The global trade volume has expanded at a drastic pace over recent years on the back of e-commerce growth, but has also led to increasing abuse of simplified customs procedures.

Responding to such a market reality, it is inevitable that customs offices should fundamentally innovate their administrative systems with key technologies of the “fourth industrial revolution,” according to the head of the information bureau at South Korea’s customs agency.

“It is now time that customs administrations adopted technologies of the fourth industrial revolution, recognizing the limits that were observed in conventional countermeasures,” Kang Tae-il, director general of the information and international affairs bureau at the Korea Customs Service, told The Korea Herald in an interview.

There has been a growing level of inconsistency between the customs office’s work burden and its workforce, Kang noted.

The number of cross-border passengers as of end-2017 stood at 74 million, growing 16.4 times from 1990. The number of export and import declarations jumped 7.7 times during the same period, from 3 million to 27 million, while trade volume expanded eight times to $1.5 trillion.

The workforce of the customs office, however, marked a mere 5.6 percent rise during the given period, he explained.

“It was under such circumstances that the KCS set its eye on establishing a smart customs procedure, using big data, blockchain, artificial intelligence and drone technologies at all stages of trade,” Kang said.

Presenting the agency’s road map titled “Smart Customs,” Kang underlined that technological applications will bring tangible progress in risk management, trade logistics, inspections and surveillance of goods.

Kang especially placed focus on big data, AI and blockchain as plausible tools to suppress illegal trade.

“So far, we have been identifying and screening travelers based on the experience of our employees and past data that showed records of possible crimes or offenses,” he said.

“But with big data, we can take a step further and build a system of crime patterns and risk profiling through what’s called a web scraping technology -- which is basically collecting and organizing vast information that is scattered around the internet.”

For screening of illegal cargo, an AI-based X-ray system will be developed to respond to growing requests to block the flow of prohibited drugs into the country and reduce risks of terrorism, according to Kang.

“This year, the KCS was able to develop five core technologies needed for an AI-based X-ray system, such as real-time procurement, decoding of video data and deciphering whether cargo matches the procured data,” he said.

“We plan to build our own ‘Korean AI-based X-ray system’ by gradually expanding the system, which will first focus on screening traveler’s luggage, international mail and containerized cargo.”

Also, the KCS aims to use blockchain to pool necessary information in creating a transparent supply chain among trading companies, carriers and customs agents by further simplifying the customs clearance process for certified cargo, while suspicious loads will be subjected to intense scrutiny.

“The KCS has been participating in a pilot project carried out by a blockchain consortium of 38 institutions and cargo-related businesses, including Samsung SDS, and has successfully applied the blockchain technology in our customs clearance management,” Kang explained.

“Through the pilot project, we were able to confirm that blockchain ensures credibility and accuracy of data and information as the system blocks any acts of forgery of counterfeiting of documents related to exports customs once it enters the system.”

By Jung Min-kyung and Lee Kwon-hyoung
(mkjung@heraldcorp.com), (kwonhl@heraldcorp.com)