Set to Change Role Over Coming Decades

RANCHO MIRAGE, Calif. -- Brokers may still have a role in a blockchain world, but the profession could be different, and brokers need a seat at the table if they’re going to successfully transition, said government and industry officials during a panel discussion at the Western Cargo Conference (Wesccon) on Oct. 11.

It’ll be only two to three years before private sector companies start deploying blockchain on a large scale, and while the government will lag, CBP will likely have deployed some blockchain capabilities across the trade in the next three to five years, said Vincent Annunziato, director of CBP’s business transformation office. The agency’s “Silicon Valley Initiative” is looking at food safety, pipeline, and raw materials such as steel, diamonds, timber and chemicals as potential areas where blockchain could be applied in the real world for its tracking capabilities. CBP will likely begin those initiatives as National Customs Automation Program (NCAP) pilots, Annunziato said.

Meanwhile, longer term effort between CBP, the University of Houston and Texas A&M University is currently underway to study how to “re-engineer” the entry process, Annunziato said. The project is looking at building data on a shipment from the ground up, with the first data coming in at the purchase order stage, followed by “header data,” invoice data and shipping data, all tied together at the house bill level. “If you start to think of blockchain as a team sport, some data is coming in from the outside so transactionally it's going to look different,” he said.

Nick Vyas, a professor and co-founder of the University of Southern California’s Center for Global Supply Chain Management, is pessimistic on what all this means for customs brokers, at least in their traditional capacity. Beyond 2030, there may not be the same role for the broker as there is now. There’s “nothing to sugar coat about it,” he said.

Blockchain is “transforming the role of the intermediary,” and the challenge is changing that role into one of a “value creator,” Vyas said. Intermediaries will become a block in a chain, where “somebody has to come and shake our hand. It’s not about getting a document or a packing slip,” but rather a “digital signature” authenticating data. Brokers may only get a fraction of a penny for the service, but with millions of transactions will still make more than they do now. “You guys should be at the table, saying there is a role that we can play that authenticates things that cannot be authenticated” in blockchain’s digital handshake, Vyas said.

There is likely “commercial value” in blockchain for brokers, said Vince Iacopella of Alba Wheels Up. “We’re still the most vetted party in the supply chain. I don’t think that’s going away,” he said. “To be blunt, I think the government wants somebody on the hook for the data, and I think that’s going to stay the same. But I agree that we have to stay in the discussion,” Iacopella said.

“There is the traditional role -- it’s happening now -- you’re authenticating data,” Annunziato said. “You guys are the experts on what’s coming in on importations, and not a machine out there can do every nuance of what you can do,” he said.

The key to that role for brokers once blockchain is widespread will be being able to see the data, said a broker in the audience. Brokers won’t have to touch the data, but need to look and see if it’s wrong, he said. “I don’t see us losing our role; it’s a matter of, how do we adapt to it and get to it sooner,” he said. Brokers have to be able to look at the blockchain to validate data, and need to learn how to read it more than anything else, he said.