US Customs target non-compliant eCommerce and brokers

US Customs and Border Protection (CBP) is taking action to minimise the exploitation of the generous small package, or ‘de minimis’ environment. Seizing goods and enhancing enforcement efforts to hold brokers accountable, the CBP’s actions are unsettling the eCommerce and freighter markets, as the government considers action to fix the tax and data loophole.

The crackdown by the CBP began at the end of May, with a large seizure of goods and the suspension of six customs brokers, which led to some Chinese eCommerce sellers initially suspending air charter operations into the US.

The CBP seized 1,000 tons of goods related to shipments from the Chinese eCommerce retailer Shein, according to reports in The Loadstar and while the situation may have Chinese shippers nervous, we have not seen any obvious decreases in transpacific freighter flights or in China-originating flights.

The U.S. exempts ‘de minimis’ shipments from duties and formal entry requirements and the threshold was increased from $200 to $800 to facilitate trade and simplify customs procedures for low-value shipments, with Type 86 Entry in the Automated Commercial Environment (ACE) introduced on a trial basis in September 2019, to file the required dataset within 15 days of arrival.

Earlier this year CBP announced enforcement measures to prevent the importation of illicit substances, while compliance enforcement efforts brought to light violations including:

– Entry by parties without the right to make entry
– Incorrect manifesting of cargo
– Misclassification
– Mis-delivery ( e.g., delivery of goods prior to release from CBP custody)
– Undervaluation
– Incorrectly executed powers of attorney

CBP has suspended multiple customs brokers from participating in the Entry Type 86 Test after determining that their entries posed an unacceptable compliance risk.

Where we are now
Air cargo yields out of China and Hong Kong at the beginning of the year were up 45% compared to pre-pandemic 2019 and online cross-border consumer orders reached a scale where they were filling the equivalent of 90 Boeing 747 freighters out of Southern China every day.

New York-based Atlas Air recently disclosed it will operate two Boeing 747-400 jumbo jets for Shein and Temu to the United States, starting in the third quarter.

Canada’s Cargojet has agreed its own eCommerce fulfilment deal for services between Hangzhou and Vancouver on 767-300Fs, which began last month with three flights a week, but it could scale up, with the possibility of moving consignments overland to the US.

However, volumes from eCommerce platforms like Temu and Shein have been the main driver of strong demand, tight capacity and elevated rates from China to North America and Europe and if their access to the US market were diminished it will release capacity and potentially put downward pressure on rates.

The EU has designated Temu and Shein as Very Large Online Platforms (VLOP) which impose stringent rules and while it does not directly impact their logistics, compliance rules could impact demand, with certain items banned from the platform.

The EU is also proposing to end its €150 ($1§63) de minimis threshold from 2028.

Metro has been providing ocean and air services into the USA since 1981, providing national Customs Brokerage solutions, across all regimes, that keep U.S. importers and exporters of all types of product compliant and free of regulatory penalties.

We operate daily import/export air freight services, full load container departure on next vessel and weekly groupage services.

If you would like to review our services for the United States, improve your supply chain or reduce costs, please EMAIL our Chief Commercial Officer, Andy Smith.