A SERVICE-ORIENTED INFRASTRUCTURE FOR ADVANCED

CROSS-BORDER TRADE

Liana Razmerita and Niels Bjørn-Andersen

Centre of Applied Information and Communication TechnologiesCopenhagen Business School, Denmark

Keywords: Web services, service oriented architectures, SOA, e-commerce, smart seals, environmental sensors, public

sector, IT innovation, cross-border trade, security, e-business.

Abstract: This paper presents an advanced e-custom infrastructure designed to streamline trade procedures, prevent

potential security threats and reduce tax related fraud in cross-border trade. The paper focuses on the

advantages of service infrastructure for the implementation of highly distributed systems, making use of

internet to distribute and exchange data. In particular we highlight the use of service oriented architecture

(SOA), web services, and smart seals in an integrated framework named EPCIS. The EPCIS system and its

infrastructure are presented and analyzed in relation to the strategic objectives for future e-custom systems

as expressed by the World Trade Organizations (WTO) and the authorities in major trading nations. The

paper highlights the main advantages of use of such an architecture. The concrete case included in the paper

illustrates how service oriented applications can ensure a more secure and advanced solution for monitoring

goods along its supply chain. As a conclusion we highlight the fact that novel technologies are the main

drivers of IT innovation, however the case study showed that organizational and political decisions are key

for diffusion and adoption of such advanced solutions.

1 INTRODUCTION

In a fast-moving global economy, facilitating cross-

border trade while at the same time increasing the

security of trade are important objectives for

governments worldwide. In order to facilitate cross-

border trade, the EU member states have committed

themselves to endorse ‘a simple and paperless

environment for customs and trade’. (Taxation and

Customs Union 2007). Paperless trade is an

important instrument to increase security

development and revenues from international trade.

At the EU level, the tax fraud alone is estimated at

200 to 250 billion Euros (EUComission 2006).

Electronic customs also aim to make customs

clearance more efficient, to reduce administrative

burdens, to serve fiscal interest, to increase the

security of international trade and to enhance health

and environmental protection. The big challenge for

a next generation of e-custom systems is to cut red

tape, to combat fraud and terrorism while at the

same time allowing a seamless flow of data between

export and import countries. Accordingly, EU

governments are under pressure to introduce modern

custom systems that increase the security of

international trade and reduce tax related fraud while

at the same time lowering its administrative burden.

(Bjørn-Andersen et al. 2007)

The European Commission has defined three

strategic goals for e-Custom development in Europe:

achieving pan-European interoperability,

establishing Single Window Access Points, and

granting Authorized Economic Operator (AEO)

status to trading partners. These strategic initiatives

are defined as follows:

• Pan-European interoperability involves that

different European governmental systems will

be able to communicate and exchange data

independent of their heterogeneity and the

different implemented standards.

• The Single Window initiative involves providing

on-line ‘Single Window Access Points’ where

businesses and public administrations can

exchange the data required by legislation for the

EU cross-border movements of goods. By

January 2013 it is planned that the single

window will replace the current ‘silo solutions’

(Taxation and Customs Union 2007).

431

Razmerita L. and Bjørn-Andersen N. (2008).

A SERVICE-ORIENTED INFRASTRUCTURE FOR ADVANCED CROSS-BORDER TRADE.

In Proceedings of the Fourth International Conference on Web Information Systems and Technologies, pages 431-435

DOI: 10.5220/0001517504310435

 SciTePress

• The Authorized Economic Operators (AEO)

status may be obtained by businesses fulfilling

certain requirements regarding their business

processes. This involves a special partnership

between the private sector and custom

administration. Certified AEO will enjoy

simplified trade procedures and fast custom

clearance.

The EU envisages that the transformation of

paper trade documents to electronic ones along with

the redesign of custom procedures and the

implementation of new e-custom systems will help

achieve these objectives. This paper is primarily

concerned with the description of a software

infrastructure to support inter-organizational

business processes for international trade. The focus

is placed on the advantages of advanced e-custom

systems. In particular we highlight the use of

service-oriented architecture (SOA), web services

and Tamper Resistant Embedded Controller (TREC)

device in an integrated framework. The TREC is an

intelligent wireless monitoring device mounted on a

container communicating with a GPS (Global

Positioning System) in order to position the

container precisely. Apart from monitoring the

physical location, the TREC device collects

information related to the state of the container (e.g.

temperature, humidity, ambient light, acceleration,

door status). The Electronic Product Codes

Information System (EPCIS) is implemented based

on a SOA using an advance track and trace

technology. The EPCIS system ensures a more

secure and advanced solution for monitoring

containers through the excise supply chain. It raises

alerts in case of problems (exceptions) for cross-

border trade. EPCIS system is designed to be

compliant with EPCGlobal standards (see:

www.epcglobalinc.org) and it’s integrated in the

EPCNetwork.

The remainder of the paper is organized as follows.

The second section introduces EPCIS architecture in

a concrete scenario of trade. The main building

blocks of advanced infrastructures and their novel

features are introduced. It provides a theoretical

background of web services, service oriented

architectures and smart seals. The 3

section

discusses evaluation results and the benefits of

employing such a system in connection with the

objectives addressed by the project. In the final

section we conclude and discuss some challenges

associated with the adoption of e-infrastructures and

new e-custom systems.

2 A SERVICE-ORIENTED

INFRASTRUCTURE

This section introduces the service-oriented

infrastructure named EPCIS prototyped within

ITAIDE

. The redesign of administrative procedures

for international trade is subject of research within

ITAIDE (Information Technology for Adoption and

Intelligent Design for e-Government,

www.itaide.org) project. The ITAIDE project is an

EC funded project within the 6 Framework

Programs which has two high level objectives: it

aims to lower the administrative costs in

international trade transactions while increasing the

security and control of the trade procedures.

E-infrastructures can be defined as networks and

webs that enable locally controlled and maintained

systems to interoperate more or less seamlessly.

A concrete scenario of use in trade procedures is

presented in Figure 1. In this scenario, businesses

with AEO status will no longer have to submit the

many export declarations to custom authorities. As

mentioned earlier in the paper, AEO status is granted

to businesses, who meet certain requirements

regarding their security, quality, transparency and

audibility of their business processes. The

advantages are that the business is granted simplified

customs and tax procedures.

As represented in Figure 1, BusinessCo makes its

commercial data available from its Enterprise

Resource Planning (ERP) system via an EPCIS

database. Using specialized web services, custom

administrations can access the commercial data at

any time from the EPCIS database. In addition

custom administration can audit BusinessCo

periodically in order to make sure that the data

provided are valid and updated. The international

trade scenario involves three stakeholders: the

business who exports goods, a carrier responsible for

the shipment of goods and the custom

administration. Currently the trade procedures based

on silo solutions require businesses to submit

various declarations containing ommercial data.

These various declarations often require large,

redundant amount of data from businesses and

represent a heavy administrative burden (Baida et al.

2007).

The architecture relies on a software-oriented

architecture (SOA) that enables the deployment of

ITAIDE (Information Technology for Adoption and

Intelligent Design for e-Government, www.itaide.org)

WEBIST 2008 - International Conference on Web Information Systems and Technologies

432

the solution in a geographically dispersed

environment. The solution makes use of EPCglobal

(Electronic Product Code Global) standard

(EPCglobalinc 2007) for capturing shipment data.

EPCglobal is the globally accepted standard that

ensures universal applicability and optimal

functionality across the globe for all industry

sectors. This standard is intended to facilitate the

development of interoperable systems for industries,

commercial sectors and/or geographic regions and

facilitate collaboration across industries independent

of physical location and geography. The EPCIS

Standard (EPCIS 2006) provides the foundation

necessary for the capture, communication and

discovery of EPC event data. In order to enforce

security policies, the EPCIS portals are located

behind firewalls which can be only passed by users

from restricted IP addresses.

Custom

EPCIS EPCIS EPCIS

Discovery

Service

Web

ERP



e.g.

approval of

export

license



e.g.

bill of

lading

Carrie

ERP



e.g.

export

declaration

BusinessCo

ERP

TREC or RFID

Get

reference

number

Use the

reference

number

and Web

EPCIS-

Electronic

Product Code

Information

System

Figure 1: EPCIS distributed architecture, modified from

IBM conceptual view of Secure Trade Lane.

EPCIS databases capture events related to the export

declarations and other predefined events related to

shipment data. The events are stored in EPCIS

repositories of the parties that own the data and are

made available to authorized parties.

Web services enable the tracking of goods as they

move through the supply chain. Web services are

software applications that can be discovered,

described and accessed based on XML and standard

Web protocols over intranets, extranets and the

Internet (Daconta 2003). Initially the web service

efforts focused on interoperability, standards and

protocols for performing business to business (B2B)

transactions. Web Services enables a new way to

establish more flexible, low-cost connections across

applications. Web services communicate using

messages. Web services are viewed as a next

generation of web-based technology. Web services

are emerging to provide a systematic and extensible

framework for application-to-application interaction

built on top of existing Web protocols and based on

open XML standards (Curbera 2002). Typically,

messages exchanges are using SOAP (Simple Object

Access Protocol) and their description is done with

WSDL (Web Service Description Language). A

service provider publishes the service profile for a

web service in a registry. A service requester, which

can be a human agent, a software agent or a business

application, finds the service based on the service

description provided in the service registry and can

execute the service. A business application

subsequently sends a request for a service at a given

URL using SOAP over HTTP. Web Services are

built on a foundation set of standards and protocols,

including Internet protocols (TCP/IP, HTTP). These

standards enable the establishment of automated

connections between applications and databases.

The design and implementation of Web Services is

associated with 3 basic aspects: communication

protocols, service descriptions and service

discovery. Industry specifications build on top of

XML and SOAP standards.

SOA is an architectural style that has emerged in the

last few years. SOA is a piece of software that

implements a well-defined functionality that can be

consumed by clients or other services regardless of

the application or business model. Services

communicate with each other by means of message

exchanges. SOA provide a number of features that

make them very advantageous to be employed in

different business applications. The main

characteristics of a SOA are: interoperability, loose

coupling, isolation, composability, and machine

processability.

The Tamper Resistant Embedded Controller

(TREC) is wireless monitoring device that can be

mounted on containers. It has been developed by

IBM Zurich research labs. The TREC enables the

creation of an audit trail of container movements and

events from the point of origin to the destination.

The TREC device collects and transmits information

via a satellite network, a cellular system

(GSM/GPRS), or a Wireless Personal Area Network

(WPAN) based on ZigBee/IEEE 802.15.4 radio

(Dolivo 2007). The information that can be collected

and transmitted includes the location of the container

and other parameters of the container (eg

temperature, humidity, door status, velocity).

Information related to the container’s precise

location can be sent to the different supply chain

partners including custom administrations. Handheld

A SERVICE-ORIENTED INFRASTRUCTURE FOR ADVANCED CROSS-BORDER TRADE

433

devices can also communicate with the TREC

device. The TREC can process information, analyze

events and control certain actions or predefined

events (e.g. to open the door based on input from an

authorized person in certain geographic areas, or to

trigger alerts in case of deviations or abnormal

physical conditions of the container). The tracking

and security device (TREC) is mounted on a

container and transmits data about the precise

location of a container along its supply chain. The

TREC is configured to signal when the container

enters or leaves a predefined location and can detect

the loading or unloading of the container onto or

from a vessel. In the pilot scenario the TREC was set

to monitor the containers’ inside temperature and

generate alert whenever the container deviates from

its intended route. Specialized web services capture

various events related to the shipment of goods, their

location and/or container condition. Notifications

and alerts can be triggered when containers deviate

from their predefined route or other abnormal

conditions occur, thus enhancing security of

shipment of goods. The architecture is designed as a

Secure Trade Lane. Secure Trade Lane (STL) is a

solution for making container shipments more

predictable and more secure.(Schaefer 2006). Supply

chain visibility and security together form a

compelling business case for monitoring container

shipments globally.

The query interface is designed for obtaining and

sharing data about unique objects in the supply chain

within and across organizations based on an

authorized access (Koldijk 2007). Compliant with

the world custom organization recommendations,

each container has assigned a Unique Consignment

Reference (UCR) number and an identifier. This

number is used by discovery services to search for

data associated with the container within EPCIS

database. Thus specialized web services enable

authorized parties in the supply chain to retrieve

timely data related to the status of the container. The

stakeholders can also be notified by the system when

the container arrives at its destination. This kind of

notifications will enable the elimination of the

current paper-based export evidence procedure.

3 EVALUATION RESULTS

The EPCIS system has been tested in relation with

the export of beer from Heineken in the context of

ITAIDE project. EPCIS has been implemented by

IBM between July and November 2006.

Subsequently, between November 2006 and January

2007, 14 containers have been equipped with TREC

devices and EPCIS pilot has been tested in two

phases. The first pilot test has been shipped from

Netherlands to United States (9 containers) while the

second one has been sent to United Kingdom (5

containers). During the transportation phase the

TREC could help as a ‘witness device’ for

import/export procedures. When an export

declaration is published an alert event is triggered to

the custom authorities who can then calculate the

risk and decide on whether a physical inspection is

warranted.

Even the overall system worked according to its

overall specifications, some glitches have been

identified in the technical solution and further

developments are in progress. For instance, the

TREC functionality and its battery lifetime has to be

improved, the register and query interfaces

associated with the discovery service are only in

beta version, and the discovery service is still to be

finalized within the pilot. EPCIS does not only

enable the publishing of custom declarations but it

also enables the tracking of products through the

whole supply chain. EPCIS is a massively,

distributed, integrated solution based on SOA and

Web Services. It allows authorized parties (custom

administration) to track products through the whole

supply chain (each party in the supply chain can

track products). The TREC device also enables

ubiquitous access to information about the location

of the container, can trigger events/alerts in case of

deviations from the predefined routes or

unauthorized container access thus improving

security and control. Web services enable

ubiquitous, timely access to data about the container

and support customs related queries. Web services

integrated in service oriented architecture enable the

implementation of the Single Window access

concept. Finally, SOA and the use of EPCglobal

standard ensure the interoperability of the proposed

solution. SOA facilitates integration with other

backend systems used by businesses and customs

administration.

4 CONCLUSIONS

New technologies provide the technical platform to

facilitate trade, and enhance security while cutting

the red tape. The paper has presented a system

operating in a novel type of e-infrastructure

architecture. It has highlighted the advantages of

such a system in report with increasing security,

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434

facilitating the cross boarder trade, reducing

transaction cost. The system is designed in line with

strategic objectives of the WTO and the customs

authorities in the US and EU. However, the

technological solution is just a first step towards the

diffusion and adoption of such an advanced e-

custom system. The development of new e-custom

solutions is a very complex issue that involves not

only technical aspects underlined in this paper, but

also organizational and political decisions. A

complementary picture of the whole processes

associated with innovation and transformation of e-

Customs focusing on political, organizational

aspects and control procedures are further discussed

in publications from the ITAIDE project (Liu et al.

2007; Tan et al. 2006).

The establishment of the e-customs infrastructure

described above is a huge task, which can only be

addressed through an active involvement of

government. A reduction in administrative costs for

the business partners involved in cross-border trade

can not justify the cost of migration towards e-

infrastructures and new systems such as EPCIS, and

therefore we think that the diffusion and adoption of

such a new type of e-infrastructure or other

innovative solutions should be reinforced through

legislation and governmental support (Bjørn-

Andersen et al. 2007; Scherlis and Eisenberg 2003).

In conclusion this paper highlights the fact that

novel technologies are the main drivers of IT

innovation, however the case study showed that

organizational and political decisions are key for

diffusion and adoption of such advanced solutions.

ACKNOWLEDGEMENTS

This research is part of the integrated project

ITAIDE (nr. 027829), which is funded by the 6th

Framework IST programme of the European

Commission (see www.itaide.org). We are greatly

indebted to all participants of the project for their

valuable contributions to the work presented here

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