U.S. GOVERNMENT PUBLISHING OFFICE

30–320PDF WASHINGTON : 2018

LEVERAGING BLOCKCHAIN TECHNOLOGY 

TO IMPROVE SUPPLY CHAIN MANAGEMENT 

AND COMBAT COUNTERFEIT GOODS 

JOINT HEARING 

BEFORE THE

SUBCOMMITTEE ON OVERSIGHT & 

SUBCOMMITTEE ON RESEARCH AND TECHNOLOGY 

COMMITTEE ON SCIENCE, SPACE, AND 

TECHNOLOGY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

SECOND SESSION 

MAY 8, 2018 

Serial No. 115–57 

Printed for the use of the Committee on Science, Space, and Technology 

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Available via the World Wide Web: http://science.house.gov 
(II) 

COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY 

HON. LAMAR S. SMITH, Texas, Chair 

FRANK D. LUCAS, Oklahoma 

DANA ROHRABACHER, California 

MO BROOKS, Alabama 

RANDY HULTGREN, Illinois 

BILL POSEY, Florida 

THOMAS MASSIE, Kentucky 

RANDY K. WEBER, Texas 

STEPHEN KNIGHT, California 

BRIAN BABIN, Texas 

BARBARA COMSTOCK, Virginia 

BARRY LOUDERMILK, Georgia 

RALPH LEE ABRAHAM, Louisiana 

DANIEL WEBSTER, Florida 

JIM BANKS, Indiana 

ANDY BIGGS, Arizona 

ROGER W. MARSHALL, Kansas 

NEAL P. DUNN, Florida 

CLAY HIGGINS, Louisiana 

RALPH NORMAN, South Carolina 

EDDIE BERNICE JOHNSON, Texas 

ZOE LOFGREN, California 

DANIEL LIPINSKI, Illinois 

SUZANNE BONAMICI, Oregon 

AMI BERA, California 

ELIZABETH H. ESTY, Connecticut 

MARC A. VEASEY, Texas 

DONALD S. BEYER, JR., Virginia 

JACKY ROSEN, Nevada 

CONOR LAMB, Pennsylvania 

JERRY MCNERNEY, California 

ED PERLMUTTER, Colorado 

PAUL TONKO, New York 

BILL FOSTER, Illinois 

MARK TAKANO, California 

COLLEEN HANABUSA, Hawaii 

CHARLIE CRIST, Florida 

SUBCOMMITTEE ON OVERSIGHT

RALPH LEE ABRAHAM, LOUISIANA, Chair 

BILL POSEY, Florida 

THOMAS MASSIE, Kentucky 

BARRY LOUDERMILK, Georgia 

ROGER W. MARSHALL, Kansas 

CLAY HIGGINS, Louisiana 

RALPH NORMAN, South Carolina 

LAMAR S. SMITH, Texas 

DONALD S. BEYER, Jr., Virginia 

JERRY MCNERNEY, California 

ED PERLMUTTER, Colorado 

EDDIE BERNICE JOHNSON, Texas 

SUBCOMMITTEE ON RESEARCH AND TECHNOLOGY

HON. BARBARA COMSTOCK, Virginia, Chair 

FRANK D. LUCAS, Oklahoma 

RANDY HULTGREN, Illinois 

STEPHEN KNIGHT, California 

DANIEL WEBSTER, Florida 

JIM BANKS, Indiana 

ROGER W. MARSHALL, Kansas 

LAMAR S. SMITH, Texas 

DANIEL LIPINSKI, Illinois 

ELIZABETH H. ESTY, Connecticut 

JACKY ROSEN, Nevada 

SUZANNE BONAMICI, Oregon 

AMI BERA, California 

DONALD S. BEYER, JR., Virginia 

EDDIE BERNICE JOHNSON, Texas 
(III) 

C O N T E N T S 

May 8, 2018 

Page 

Witness List ............................................................................................................. 2 

Hearing Charter ...................................................................................................... 3 

Opening Statements 

Statement by Representative Ralph Lee Abraham, Chairman, Subcommittee 

on Oversight, Committee on Science, Space, and Technology, U.S. House 

of Representatives ................................................................................................ 4 

Written Statement ............................................................................................ 6 

Written Statement by Representative Eddie Bernice Johnson, Ranking Member, Committee on Science, Space, and Technology, U.S. House of Representatives ........................................................................................................... 8 

Written Statement by Representative Donald S. Beyer, Jr., Ranking Member, 

Subcommittee on Oversight, Committee on Science, Space, and Technology, 

U.S. House of Representatives ............................................................................ 10 

Written Statement by Representative Barbara Comstock, Chairwoman, Subcommittee on Research and Technology, Committee on Science, Space, and 

Technology, U.S. House of Representatives ....................................................... 12 

Written Statement by Representative Daniel Lipinski, Ranking Member, Subcommittee on Research and Technology, Committee on Science, Space, and 

Technology, U.S. House of Representatives ....................................................... 14 

Witnesses: 

Dr. Douglas Maughan, Cyber Security Division Director, Science and Technology Directorate, U.S. Department of Homeland Security 

Oral Statement ................................................................................................. 16 

Written Statement ............................................................................................ 19 

Mr. Robert ‘‘Bob’’ Chiaviello, IPR Counsel, Nuby Law 

Oral Statement ................................................................................................. 27 

Written Statement ............................................................................................ 29 

Mr. Michael White, Head of Global Trade Digitization, Maersk 

Oral Statement ................................................................................................. 50 

Written Statement ............................................................................................ 53 

Mr. Chris Rubio, VP Global Customs Brokerage Staff, UPS 

Oral Statement ................................................................................................. 57 

Written Statement ............................................................................................ 60 

Discussion ................................................................................................................. 65 

Appendix I: Answers to Post-Hearing Questions 

Dr. Douglas Maughan, Cyber Security Division Director, Science and Technology Directorate, U.S. Department of Homeland Security ............................ 84 

Mr. Robert ‘‘Bob’’ Chiaviello, IPR Counsel, Nuby Law ......................................... 87 

Mr. Michael White, Head of Global Trade Digitization, Maersk ......................... 89 

Mr. Chris Rubio, VP Global Customs Brokerage Staff, UPS ............................... 91 

(1) 

LEVERAGING BLOCKCHAIN TECHNOLOGY 

TO IMPROVE SUPPLY CHAIN MANAGEMENT 

AND COMBAT COUNTERFEIT GOODS 

TUESDAY, MAY 8, 2018 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON OVERSIGHT AND

SUBCOMMITTEE ON RESEARCH AND TECHNOLOGY

COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY, Washington, D.C. 

The Subcommittees met, pursuant to call, at 10:03 a.m., in Room 

2318 of the Rayburn House Office Building, Hon. Ralph Abraham 

[Chairman of the Subcommittee on Oversight] presiding. 
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Chairman ABRAHAM. The Subcommittee on Oversight and Research and Technology will come to order. 

Without objection, the Chair is authorized to declare recess of the 

Subcommittee at any time. 

Good morning, and welcome to today’s hearing entitled 

‘‘Leveraging Blockchain Technology to Improve Supply Chain Management and Combat Counterfeit Goods.’’ I’ll recognize myself for 

five minutes for an opening statement. 

Good morning again. Welcome to today’s joint Oversight and Research and Technology Subcommittee hearing, ‘‘Leveraging 

Blockchain Technology to Improve Supply Chain Management and 

Combat Counterfeit Goods.’’ Today’s hearing will highlight potential applications of blockchain technology in shipping, logistics, and 

customs, emphasizing supply chain management. A focus today 

will be how this technology can be leveraged to a greater visibility 

into the supply chain and how the technology can be used to combat the distribution of counterfeit products. 

We will hear from government and private-sector experts about 

blockchains potential to improve the security of our systems and 

how it can ensure customers and the companies alike, that the 

products and services being used are verified. 

The Science Committee continues to engage in oversight of 

emerging forms and applications of technology, just like the discussion that we—will occur on blockchain today. We recognize that 

these technologies can benefit both the public and private sectors 

and seek to understand what can be done to ensure that this technology is appropriately leveraged in an efficient and productive 

manner. 

Through ensuring reliability, increasing productivity, and securing systems and data, the application of blockchain technology is 

an area in which there is much to learn. While the applications for 

blockchain technology are continuously increasing, this hearing is 

an opportunity to learn more about its specific use in supply chain 

management. Today’s witnesses can provide valuable insight into 

how blockchain can enhance security and be leveraged outside of 

the private sector to improve government efficiency. 

We must also recognize that—the barriers faced by the private 

sector in leveraging blockchain technology in order to fully realize 

its potential benefits. By hearing from individuals today that are 

taking part in ongoing and proactive efforts within the private sector to utilize blockchain technology in different areas of their business models, we can gain a better understanding of what, if anything, industry needs from the government. 

I want to thank Mr. White for being here to represent Maersk, 

and Mr. Rubio representing UPS. These companies are presently 

engaged in important case studies using this technology. We look 

forward to learning about those efforts. 

Additionally, Mr. Chiaviello is here today to do—detail some of 

the counterfeiting and business issues companies like Luv N’ Care 

are experiencing. Baby care products are some of the most important on the market. We must be able to verify the authenticity of 

these goods. There is a potential role emerging for technologies like 

blockchain to address these global supply chain safety issues. 
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The committee will continue to prioritize issues like verification 

and overall cybersecurity. We hope venues like today’s hearing will 

help provide a better understanding of the issues our private industries are facing and how they are utilizing emerging technologies. 

This knowledge can better inform the Committee on how the application of blockchain technology could potentially bolster private 

companies’ and the federal government’s cybersecurity weaknesses. 

Dr. Maughan, we appreciate you being here today to provide 

more insight into the role DHS has played in utilizing this emerging technology. DHS Science and Technology Directorate is in a 

unique position to provide valuable insight and services as a useful 

role in exploring a broader understanding and application of the 

technology in areas directly related to shipping, logistics, and customs. 

Additionally, through the many projects and ventures it supports, DHS has the ability to effectively identify the potential for 

blockchain technology and address how the federal government 

could benefit. These potential solutions could help secure data and 

enhance our national security. 

I look forward to the insight our witnesses will provide. This dialogue will help us resolve important questions and better understand the next steps that must be taken to ensure the integrity, resilience, and security of our systems and industries that could—and 

do—benefit from the application of this technology. 

[The prepared statement of Chairman Abraham follows:] 
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[The prepared statement of Ms. Johnson follows:] 
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[The prepared statement of Mr. Beyer follows:] 
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[The prepared statement of Mrs. Comstock follows:] 
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[The prepared statement of Mr. Lipinski follows:] 
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Chairman ABRAHAM. We’re going to recognize our witnesses now. 

Our first witness today is Dr. Douglas Maughan, Director of the 

Cyber Security Division of the Science and Technology Directorate 

at the Department of Homeland Security. Dr. Maughan previously 

worked at the National Security Agency from 1987 to 1999 as a 

Senior Computer Scientist before moving to DARPA to work as a 

Program Manager. In 2003, he joined the Department of Homeland 

Security as a Program Manager and was promoted to Division Director in 2010. He holds two bachelor’s degrees from Utah State 

University in computer science and applied statistics, a master’s 

degree in computer science from Johns Hopkins University, and a 

doctorate in computer science from the University of Maryland, 

Baltimore County. 

Our second witness is Mr. Bob Chiaviello, an IPR Counsel at 

Nuby Law. Mr. Chiaviello has practiced intellectual property law 

for 37 years starting at Pennie & Edmonds in 1980. After a brief 

stint with IBM, he joined Baker Botts in 1990. In 2002, Mr. 

Chiaviello joined Fulbright & Jaworski as a partner and worked 

there until 2011. He received his bachelor’s degree from Washington and Lee University and his juris doctor from the John Marshall Law School. 

Our next witness is Mr. Michael White, head of the Global Trade 

Digitalization at Maersk. Mr. White has worked at Maersk since 

2007, first as a Managing Director at Maersk Holding. He then became Managing Director at Maersk Line before becoming the head 

of Global Trade Digitization in 2017. He received a bachelor’s degree from Virginia Wesleyan University and also studied at Harvard Business School and the International Institute for Management Development business school in Lausanne, Switzerland. 

Our final witness is Mr. Christopher Rubio, Vice President of 

Global Customs Brokerage Staff at United Parcel Services. Mr. 

Rubio holds a bachelor’s degree in accounting from Pace University 

and an MBA in finance from Rutgers University. He has worked 

for UPS since 2004, first as Department Manager for the 

Midmarket Sales Team. He then became the Department Manager 

for UPS Trade Management Services before joining the Global Customs Brokerage System Group. 

I now recognize Dr. Maughan for five minutes to present his testimony. 

TESTIMONY OF DR. DOUGLAS MAUGHAN, 

CYBER SECURITY DIVISION DIRECTOR, 

SCIENCE AND TECHNOLOGY DIRECTORATE, 

U.S. DEPARTMENT OF HOMELAND SECURITY 

Dr. MAUGHAN. Chairman Abraham and distinguished Members 

of the Oversight and Research and Technology Subcommittees, 

thank you for inviting DHS to speak with you today. I will be sharing important aspects of how the Department of Homeland Security Science and Technology Directorate is using blockchain technologies in research and development and working with department missionaries to integrate the innovative technology into everyday use. 

As the R&D arm of DHS, S&T develops the tools, technologies, 

and knowledge products for DHS operators and state and local first 
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responders, ensuring that R&D coordination across the Department 

to develop solutions for the needs of today and tomorrow. S&T 

partners with federal agencies, industry, academia, and international governments to create and test real-world solutions that 

help the Nation’s homeland security officials defend against, respond to, mitigate, and recover from all hazards and threats in a 

realistic time frame. 

Blockchains offer promise, as witnessed by the rapid growth of 

interest across government and private sector. From a government 

perspective, the technology holds potential for enhanced transparency and auditing of public service operations, greater supply 

chain visibility to combat the distribution of counterfeit products, 

and automation of paper-based processes to improve delivery of 

services to organizations and citizens. 

There are many types of blockchains with varying degrees of support of classic security principles such as confidentiality, integrity, 

and availability, as well as support of privacy principles such as 

pseudonymity and selective disclosure. Analysis to determine if a 

particular blockchain supports these security and privacy considerations is often nonexistent and/or not readily available. There remain other challenges with blockchain technology, particularly a 

lack of support for standards that may limit the growth and availability of a competitive marketplace of interoperable, cost-effective, 

and innovative solutions for both government and industry. 

Certainly, private industry is leading the way in blockchain development, as many see it as a key competitive advantage. Government must be informed and ensure blockchain technology, as it 

evolves, supports standardized approaches for security privacy and 

data exchange to create efficiencies and enhance the public good. 

Government must also consider leadership opportunities within the 

broader community and partner with industry to bring solutions to 

market. 

Blockchain technologies are an integral part of several ongoing 

S&T research efforts with both DHS components and industry 

partners. We’re exploring many issues, including the development 

of best practices and decision criteria on when and how to implement the blockchain technologies, understanding the support for 

security and privacy principles in commercial blockchain implementations, developing specifications to ensure standardized approaches for decentralized identifiers, defining interoperable data 

formats using verifiable credentials, and identifying scalable and 

usable approaches to decentralized key management systems. 

DHS S&T is also supporting the development of globally available specifications as a precursor to standards, which are open, royalty-free, and free to implement to ensure interoperability across 

systems, while ensuring there is no vendor lock-in. We are doing 

this through organizations like the World Wide Web Consortium 

and the Organization for the Advancement of Structured Information Standards. 

Within DHS, the U.S. Customs and Border Protection organization has been the most active operational component to partner 

with S&T on the use of blockchain technologies for its mission. Our 

ongoing engagements with CBP include a proof-of-concept deployment with the Border Patrol to evaluate how blockchain technology 
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can ensure the authenticity and integrity of imagery data collected 

from cameras, both fixed and mobile; conducting analysis of alternatives and feasibility studies to understand the potential benefits 

and challenges for facilitating and enhancing international passenger travel; and conducting proof-of-concept deployments in partnership with CBP’s Office of Trade and Office of Trade Relations 

that are directly focused on applications of blockchain to shipping, 

logistics, and customs. 

Blockchains are moving rapidly from hype to reality in the application domain areas where DHS S&T is currently working. We believe our careful and considered approach benefits not just DHS 

but everyone who is considering the use of a blockchain technology 

by ensuring that there are multiple vendors with interoperable solutions from which the government can choose. 

Thank you again for your committee’s thoughtful interest and 

leadership in blockchain technology and how it will help DHS accomplish its important mission. I look forward to your questions. 

[The prepared statement of Dr. Maughan follows:] 
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Chairman ABRAHAM. Thank you, Dr. Maughan. 

I now recognize Mr. Chiaviello for five minutes to present his testimony. 

TESTIMONY OF MR. ROBERT CHIAVIELLO, 

IPR COUNSEL, NUBY LAW 

Mr. CHIAVIELLO. Mr. Chairman, Members, thank you for focusing 

a light on this problem. I also want to thank your staff for helping 

to coordinate and the hospitality they’ve shown us coming up from 

Monroe, Louisiana, for this hearing. 

I represent Luv N’ Care. It’s a company located in Monroe, Louisiana, and we make baby products. If you’re a parent or grandparent of small children, you probably are familiar with our products. We make sippy cups, pacifiers, bibs, a wide range of products. 

We’re not a tech company, so—but I’m here to explain to the Committee a problem—a growing problem that we are experiencing 

from unfair competition, particularly unfair competition from overseas. 

As a consumer products company, we’ve always had to deal with 

people who would copy our intellectual property and try to sell it 

to—as counterfeits or knockoffs, but today, what we’re facing is a 

foreign-centered threat. It’s costing our company millions of dollars 

a year, and it’s seriously affecting our bottom line. 

Some of the—what we are seeing today is really a combination 

of two things. One is online retailing, combined with the ability to 

ship products directly from overseas into the U.S. market. When I 

first started 30-some years ago, if there was unfair competition, it 

usually came in by a container load, which usually gave us plenty 

of time to deal with it or—either on the water or by the time it arrived here we—we could deal with it either with customs or in the 

court system. 

Today, the products are coming in by UPS and China post. What 

we see is a foreign-based entity that will use an online retailer like 

Amazon or others. They market their product to U.S.-based consumers. Typically, they use our intellectual property. They’re using 

our trademarks to promote their product. They’ll even go so far as 

to copy our photographs from our website, photograph our products, marketing it as their own. Then, they use digital advertising 

to attract the consumer to their website. The consumer thinks of 

course that the product is somehow related to us, purchases the 

product, and then the product is shipped directly to the consumer 

from, typically, China. 

We are now—and this—the product can be shipped in. We’ve 

done experiments or testing. It can be 48, 72 hours from placing 

an order online to the time the product arrives here in the United 

States. 

The—well, let me see. The—another—well, our problem is primarily with intellectual property where we can enforce our rights. 

There’s also a problem with U.S. health and safety laws. Baby 

products are a fairly regulated item between the Consumer Products Safety Commission and the FDA, and our company spends a 

great deal of effort, resource complying with those rules and regulations, as well as our own quality standards. 
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Quite often, these pirates do not. We—some of the products that 

we’ve inspected, they use inferior materials. They use banned materials. The products don’t comply with the size regulations of the 

CPSC. We’ve found pacifiers, for example, that are made using inferior plastic materials or with adulterants so that the nipple part 

can come off the pacifier, obviously can become a choking hazard. 

And the U.S. consumer, as well as we, have no recourse. These 

folks are located—these pirates are located in China. They have no 

domestic connection, and our current systems for trying to enforce 

U.S. IP laws and health and safety regulations fail when the infringer or the violator is located overseas and outside the jurisdiction of U.S. courts and customs. 

The way we see the problem, it’s really a question of how the 

border is opened, and we implore for some solution to try and place 

better controls on the border to prevent these kinds of—this kind 

of activity. 

I want to thank the Committee for its attention to this problem. 

[The prepared statement of Mr. Chiaviello follows:] 
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Chairman ABRAHAM. Thank you, Mr. Chiaviello. 

Mr. White, five minutes please, sir. 

TESTIMONY OF MR. MICHAEL WHITE, 

HEAD OF GLOBAL TRADE DIGITIZATION, MAERSK 

Mr. WHITE. Good morning, Chairman Abraham, Chairwoman 

Comstock, Ranking Member Beyer, Ranking Member Lipinski, and 

members of the subcommittees. My name is Mike White. I’m head 

of Global Trade Digitization for Maersk. Before moving to my current role, I was President of Maersk Line North America for the 

past eight years, and I have had the pleasure of working in this 

industry for over 37 years. Thank you very much for the opportunity to testify this morning. 

In a global economy, supply chains are of critical importance. It is estimated that over $16 trillion worth of goods cross international borders each year, and more than 80 percent of those 

goods are carried by the ocean shipping industry. Over the past 

five years, global container volumes have increased on average of 

3.7 percent per year. 

Moving goods from point A to point B involves many parties who 

are separate but dependent upon one another. Importers and exporters, freight forwarders, customs brokers, ports and terminals, 

ocean carriers, customs and government authorities, inland transportation providers, financial institutions, and others all gather 

discrete sets of sometimes overlapping information, which they 

share using a convoluted web of individualized formats and aging 

technologies. This inconsistent flow of information across organizational boundaries hampers the efficient flow of goods, but through 

a collective complexity-driven inertia, supply chain participants 

persist in their outdated practices. Perhaps this is because they 

trust that, flawed though it may be, the system will deliver ultimately a container from point A to point B, and they can’t afford 

to experiment with a system that may fail to do so. 

The industry operates today much as it does—or has since the 

introduction of shipping containers in the 1950s. Many processes 

are manual, time-consuming, and too often paper-based, with 

transactions still frequently coming today via fax machine. The 

cargo on any given container vessel voyage generates a mountain 

of documents, many of which are sent to the relevant container’s 

destination by some other means. Container shipments can often 

be delayed in the port because necessary paperwork has not caught 

up with the goods that they carry. 

In a Freightos survey recently cited by The Economist, 2/3 of respondents said that over 1/4 of their deliveries abroad arrived late. 

Nearly 1/2 said they spend more than 2 hours on paperwork when 

arranging a given shipment, and the vast majority of respondents 

had real difficulty tracking goods in transit. In an industry where global transport costs are 1.8 to $2 trillion 

annually, administrative costs can sometimes exceed the end-toend transport costs for a given container, and overall inefficiencies 

are estimated at 15 percent or higher. The World Economic Forum 

estimates that by reducing barriers within international supply 

chains, global trade could increase by up to 15 percent, boosting 

economy and creating jobs. 
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These barriers have proven incredibly difficult to surmount as 

participants are trapped by the layered complexity of entrenched 

methods. Everyone agrees that there must be a better way, but no 

single participant is able to affect change because of the overarching desire to stick with what is known to work even if not very 

well over an experiment that could fail with disastrous and cascading consequences. 

In 2016, Maersk and IBM began a collaboration with the goal of 

digitizing the global supply chain. To begin, we analyzed a number 

of supply chains to understand the current challenges in specific 

areas of complexity. One of these involved a shipment of avocados 

moving from Kenya to the Netherlands. This one container involved over 30 different actors or entities, more than 100 individuals, and over 200 separate exchanges of information and documentation, the vast majority of which were completely manual, 

paper-based, and extremely time-consuming. 

We soon realized that no sustainable solution can exist for 

streamlining this entrenched complexity without unprecedented 

buy-in from the entire industry. In our analysis, an open and neutral industry platform, consisting at its core of a worldwide network of interconnected supply chain participants, is by far the best 

way to drive efficient, transparent, and secure global trade. The 

trust necessary to build this network would likely not exist without 

blockchain technology. 

In January of this year, Maersk and IBM announced our intention, subject to the receipt of all applicable regulatory approvals, to 

form a joint venture to implement this global platform. The platform will follow the flow of cargo from source to destination. As 

empty containers are provisioned and transported from a warehouse, as the containers are stuffed and transported to a port, loaded on board a vessel, cleared export regulatory clearance, and continuing on the vessel to the import side will follow the flow of the 

cargo through customs clearance and ultimately delivery to the 

final consignee and the empty containers returned to a depot. 

The platform will do this by leveraging network participants who 

both make information available and consume information by others. Blockchain enables this unprecedented collaboration by ensuring the security, trustworthiness, and permissioned accessibility of 

sensitive participation information, even as that information is distributed across heretofore segregated enterprises. Participants will 

be able to go to one place to track the real-time status of a container and to locate and transact with up-to-date, trustworthy 

trade information. 

Blockchain is the critical ingredient. It creates an immutable 

record of transactions, which enables the ecosystem to track the exchange of critical information like records of inspection, bills of lading, customs documents. Throughout the trade, each participant 

has real-time visibility access to supply chain according to permission levels. Trust is built by validating the participants, authenticating transactions, distributing information, and maintaining 

unalterable records that are located or accessible through the platform. 

At the end of the given shipment, these immutable records will 

provide one version of the truth of how a container transited from 
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beginning to end, and the documents submitted to the platform can 

be actioned and stored using blockchain technology. This means 

that, once a document has been certified by a government agency, 

the slightest alteration to that document will be exposed and rejected as different from the original. This will obviously have lasting benefits towards fraud detection and prevention. 

The result: a previously unattainable information backbone of 

the global supply chain, encompassing the milestones documents in 

a structured form, customs filings, and many more solutions. Access to this platform will give traders and transportation real-time 

end-to-end visibility of, and permission to access to, information 

about cargo shipments such as status and whereabouts of containers, shipping milestones, and trade documentation. As the network grows, its benefits will multiply and it will generate billions 

of dollars in savings for all industry participants, along with entirely new approaches to global logistics. 

Thank you for the opportunity to discuss this vital topic. I look 

forward to answering your questions. 

[The prepared statement of Mr. White follows:] 
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Chairman ABRAHAM. Thank you, Mr. White. 

Mr. Rubio? 

TESTIMONY OF MR. CHRIS RUBIO, 

VP GLOBAL CUSTOMS BROKERAGE STAFF, UPS 

Mr. RUBIO. Chairman Abraham, Chairman Comstock, Ranking 

Member Beyer—— 

Chairman ABRAHAM. Turn your mic on. 

Mr. RUBIO. Thank you, sir. Chairman Abraham, Chairman Comstock, Ranking Member Beyer, Ranking Member Lipinski, and distinguished members of the committee, thank you for the opportunity to testify before you today on how blockchain technology can 

be leveraged to provide greater supply chain visibility and possibly 

help combat the distribution of counterfeit products. 

I applaud the Committee’s efforts to get in front of this rapidly 

evolving technology, and this hearing before two subcommittees 

speaks to the importance of this issue. 

With over 434,000 global employees delivering more than 19 million packages and documents every day in over 220 countries and 

territories around the world, we work hard to be united problem 

solvers. At UPS, our business processes are complex and our technology advanced, but our objective is simple: to ensure world-class 

service for our customers. 

UPS has been researching the use of blockchain technology with 

the purpose of identifying ways blockchain may impact, disrupt, 

and/or drive efficiency in the supply chain. Our goal is to engage 

in a collaborative discussion with customers and policymakers on 

how blockchain technology can be utilized to further enable supply 

chain digitization, efficiency, and security, blockchain as an enabler. 

In terms of logistics applications, blockchain could bring together 

buyers, sellers, suppliers, payment companies, and logistic companies to provide end-to-end supply chain visibility, while addressing 

privacy and data security concerns. For government border agencies, blockchain could enable greater transparency of a transaction, 

possibly including what’s in the box and who’s buying it, how much 

they’re paying for it, assurance that the duties and taxes are paid, 

and possible confirmation that shipments are not under-declared, 

resulting in faster release and a more trustworthy supply chain. 

As a result of the technology underlying blockchains, UPS sees 

four key benefits for our company and our customers: integrity, 

transparency, interoperability, and security. In particular, our 

large customers have the potential to benefit greatly from the adoption of this technology. 

Given the complexities of the modern supply chain, multinational 

corporations have invested large amounts of money in enterprise 

resource planning systems and supply chain management software 

yet only have limited visibility and insight into where all of these 

products are at a given point in time. 

However, it is not only large multinationals that will benefit. We 

also see the potential for small and medium-size enterprises to realize the many benefits of blockchain, for example, a small business 

would be able to ship its products globally due to the blockchain 
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framework that enables multiple parties to share important trade 

information in a single ledger for the contents of that shipment. 

As a protector of intellectual property rights, UPS and other express delivery service providers engage regularly with customers 

and governments to ensure that our network around the world only 

carries legitimate and legal products. However, there are practical 

limits to what we and other express delivery providers can do dayto-day. First, we’re not the originators of the information about the 

shipments, and limitations exist on the quantity of information 

that we can obtain from customers. Second, we and other express 

delivery providers do not have the requisite expertise to identify 

counterfeit or pirated goods. And third, we’re not law enforcement 

agencies, which means we’re subject to national data protection 

and commercial information and confidentiality rules. 

This is where blockchain could potentially provide a solution. By 

having the ability to track any product from the beginning of its 

journey through the supply chain, blockchain may provide a solution to unknown or unverified product origins. In fact, we are already seeing this technology used to trace the origins of various 

products from diamonds and mangos. By creating a digital record 

of each individual item, the company and consumer are able to 

verify the authenticity of the product and ensure standards are met 

each step of the way. 

The United States and international governments’ role in fostering blockchain: The U.S. Congress, federal agencies, and our 

international counterparts will play a vital role in the adoption and 

success of blockchain in the supply chain. Governments must take 

a balanced and measured approach between regulating this 

everchanging technology and allowing for its innovation and evolution. As e-commerce and global trade flows continue to rapidly 

grow, the United States must work with our international trading 

partners to establish a common set of blockchain standards that 

are recognized throughout the world. 

As I mentioned previously, UPS operates in over 220 countries 

and territories around the world, and I know firsthand that a 

patchwork of global regulation would stifle innovation, slow the 

flow of goods across borders, and increase the likelihood that illicit 

material would enter the country undetected. 

Despite the potential upside to the widespread adoption of 

blockchain, a couple of key barriers exist that must be overcome. 

The first and biggest hurdle is the linking of all physical objects 

to the digital stream. Currently, individual items may be tagged 

digitally with RFID, near-field communication, or two-dimensional 

barcodes. However, in order for blockchain to realize its full potential, all products would have to be tagged digitally, requiring an 

overhaul in today’s supply chain practices. Without an industry 

and supply-chain-wide commitment to adopt to digitalization, many 

organizations will not make the investment in the technology. 

Finally, the international community must come together to ensure that there is one unified set of standards for blockchain. This 

will give companies the confidence they need to know the technology they adopt will be recognized throughout the world. Without 

these common standards, uncertainty will prevent the largescale 
59 

investment that is needed to make blockchain a success in the supply chain. 

Thank you once again for inviting me to testify before you on the 

technology that could change how the world understands supply 

chains. I look forward to any questions. 

[The prepared statement of Mr. Rubio follows:] 
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Chairman ABRAHAM. Thank you, Mr. Rubio. And I want to thank 

all the witnesses again for coming here and certainly bringing your 

knowledge base to this subcommittee. 

If I understand blockchain correctly—and I am in a steep learning curve—but it will revolutionize tracking of goods somewhat like 

GPS revolutionized navigation. So I think this is world-changing 

technology that we’re dealing with. 

I’m going to ask some questions for five minutes. Mr. Chiaviello, 

I’ll ask you first. 

In your testimony you detailed the issues your company and others are experiencing with counterfeit goods in the supply chain. 

What sort of impacts, either quantitative or qualitative, has this 

had on your business and on your customers? 

Mr. CHIAVIELLO. Well, on our business it certainly affects us on 

the order of millions of dollars a year. I mean, it’s hard—it’s difficult to put an exact number on it because we don’t know what 

we don’t know, but based on what we can determine from what we 

have investigated, as I say—and it’s growing. You know, five years 

ago, we didn’t really see this problem, and—so now it’s—it’s a million-dollar problem, whereas five years ago, well, it barely existed. 

The direct effect is not only does it—it costs us—it costs us 

money, it affects our competitive situation as these pirates or counterfeiters, they don’t bear the cost burden that we do in making 

sure that our products comply with federal regulations, so they can 

compete against us with a much lower cost structure. Our products 

set the—sort of set the price level. They come in just slightly underneath us, but because they don’t have our cost structure, it’s 

very, very profitable, which is what’s driving this business. 

Chairman ABRAHAM. So building off that, Mr. White and Mr. 

Rubio, how can your companies, with the application of this 

blockchain technology, help a company that Mr. Chiaviello represents? What can you guys do to combat that counterfeiting of 

goods? 

Mr. WHITE. Well, the platform we’re putting together between 

Maersk and IBM initially is one that helps identify the sources of 

information. So we use blockchain to help establish who are the— 

it’s a blockchain solution which is permission blockchain, which 

means that the entities that are involved are known to each other. 

And if the documents created from origin are sent to anybody else 

who are party to that transaction, if any of those documents 

change, it’s immediately identified that the document has been 

changed. And that could work from a change from when it goes to 

a customs authority or another government agency, when that’s 

been certified and the document is therefore sent down the path. 

So the ability to identify any changes in the documentation of 

what’s been shipped or any new entities that are involved in the 

party is immediately identifiable. So it helps identify the potential 

risk of fraud I think much easier, much earlier, and for everybody 

involved in the transaction to see one document is different from 

what was—the rest of the documents that they had seen up to that 

point. 

Chairman ABRAHAM. Mr. Rubio? 

Mr. RUBIO. Yes, and what we can envision is an environment 

where you can have a provision—permissioned network of traders, 
66 

and in this permissioned network of traders, you could have the 

different actors in the supply chain exchanging information. And as 

the exchange information, fraud can, you know, immediately be detected via the technology, and then those that fall outside could be, 

you know, scored negatively and removed from the networks, et 

cetera. So the technology really lends itself to advancing the internet—intellectual property rights protection, and we see that as a 

possibility going forward. 

Chairman ABRAHAM. And Dr. Maughan, could DHS potentially 

leverage this blockchain as a tool to combat the importation of 

counterfeit goods? 

Dr. MAUGHAN. Yes, certainly. In fact, if you look at the Customs 

and Border Protection, they are just one person and one organization involved in the whole transaction, along with companies like 

Maersk and UPS and others. And so that’s the work we’ve been 

looking at is in the pilot phase. How could we use the blockchain 

technology to detect counterfeit goods more easily? 

Chairman ABRAHAM. Are you seeing any obstacles that we as a 

federal government are throwing up in your path to prevent you 

from using that technology in an efficient and productive way? 

Dr. MAUGHAN. To date, no. As I pointed out in my testimony, the 

one area that does concern us is a shortage or lack of standards, 

and so we’ve been focusing on specifications towards that end, and 

I think when we have a full network of standards that everybody 

can live by, then I think that will be even more useful for all involved. 

Chairman ABRAHAM. Thank you, Dr. Maughan. 

I now recognize Ms. Bonamici for 5 minutes. 

Ms. BONAMICI. Thank you very much, Mr. Chairman, and thank 

you to all of our witnesses for your testimony today. There is certainly a wide range of possible applications for blockchain technology, some quite fascinating, for example, safeguarding ownership of creative works or voting technologies. There’s a lot of potential there. 

These and other possible uses are important, but the health and 

safety of Americans is of course something that is of paramount importance. So I’d like to focus on one particular area where 

blockchain may offer benefits, namely drug abuse prevention. I recently had a series of community meetings in northwest Oregon 

about the toll of the opioid epidemic on our families and our communities, and one issue that came up not infrequently was the influx of dangerous drugs from foreign countries, especially fentanyl 

from China. So it seems that blockchain could be used to prevent 

the importation of illicit drugs or the unlawful diversion of legitimate medications. 

Parcels that are shipped from foreign countries are a major 

source of illegal substances, including opioids and, as I mentioned, 

fentanyl. I understand that Homeland Security, particularly customs, is as concerned about this as I am. And I know there are several legislative proposals to combat this problem. For example, one 

of the bills I’m cosponsoring is the Synthetics Trafficking and Overdose Prevention Act that would require foreign and postal operators to provide electronic data, enabling Customs and Border Patrol 

to better target and screen high-risk shipments. 
67 

So, Dr. Maughan, might there be uses for blockchain technology 

in verifying that imported goods are legal and do not pose a threat 

to public health or safety? And are you aware of efforts or discussions specifically around using blockchain to prevent illegal drug 

activity, whether it be the interdiction or preventing diversion? 

Dr. MAUGHAN. So I am unaware of any activity to date that is 

looking at this issue, but I certainly believe that it has a very interesting opportunity for us. As I mentioned in my testimony, there 

are other pilots that we are looking at with CBP to address counterfeit goods. We just haven’t had the conversation about the 

opioids, fentanyl, and other illicit drugs in those types of pilots. 

In the end, the goal here is to be able to track goods, not only 

the—you know, using industry providers as well as government 

participants, and I certainly believe there’s opportunity to look at 

that in the same example. 

Ms. BONAMICI. I think that would be some welcome work. Also, 

Dr. Maughan, of course food safety, which you mentioned and has 

been mentioned in the testimony, the FDA and Centers for Disease 

Control recently warned us all about E. coli contamination in romaine lettuce, for example. Would you be able to comment on how 

blockchain might improve that ability to ensure food quality and 

safety? And you mentioned pilots. I know there’s a couple of pilots 

going on and trial projects regarding seafood traceability, working 

with organizations so that customers, when they’re shopping for 

fish, can know exactly where that came from and trace that. So 

do—are you aware of that work? 

Dr. MAUGHAN. I’m not aware of that work but one of the other 

witnesses mentioned mangoes. There have been—and avocados. 

There have been other examples of cases where we’ve tracked food 

and goods, and I certainly believe the application areas are unlimited as to how we would use the technology to provide food safety 

for the Nation. 

Ms. BONAMICI. Mr. Rubio, I understand that UPS already requires a kind of electronic registration data from foreign shippers. 

Could you comment on whether blockchain could play a role in this 

area? 

Mr. RUBIO. Yes. Most definitely, we see the opportunity, again, 

leveraging the potential of blockchain to provide permissioned access for the exchange of information and then leveraging the information that’s—that can be collected to perhaps maybe score customers and then provide access to, you know, secure supply chains. 

Ms. BONAMICI. Terrific. And I don’t know who wants to weigh in 

on my next question. As we are talking about this great potential 

from blockchain, we also understand and talk about in this committee a lot quantum computing and whether the development of 

blockchain is really keeping up with what’s happening with quantum computing. I know NIST, the National Institute of Standards 

and Technologies, is looking at this, sort of incorporating some 

quantum cybersecurity measures along the way because everything 

I’ve read said that that is the big threat eventually that if we don’t 

keep—as we’re developing blockchain if we don’t keep up with 

what’s happening with quantum computing. Does anybody know 

about the work that’s going on there as blockchain is developing? 
68 

Are we developing these quantum-resistant algorithms? Anybody 

able to answer that? 

Dr. MAUGHAN. I’ll give you a shot and try, but—so if you look 

at the blockchain technology, at its core it’s cryptography and the 

ability to secure the data, and the concern is that our cryptographic 

systems eventually can be broken using quantum computing, and 

so the concern is how do I make my cryptographic algorithms at 

the core of the blockchain technology something that can be quantum-computing-resistant or at least allow the cryptography to be— 

to last a lot longer. And the concern is if our adversaries are using 

quantum cryptography to break our cryptographic algorithms, they 

would actually be able to break the blockchain technology. 

Ms. BONAMICI. Certainly something we can discuss further. 

Thank you. My time is expired. I yield back. Thank you. 

Chairman ABRAHAM. Mrs. Comstock. 

Mrs. COMSTOCK. Thank you. 

Mr. Chiaviello, as a mom and a grandmother now, your testimony about the challenges of knockoff children’s products was certainly troubling. So how might the use of blockchain technology 

help a company resolve this problem? And what other tools might 

be useful in helping companies and consumers combat counterfeiters particularly in this area? 

Mr. CHIAVIELLO. Well, I think the primary goal would be to control access, in other words, as the term has been used, 

permissioned access. And so when a consumer is—well, let me give 

you an example. Teethers are regulated by the Food and Drug Administration and require that any factory where a teether is manufactured has to be registered with the Food and Drug Administration, has to pass extensive health and safety evaluations. And then 

once the factory passes those tests, the factory is given a number. 

And that number then identifies the source of all the teethers that 

originate from that factory. And so that number can act as a stamp 

of approval like USDA approval on hamburger, on beef products 

and go with the product, using a blockchain technology to assure 

the consumer that the product they are buying is an authentic 

product. In other words, it’s been—I don’t want to say certified but 

it’s—originates from a certified location. So I think there’s great opportunity for—in that respect. 

Mrs. COMSTOCK. Okay. Thank you. And then I guess for other 

witnesses, if any of you work—does any of your work involve coordinating with NIST or leading any type of collaboration with 

other industries regarding standards for blockchain technology? 

Mr. WHITE. From Maersk and IBM, we’re looking to embrace existing standards, industries, wherever there are standards available so that we can make sure that we adopt and embrace it. In 

our view, to have a platform that really helps to accelerate the 

digitization of global trade, we need to be completely open and neutral, and we need to take advantage of having common standards 

around the world. 

So here in the United States we’re looking into the BiTA, which 

is trying to look at some of the standards. Also, we’re working with 

other agencies as they develop across the global economy to understand where those opportunities are. Also, we look to be embracing 

not only DHS and CBH here—CBP here in the United States but 
69 

also other customs and WCO to understand what direction they’re 

going because we think it’s really important, this interoperability. 

We need to make sure that everybody can avail themselves of this 

platform and exchange information in a transparent way using 

blockchain that provides that immutable trust. 

Mr. RUBIO. Yes, and UPS is also involved in the BiTA Alliance, 

and we’re clearly interested in advancing standards in blockchain. 

Mrs. COMSTOCK. Okay. And have your companies recognized any 

cybersecurity benefits in the development and implementation of 

blockchain technologies across various applications? That’s for any 

of you. 

Mr. WHITE. At this point, we’re still in the pilot program of putting together the platform and again waiting for regulatory approval, so it’s a little bit early on in that, but I think it was mentioned using cryptography and having a permission blockchain, I 

think it’s a 32-character alphanumeric sequence that has to be attached to the previous documents in there. So, so far, it seems that 

it’s pretty trustworthy in terms of getting that information across 

there. It’s a little bit early to see about the broader applications for 

cybersecurity, but that’s obviously high on our list at Maersk Line, 

concerning some of the challenges we went through last year, and 

just make sure that we continue to keep that high on our agenda 

because it’s critical to global supply chains. 

Mrs. COMSTOCK. Okay. Anyone else on that? Okay. 

Well, I’ll yield back, Mr. Chairman. Thanks. 

Chairman ABRAHAM. Thank you, Mrs. Comstock. 

Dr. Marshall? 

Mr. MARSHALL. Thank you, Mr. Chairman. Let me first of all 

brag on my two grandsons, so congratulations to Mrs. Comstock on 

a new granddaughter. 

Mrs. COMSTOCK. Yes, I have a grandson and a granddaughter—— 

Mr. MARSHALL. Well, good for you. 

Mrs. COMSTOCK. —this past year. Yes, so I—— 

Mr. MARSHALL. We’ve both got two each up here. This doesn’t 

count against my time does it? 

I want to start with Mr. White. How important is NAFTA to 

Maersk? 

Mr. WHITE. Well, NAFTA is important to all of us. I think, as 

Maersk, we’re obviously supporters of global trade and trying to 

make sure that, you know, there’s opportunities to promote that. 

In terms of North America, South America, most of our shipments 

are international by water, so there’s some that’s moving via that 

route, but most of that’s moving overland borders. So we of course 

are interested in monitoring that, and we—— 

Mr. MARSHALL. Okay. 

Mr. WHITE. —just support whatever the regulations are and 

make sure that we can make trade as easy as possible under the 

regulations that are available. 

Mr. MARSHALL. Mr. Rubio, how important is NAFTA to UPS? 

Mr. RUBIO. It’s very important. Canada’s one of our largest trading partners, and of course we move lots of products between 

United States, Canada, and Mexico. So we’re also involved with 

CBP on some pilot work related to NAFTA. 
70 

Mr. MARSHALL. Okay. Yes, China—I mean, Canada actually is our largest trading partner. We export $280 billion a year to Canada, 230 to Mexico. China is a distant third at about half of those. 

Blockchain technology, as we’re modernizing the NAFTA agreement, do you feel like we’re doing anything to help empower you 

all? Either one, Mr. White, Mr. Rubio, are we taking blockchain 

technology—have you had any conversations with Administration if 

you’re allowed to what would allow you to better use blockchain as 

we modernize this NAFTA agreement? 

Mr. RUBIO. We’re—yes, as I mentioned, we’re working right now 

with CBP on a pilot related to NAFTA, and it’s progressing very 

well. We think that will have a pilot up and running in the fall 

time frame, so I think we’re getting great support from CBP in this 

area. 

Mr. MARSHALL. Great. And, Mr. White, anything to add there? 

Mr. WHITE. Yes, likewise, we’re working with Canadian customs 

and CBP here in the United States to try and look at the documentation that’s required for a certain specific commodity segment 

of that and to see if that can be applicable there and can we actually make that a standard elsewhere. So we’re early days, but we’re 

working together on that. 

Mr. MARSHALL. So there’s a spirit of cooperation in anticipation 

of this technology from this Administration? 

Mr. WHITE. Absolutely. 

Mr. MARSHALL. That’s great to hear. 

Dr. Maughan, let’s talk to you for a second. One of my biggest 

concerns is I go to all my different meetings, different committees, 

talk to different folks, is when it comes to cybersecurity, let alone 

blockchain technology is—I’m worried that every department is 

doing their own thing. Would you—is DHS the leader on these 

issues? Would—is there some cooperation between your department and the other departments in the Administration, whether 

it’s blockchain technology or cybersecurity? 

Dr. MAUGHAN. So I’ll answer from two sides. From the science 

and technology side, there’s a lot of coordination and collaboration 

going on in the interagency and particularly in the blockchain area 

where we share what’s going on across the different agencies. You 

have NSF and NIST and others also funding research and development in blockchain. 

On the operational side, DHS does have the lead on the cybersecurity, as well as with the NIST cybersecurity framework and it’s— 

how it explains cybersecurity. So both operationally and R&D, DHS 

has a strong position there. 

Mr. MARSHALL. Is there a cooperation with the military in what 

they’re doing in these areas with DHS? 

Dr. MAUGHAN. That I’m aware of on the research and development side there is because I’m involved in it and we—— 

Mr. MARSHALL. Okay. 

Dr. MAUGHAN. —do things from an interagency perspective. I 

don’t know the details on operationally. I would expect there is, but 

I don’t know the details. 

Mr. MARSHALL. Okay. It’s been said—I’ll stick with you Dr. Maughan—is that China steals $400-$600 billion of our technology 

every year through copyrights or computer software, whatever it is, 
71 

explain to me again—you all have touched on it. Go a little bit 

deeper. How can blockchain technology impact that? And be as specific give me examples if you could. 

Dr. MAUGHAN. Sure. So the—if you look at how a blockchain 

works and the ability for organizations or individuals to put their 

cryptographic stamp on the data, right, now, if I use it in that way, 

you as the Chinese or others, wouldn’t be able to counterfeit 

and—— 

Mr. MARSHALL. So Nike would have their unique encryption, and 

you knew if you got—— 

Dr. MAUGHAN. Right. 

Mr. MARSHALL. —a pair of Nike shoes from someone that doesn’t 

have that unique encryption, you as a producer would—I mean, not 

as a producer—you as a wholesaler in America would understand— 

would see that? 

Dr. MAUGHAN. Correct. And if it’s not—if it doesn’t have the correct data, doesn’t have the correct integrity on the data, then someone would be able to tell that you’re not the legitimate producer or 

supplier. 

Mr. MARSHALL. Okay. Thank you. I can ask one more question 

if you’re not quite ready. 

Tell me—you know, fentanyl is one of my big concerns. Fentanyl 

is 100, 1,000 times more potent than the typical opioids coming 

across. You can make this in your garage. It’s coming over by the 

truckloads from China, I’m told. How can blockchain—you know, 

UPS or DHS—maybe—Mr. Rubio, you’re the UPS guy. Any 

thoughts how blockchain could impact that? 

Mr. RUBIO. It’s a tricky issue because it’s ultimately what gets 

packed in a carton, and I think that becomes a challenge for us. 

Blockchain certainly provides the framework for us to begin investigating the contents and then perhaps scoring transactions and 

then eliminating them from the supply chain. So the framework is 

there, and it’s an area that will require work—— 

Mr. MARSHALL. Can we trace it backwards, you know, perhaps 

back to the origin—— 

Mr. RUBIO. Absolutely. 

Mr. MARSHALL. —a little bit better? 

Mr. RUBIO. Yes, using the same techniques that Dr. Maughan explained, that’s exactly the way we would go. 

Mr. MARSHALL. Thank you, Mr. Chairman, and I apologize I 

went over. I yield back. 

Chairman ABRAHAM. That’s quite all right, Doctor. 

Mr. Hultgren, 5 minutes. 

Mr. HULTGREN. Thank you, Chairman. Thank you all. I appreciate you being here. This is a really important, interesting, challenging topic and grateful to learn from you all. And I’ve also been 

grateful I’ve been able to see a number of great ideas coming out 

of Illinois, my home State, with many investments in the financial 

sector coming out of Chicago. There are also some efforts at the 

state level to look at many innovative solutions to state and local 

government with the Illinois Blockchain Initiative, a consortium of 

state and county agencies who issued their first report just in February. 
72 

I’ve also been encouraged through the work that I’ve been able 

to do on the Tom Lantos Human Rights Commission on the way 

in which new technologies like blockchain can better secure and 

validate supply lines in conflict regions, as well as better manage 

the disbursements of aid through the federal government and other 

NGOs. The transparency of something like a distributed ledger can 

also give new tools for individuals to finally assert basic property 

rights when governments deny the rule of law or access to the legal 

system in other countries. 

If I can address first, Mr. White, Mr. Rubio, and Dr. Maughan. 

Previous witnesses before the Committee have detailed how 

thoughtfully inserting blockchain, inappropriate projects already 

funded would ensure we stay at the forefront of this transformative 

technology. Have you taken this approach to analyze blockchain’s 

potential for appropriate projects? And in your opinion, what are 

some examples of where it would be appropriate or not be appropriate to implement blockchain technology? And what’s the distinction of where it would work likely and where it would likely not 

work? 

Mr. WHITE. Well, from a Maersk Line perspective, one of the opportunities we see are global supply chains. So global supply chains 

are some of the most complex multiparty networks in the economic 

landscape today. So, by definition, you have a number of companies 

that are involved, transmitting sensitive information for the cargo 

across different channels. I think blockchain is especially suitable 

for that because you can enable, through this permissioned 

blockchain, the entities that should have a right to see and have 

access to that information, to have access to that information, to 

make sure that they can see it, and trust that the information has 

not been tampered with or modified in any way, shape, or form. 

And then you can tie the visibility of the sort of end-to-end, in-transit information and have that simultaneously with the documents 

or the data on that to actually enable smoother supply chains but 

also in a trusted immutable way. So we think for that blockchain 

is very much fit for purpose, and I think it can be a game changer 

because it provides that immutable trust through the distributed 

ledger, through smart contracts, and through a permissioned 

blockchain, so we think there’s a great opportunity. 

Mr. HULTGREN. Great. Mr. Rubio or Dr. Maughan? 

Mr. RUBIO. Yes. From our side, really it’s about reducing friction 

in the supply chain and streamlining the exchange of information. 

So what blockchain provides is the opportunity to digitize transactions and then share that information through the network. And 

as we can collect information near real-time, that will just speed 

up supply chains and provide, you know, fast-moving product. 

Mr. HULTGREN. Okay. Dr. Maughan? 

Dr. MAUGHAN. As I mentioned in my testimony, there are other 

additional ones from a DHS perspective in addition to the supply 

chain, but certainly the ones we’ve been working on is the data and 

sharing of imagery on the border with CBP in order to be able to 

share that and ensure the authenticity and integrity of that data. 

And I think that has tremendous value as we think about IOT devices that are doing—that are collecting data and sharing that 

data. We’ll be able to protect that. There are others that have to 
73 

do with passenger processing and other aspects that I think our potential uses as well. 

Mr. HULTGREN. Yes. Any that jump to mind that you feel like 

this just wouldn’t work? It’s just not the right place for this? I 

guess if that comes up, let us know because we definitely respect 

your thoughts and opinions. 

Let me move on in my last minute here again to Mr. White, Mr. 

Rubio, and Dr. Maughan. Do you collaborate or coordinate with any 

domestic or international standards bodies on blockchain? 

Mr. WHITE. Yes, so from a Maersk Line and IBM association, 

we’re working together and looking to work with BiTA here in the 

United States and also looking to work with other entities around 

the world. We think it’s very important to have sort of a common 

definition of standards where standards exist, and where standards 

don’t exist or need to be improved, we want to work collaboratively 

with others to make sure that we get the right standards so that 

we can all—make sure that we can talk more easily through a 

digitized environment going forward. 

Mr. RUBIO. UPS is also a member of the BiTA, and we’re very 

interested in driving standards to improve this technology. 

Dr. MAUGHAN. And we are actively involved with both the World 

Wide Web Consortium, the W3C, and OASIS, the Organization for 

Structured Information Systems for some of our standards work as 

well. 

Mr. HULTGREN. Great. My time is expired. Thank you again for 

your work. Thank you, Chairman, for holding this hearing. 

Chairman ABRAHAM. Thank you. Mr. Beyer? 

Mr. BEYER. Thank you, Mr. Chairman. 

Dr. Maughan, you—in your briefing you said, and I quote, ‘‘Most 

organizations don’t need a blockchain.’’ Can you tell us why most 

organizations don’t need a blockchain? 

Dr. MAUGHAN. So we’ve worked through kind of a process to ask 

some questions of people about what they’re trying to do, and they 

oftentimes don’t need a blockchain. They can solve their problems 

with a database or other accounting instruments. And it takes a 

little bit of a discussion to get to a point. A lot of times people are 

thinking just in a single organization they’ll use a blockchain. Well, 

they don’t really need one. The blockchain, its attributes include 

multiple parties, trust relationships, and different types of sharing 

of information and storage of information. And you really need to 

actually walk through a certain set of questions to decide whether 

you really need a blockchain. And in a lot of cases, people don’t 

need a blockchain. 

Mr. BEYER. You know, there have been lots of anxiety the last 

couple of elections—and not just 2016—2004, 2008 about the security of voting machines, and there’s a move to online voting but 

only if it’s secure. Is voting someplace where blockchain might be 

relevant or is this like again a place where there are other simpler 

technologies? 

Dr. MAUGHAN. I think we’re early days. I don’t know that we’ve 

done the real diligence that we need to look at that, but I actually 

believe that voting is probably not a place where we would use 

blockchain technology. 
74 

Mr. BEYER. Would every voter have to have their own blockchain 

key and—— 

Dr. MAUGHAN. Right, well, the question is, is who am I sharing 

my vote with? I mean, the only person that I really want to share 

my vote with is my local voting establishment, and so I think the 

complexity there is even worse than what we have today in just 

paper in normal elections. 

Mr. BEYER. Thank you. Mr. Chiaviello, you are—I very much 

empathize with the problems of your company. I’m an automobile 

dealer, so counterfeit parts have plagued me for more than 4 decades. But are any of the companies that you represent now pursuing blockchain technology? And do—on the other hand, if you 

complain about reselling the counterfeits through a big company, 

an Amazon, do they have to be a participant in the blockchain with 

you to make this work? 

Mr. CHIAVIELLO. I—we are not pursuing blockchain at this point 

directly, but it would appear that the retailer, the Amazons of the 

world, would have to be participants in blockchain technology. And 

we would have to be participants as well. As we see it, where this 

is going is that the blockchain, the key to a blockchain would be 

like a digital hologram or an equivalent to a trademark or a watermark that you might find on paper identifying the product itself as 

an authentic, legitimate product. That would have to be established 

by someone like us, the designer/manufacturer, but then it would 

have to pass through the entire supply chain, and ultimately, we 

would need a method for the consumer to be able to verify that 

that product is a legitimate, authentic product. 

Mr. BEYER. Interesting. Mr. White, you have your—you had global perspective with Maersk obviously, and I strongly believe, just 

based on this committee’s interest, that America should take the 

lead on blockchain innovation research. But we have—we see what 

a lot of the other nations are doing. China recently launched what 

they call the Trusted Blockchain Open Lab. Dubai says it will be 

the world’s first blockchain-powered government. Singapore is exploring it. Russia’s state-run bank Sberbank announced it’s going 

to team up to do blockchain for document transfer. The European 

Union launched its E.U. Blockchain Observatory and Forum. 

Where is the United States compared to the rest of the world in 

terms of our blockchain leadership in research? 

Mr. WHITE. Well, I think the United States is leading in lots of 

ways on blockchain. Maersk and IBM are coming together for our 

collaborative effort that we are seeking regulatory approval in different authorities around the world to launch this global 

digitization platform I think is evidence of the largest marine 

transport container shipping company in the world and the technology giant of IBM that is a leader in blockchain coming together 

to have some innovative uses of blockchain. 

And it’s not—I would say blockchain is not a solution looking for 

a problem. It is specifically fit for purpose for a global supply chain, 

so when we talk about this large, distributed network, multiple 

parties transmitting sensitive information across not only organizational but also geographical boundaries, having some way to do 

that in a secure manner I think helps facilitate trade. I think it 

helps to certainly identify fraud much earlier in the process, which 
75 

is a significant disincentive to it. And I think we can create safer, 

better, more efficient supply chains by deploying this technology. 

And I think the United States is right in the forefront of that. 

Mr. BEYER. Thank you. Mr. Chairman, I yield back. 

Chairman ABRAHAM. Thank you. Mr. Loudermilk? 

Mr. LOUDERMILK. Thank you, Mr. Chairman. And first of all, I 

want to thank the Chairman for holding this hearing. I’ve kind of 

felt a little bit like a voice in the wilderness on blockchain—excuse 

me—after spending 20 years in the—20-plus years in the IT industry. And I’ve often said for the last couple of years if we can get 

over the stigma of cryptocurrency and look at the technology beneath it, it could be a solution to a lot of our cybersecurity and data 

protection issues. 

And so I appreciate the Chairman having this hearing. I was 

very excited when I saw it because I think we’re beginning to make 

some progress from this side of the dais in looking at this incredible technology. 

Mr. Chiaviello, you talked about counterfeit and knockoff products as a problem, the sale and distribution of those. Can you 

elaborate a little bit how the sell and distribution of these counterfeit goods makes it difficult and costly to police and enforce IP 

rights, intellectual property? 

Mr. CHIAVIELLO. Yes. The big problem that we’re facing now is 

that the—the pirates, the knockoff companies are now located overseas, and we have no way of identifying them. They establish an 

online store with typically a fake name and no identifying or contact information. The—if they have a domain name, it’s hidden behind a proxy server, privacy proxy, and so we have—we or the consumer have no way of identifying where that entity is located. 

Products that are shipped into this country, often they use fake 

addresses. Return addresses on the packaging are fake, and so we 

and the U.S. consumer is essentially left without a remedy. 

There’s—as you know, to bring an action in a federal court or even 

a state court, you need personal jurisdiction over the seller. 

Mr. LOUDERMILK. Right. 

Mr. CHIAVIELLO. And if we don’t even know who the seller is, 

much less where they’re located, we cannot get personal jurisdiction, and any default judgment would be essentially valueless trying to enforce it. 

Mr. LOUDERMILK. What would be the long-term consequences of 

failing to address the issue both to business and to the consumers? 

Mr. CHIAVIELLO. Well, it puts domestic companies at a financial 

disadvantage. We’re competing with people who don’t incur the cost 

for the R&D, don’t incur the cost for the regulatory compliance. 

And at the least it limits our growth. We’re not as—we cannot be 

as big company as we should be based on this type of foreign unfair 

competition. And to the extent it continues, it threatens domestic 

industries. 

Mr. LOUDERMILK. Okay. Thank you. Let me steer a little closer 

back to Georgia with our good corporate partner from Atlanta. Mr. 

Rubio, you’ve stated or actually wrote that blockchain could make 

large multinational companies such as UPS more efficient and 

could, and I quote, ‘‘leave them better equipped to handle the continued growth of e-commerce.’’ Can you elaborate a little bit more 
76 

on the e-commerce aspect of that and how it can help these companies be more efficient, as well as more secure? 

Mr. RUBIO. Sure. The promise of blockchain is that it allows for 

the digitization of transactions within the supply chain. And in the 

e-commerce space, oftentimes documentation is required to clear 

customs around the world. And so what blockchain can do is it can 

provide the vehicle for us to digitize transactions, collect that information, and make it simpler for the consumers and then eliminate 

this friction in the supply chain. So by posting information in real 

time to the supply chain, data can be shared among the different 

players, and that would streamline the flow of goods. 

Mr. LOUDERMILK. What’s the benefit to the consumer? 

Mr. RUBIO. The benefit to the consumer is that they can receive 

their product quicker without any interruption. 

Mr. LOUDERMILK. All right. Thank you. Mr. Chairman, I yield 

back. 

Chairman ABRAHAM. Thank you. Fascinating subject, so we’re 

going to have another round of questions here. 

I’m sure volumes have been written on the efficiency of both 

Maersk and UPS as far as moving goods, phenomenal companies. 

But, Mr. White, in your testimony you said that blockchain technology could increase global trade by up to 15 percent. That’s a 

phenomenal figure, and certainly we want to move that forward. 

One barrier to the widespread adoption of blockchain technology is 

the linking of the physical object to the digitization. Can you 

guys—Mr. White and Mr. Rubio—can you all elaborate as to how 

we can actually make that happen, how we can make those physical dots connect? 

Mr. WHITE. I think it’s well-cited. Actually, during our evaluation 

of supply chains, we looked at some of the most sort of complex 

supply chains, as I mentioned. You have a challenge of both the 

physical end-to-end transport of the goods, which is one thing, and 

the visibility of the events that—the real-time access of that information as to where that container in our case is physically located 

at any one point in time and then the disconnect that we see from 

a paper-based documentation flow, so linking the two of them together with digitization so you have the opportunity to have more 

real-time visibility as to where a shipment is. 

So with our platform we have a shipment—shipping information 

pipeline, so we can actually see more events of what’s happening 

with that container, everything from when it’s empty for loading to 

when it’s stuffed to when it’s back to the terminal facility to when 

it’s loaded on board a vessel and onto any train shipment through 

customs clearances on both ends, endgame delivery, but also having the capability with this platform to have digitize documents. As 

Mr. Rubio has said, it enables us to have them in a structured way 

in a format that the government agencies require so that they can 

actually process them. So you have the capability of having them 

both together. 

In our supply chain evaluation, the one shipment of avocados I 

mentioned was I know is a 34-day end-to-end transit from when it 

was actually farmed at the farm and then put to the truck to be 

loaded into a container until it would end up being delivered. In 

that 34 days, 14 days, two weeks of it, it was sitting there waiting 
77 

for documentation for processing. So you’ve got an opportunity to 

actually improve supply chain cycle times and the efficiency, as I 

mentioned, over 200 individual exchanges of document and information. With the certifications that were required, they actually 

are stamped by one authority and moved by courier by motorbike 

to another authority for another stamp and then to the port so 

you’re physically moving documents instead of transmitting electronically. 

Chairman ABRAHAM. Mr. Rubio, do you want to weigh in on 

that? 

Mr. RUBIO. Sure, yes. The big challenge of course is making the 

physical world connect with the information world, and that really 

is a key challenge that will need to be overcome in order to achieve 

the ends that you’re asking about. 

But there are technologies that can speak to the data like RFID, 

as I mentioned, and potentially even x-ray technology. So x-ray 

technology, you know, the possibilities exist for interpretation of xrays to understand what’s actually in a carton and then leveraging 

that information with what’s physically been communicated by the 

different players in the supply chain can then further support the 

validity of what has been claimed on the transaction. So those are 

kinds of techniques that can be used to link up the two. It’s a very 

tricky issue, but that would be how it could possibly unfold. 

Chairman ABRAHAM. All right, thank you. Dr. Maughan, we have 

consistently heard that in order to effectively foster the adoption of 

blockchain solutions to supply-chain problems, there must be a 

common set of standards, and we’ve addressed that somewhat here 

today that are globally recognized. How can such standards be promulgated and adopted? 

Dr. MAUGHAN. First is the development of those standards, 

which we’re working on with some of our partners, but then I think 

it is—it’s an education game. As you can tell, we’re fairly early on 

in the blockchain world, and it becomes up to companies like 

Maersk and UPS as they use it to educate others. And I think we 

are in a leading position within the world that we the United 

States can take a leadership role and continue to push blockchain 

and educate people on the use of it. 

Chairman ABRAHAM. So you agree that the United States should 

lead that charge? 

Mr. RUBIO. I certainly believe we should take a leadership role. 

I don’t know if we’re going to be out in front because you can’t do 

a blockchain by yourself, right? 

Chairman ABRAHAM. Right. 

Mr. RUBIO. I mean, what we want to do is have this conversation 

both government to government and have a conversation with our 

government partners so that they are also on board because it is 

a global community. 

Chairman ABRAHAM. Okay. Thank you. Mr. Beyer? 

Mr. BEYER. Thank you, Mr. Chairman. 

Mr. Rubio, you talked about how UPS is committed to 

blockchain, and you also talked about some of the obstacles. One 

of the things I read is that Visa right now can process 56,000 

transactions per second, but the Bitcoin blockchain is only about 
78 

five transactions per second. Do you see this transaction processing 

power an obstacle to making UPS effectively use blockchain? 

Mr. RUBIO. Well, I’m unfortunately not in a position to qualify 

any statements on Bitcoin, but certainly, the blockchain itself, we 

certainly see the capability to share information, streamline information, and process it in real time and absolutely by exchanging 

information rapidly, that will streamline the supply chain and 

allow trade to happen efficiently. 

Mr. BEYER. If you adopt blockchain, will UPS drivers be allowed 

to turn left? 

Mr. RUBIO. Hardly. 

Mr. BEYER. Okay. Dr. Maughan, one of the things that—you 

know, when we had our last blockchain technology, we got all excited for two hours and somebody pointed out that when quantum 

computing comes, that it goes so fast that they actually break the 

block chain keys. How soon do you see this coming? Do—does it 

make sense for us to make all this huge investment of blockchain 

if quantum computing is going to make it irrelevant once it arrives? 

Dr. MAUGHAN. You know, that’s a very good question, and I 

think we don’t know yet where—when quantum is going to be here, 

right? I mean, it depends on who you talk to. Quantum is 10 to 15 

to 20 years out, and there’s still I think a lot of research and development to be done even to get us there. And I think the issue is 

blockchain today can use cryptographic algorithms of today and 

still provide us the security and the privacy we need? I think we’re 

going to have to figure out how this competition, if you will, between blockchain and quantum, how that plays out over the next 

decade or two. 

Mr. BEYER. Blockchain at least is a lot more intuitive—— 

Dr. MAUGHAN. It is and—— 

Mr. BEYER. —than quantum entanglement and things like that 

so—— 

Dr. MAUGHAN. That’s right, a bit easier to understand. 

Mr. BEYER. So you have this beautiful education, a Ph.D. in computer science. The President still doesn’t have a National Science 

Director, head of the Office of Science and Technology Policy at the 

White House. Are you—should you apply? It would be the first 

computer scientist ever to be the White House Chief Scientist. 

Dr. MAUGHAN. I don’t think I can comment on that. 

Mr. BEYER. I’m talking to my friend here, the Chairman. I yield 

back, sir. 

Chairman ABRAHAM. Thank you, Mr. Beyer. 

Mr. Hultgren? 

Mr. HULTGREN. Thank you again, Chairman. 

Moving on to a couple other questions I had, so, first, I’m going 

to address this to Dr. Maughan. Other experts in the field have 

noted the potential opportunity for nurturing future blockchain 

projects within SBIR, the Small Business Innovation Research program. Do you see any other areas within the federal government 

that could help facilitate the establishment of blockchain projects 

or pilots, certainly within DHS but other spots as well? 

Dr. MAUGHAN. I think the applications are almost limitless, and 

I think the question is really up to the departments or agencies as 
79 

to how they try to address that. We have—from a science and technology perspective, we have taken a fairly good leadership position 

so far within the government. We are talking about other applications where blockchains might be usable, and we have also used 

our Silicon Valley Innovation Program to fund startup companies 

to look at some of these techniques and technologies. In fact, the 

pilot we’re doing with the Border Patrol on data imagery is with 

a startup company out of Texas. 

Mr. HULTGREN. Great. Thank you. Mr. White and Mr. Rubio, 

specifically with respect to collaboration and standardization, what 

are some of the lessons your companies have learned that will help 

you utilize blockchain technology at scale? 

Mr. WHITE. So in terms of lessons, I think this item of standardization is critically important. We need to understand what standards are out there. For instance, you know, if we look at just endto-end supply chains, UNC codes or the way that we define inland 

points varies depending on what geography you’re in, and then also 

are they specific enough to really nail down, you know, what the 

geography is that you’re—if you’re talking about multiple facilities 

within a common ZIP Code, for instance. So the ability to sort of 

embrace and tackle some of those challenges I think, as an industry, we have to do it. It’s something of course Maersk and UPS 

could do individually, but then if we’re both calling it something 

different, it makes it a challenge. So I think coming together, working through these advisory boards and these standards committees, 

I think it’s really important to prioritize what are the most important standards to get alignment on and how can we move that forward. 

And in addition to joining these established organizations between Maersk and IBM with our new platform we’re looking to establish an industry advisory board, you know, making sure that we 

have participants from ports, terminals, other carriers, inland carriers, customs entities if we can to make sure that we look at it 

from a collaborative multi-perspective position. 

Mr. HULTGREN. Thanks. 

Mr. RUBIO. And the lessons that I’m learning personally in this 

space being involved in some of these working committees, but as 

you sit through and you look at defining standards for how we’re 

going to communicate and collaborate via blockchain, there are 

painstaking issues over data that you will exchange. And so it’s 

fascinating to listen to the different players and their perspectives 

of what information would be useful to exchange and what information would not. So it is—in driving the standards, it’s not a trivial task but it’s an important task. And in the end, you end up with 

a very sound product. And my first-hand experience is that’s how 

we did it with CBP, and you guys should be proud of the work that 

they have done so far. 

Mr. HULTGREN. Absolutely. Thank you. One last question, again, 

Mr. White, Mr. Rubio, and Dr. Maughan. Given its jurisdiction over 

NIST, what can this committee do to ensure that the United States 

is cultivating a supportive environment for blockchain technology 

projects? Dr. Maughan, I’ll start with you. 

Dr. MAUGHAN. Well, I think certainly in our role within DHS, we 

work a lot with NIST and the roles there. They’ve published docu-
80 

ments identifying blockchain overview and how that all works, and 

I think just to continue participation in the standards community 

is an important part for NIST participation, and we’ve certainly 

been working with them on that. 

Mr. HULTGREN. Great. Thanks. 

Mr. WHITE. The interaction we’ve had with DHS and CBP has 

been very positive. We’ve been working with the E.U. CORE project 

for the last 18 months to try and understand how they’re approaching digitization, and CBP and DHS have been supportive of that. 

And then also as we’re developing our platform trying to learn from 

those lessons, that continued support and looking to how we can 

work with other partner government agencies, I think they have 

been very constructive in that process. 

Mr. HULTGREN. Great. Thank you all so much. I’ll yield back. 

Chairman ABRAHAM. Thank you. Mr. McNerney? 

Mr. MCNERNEY. Well, I thank the Chairman and I thank the 

panelists. 

Mr. Rubio, can you walk us through why blockchain technology 

is useful for identifying—for identity verification and why this is 

important for chain logistics? 

Mr. RUBIO. So it’s—it would be important for identity verification 

in that it would help secure supply chains. And so understanding 

who the actors are in the supply chain that are exchanging product 

or information would be critically important so that we can maintain security and it can also be leveraged for potential intellectual 

property rights types of issues. 

Mr. MCNERNEY. Good. Thank you. Mr. Maughan, is the U.S. 

Government currently using blockchain technology to mitigate cybersecurity threats? 

Dr. MAUGHAN. I’m not aware of actual deployed blockchain technology. As I mentioned in my testimony, we have a number of pilot 

deployments where we’re testing out some of the technology to see 

how it will be used and the scale at which we can use it. 

Mr. MCNERNEY. Are there any potential risks associated with 

using blockchains to reduce cybersecurity threats? 

Dr. MAUGHAN. I don’t know that there are that many risks. I 

mean, I think we’re—you know, when you start talking about cybersecurity, it is about the data and can I ensure integrity and authenticity? As long as the technology is implemented correctly, then 

I think the risks are—they’re mitigated by the technology itself. A 

lot of times in cybersecurity the problem is implementation and 

people implementing it incorrectly. 

Mr. MCNERNEY. I understand. I’m not sure which panelist to 

ask, but could someone discuss the energy implications of expanding applications of blockchain technology and how can it be mitigated? Who would be the right person to address that? What are 

the energy implications of blockchain—widespread application of 

blockchains? 

Dr. MAUGHAN. I believe your question is probably related to—if 

you look at from an energy standpoint, are you talking about computing power? 

Mr. MCNERNEY. Right. 

Dr. MAUGHAN. Yes. So if you look at the way cryptocurrencies 

are used—and there’s an awful lot of computing power in the back-
81 

ground of cryptocurrencies to actually make them work. And so 

the—I think the question and the discussion is about if I start to 

do large-scale blockchains, I now have computing infrastructure 

that I also have to operate. And the question is is does that make 

it a difficulty for a small business or someone else to ensure that 

they have the adequate power to do their blockchain technology? 

Because you do have to check. And there’s checks all along the way 

in the data to ensure that it hasn’t changed and that—and it is authentic, and so there is a computing infrastructure that goes along 

with this. It doesn’t just happen. 

Mr. MCNERNEY. So, I mean, what can be done to mitigate the energy usage implications of widespread application of blockchains? 

Dr. MAUGHAN. I actually believe you’re going to see companies 

like Maersk and UPS probably have their own large infrastructure 

from a computing standpoint. I think you have a potential for service companies to provide, which is what happens in the 

cryptocurrency world. There are what are called Bitcoin miners, 

and they run the infrastructure that does a lot of the calculation. 

Mr. MCNERNEY. Right. 

Dr. MAUGHAN. You could very easily see something similar in the 

blockchain world where someone else is doing—offering a technical 

capability to provide you a service and be the computing infrastructure if you are a small business. 

Mr. MCNERNEY. Mr. White, I have in my district the Port of 

Stockton. It’s the largest inland port on the West Coast. It’s the 

third-largest port in the State of California. What steps is your 

company taking to increase adoption of blockchain technology? 

Mr. WHITE. Well, we’re working with ecosystem participants 

from ports and terminals to major rail operators, so we’re already 

in discussion with four out of the seven class I railroads in the 

United States and also with trucking communities because we 

think by everybody participating in this new global platform, we 

have the capability of making it more visible in terms of the seamless and more efficient movement of cargo and, by using 

blockchain, make sure that those who are permissioned—it is a 

permissioned blockchain, so those who are party to the shipment 

can see the information; others cannot. And those that can see it 

can get better real-time information, so in terms of moving cargo 

efficiently through ocean or inland terminals, getting better visibility as to when cargo is available, will be available, and enabling 

more efficient use of the landside equipment that moves cargo between the ports and the shippers or the consignees and D.C.’s and 

warehouses. 

Mr. MCNERNEY. It sounds like a lot of advantage. 

Mr. WHITE. We think it’s a great utility for everybody. I think 

this industry has not really changed since the 1950s since 

containerization has come around, and I think this technology affords us an opportunity to look at things differently. And what 

we’re seeing is a lot of engagement from everybody involved in the 

supply chain because I think the industry is ready for change. 

Mr. MCNERNEY. Thank you. I yield back. 

Chairman ABRAHAM. Thank you, Mr. McNerney. 
82 

Well, once again, I thank the witnesses and the members had 

some great questions. Robert, tell everybody in Monroe, Louisiana, 

give them my regards. I’ll be home shortly. 

Mr. Rubio, is that your family behind you? 

Mr. RUBIO. It is, yes. 

Chairman ABRAHAM. I tell you, I’ve been watching those two 

young people. They are our future, and they have been listening intently, so they are our future blockchainers and quantum computer 

tacticians, so I appreciate their presence very much here. 

Mr. RUBIO. Thank you, Mr. Abraham. 

Chairman ABRAHAM. The record will remain open for two weeks 

for additional comments and written questions from members. This 

hearing is adjourned. 

[Whereupon, at 11:32 a.m., the Subcommittees were adjourned.] 
(83) 

Appendix I 

ANSWERS TO POST-HEARING QUESTIONS
84 

ANSWERS TO POST-HEARING QUESTIONS

Responses by Dr. Douglas Maughan 
85 
86 
87 

Responses by Mr. Robert Chiaviello 
88 
89 

Responses by Mr. Michael White 
90 
91 

Responses by Mr. Chris Rubio 
92 
93 

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