One of the biggest worries for e-Commerce shippers going into the holiday season was the potential departure of the United States on October 17th from the Universal Postal Union agreement governing rates and services for small packages shipped between countries. In short – had the U.S. chose to leave, they would have had to negotiate bilateral rates with every country rather than the union’s agreed-to rate structure.
The President has made no secret that he feels that the rates were non-compensatory and wanted them to be increased.
The agreement reached between the U.S. and the UPU calls for the following:
- There is an increased speed for the phase-in of increased rates for inbound international bulky letters and small packages.
- Beginning July 1, 2020, member countries with inbound letter post volumes in excess of 75,000 tons will be able to opt-in and self declare rates.
- The approach favored and proposed by the U.S. – for all countries to immediately set their own rates – was roundly refused.
A key trade industry group, the International Mailers Advisory Group, said:
IMAG is pleased that the Universal Postal Union (UPU) was able to find a solution to achieve global remuneration reform that allows the United States to remain in the UPU, a 144-year old organization of which the United States was a founding member. By remaining in the UPU, the United States retains its important leadership role in the global postal system. Mailers and shippers will see no interruption in service through the critical holiday season and beyond.
For e-Commerce shippers, this likely will translate into an increase in inbound rates to the United States via the international mail system. However, there is an opportunity for an increase in velocity with the launch of CBP’s Type 86 entry pilot which will allow Kesco to electronically process inbound customs clearances of low-value shipments, speeding the parcels through the mail system to waiting recipients.
The United States and China are embroiled in a back-and-forth trade war that has seen duties imposed on nearly every tariff number in the book. Regardless of the list, importers whose goods were duty-free or even single-digit duty percentages have seen Section 301 duties imposed on those goods from 10% all the way to now 30% for nearly $250 billion in exports to the United States.
For importers bringing in large commercial shipments that are being broken down and distributed to individual consumers, there is a way to move the distribution process further upstream and take advantage of a regulation that in most cases means the Section 301 duties aren’t an issue.
In 2015, President Obama signed the Trade Facilitation and Trade Enforcement Act which, among other things, raised the de minimis on shipments to the United States from $250 to $800 per individual, per day. These shipments when they arrive with an express consignment operator can be declared on a manifest and be released by Customs and Border Protection and unless they’re flagged and held for further review or a physical examination, will move from plane to package delivery truck or Postal Service for delivery to a customer’s doorstep or mailbox.
The reason this avoids the Section 301 duties is that shipments moving through the express consignment process do not present for entry using the regular formal entry process – thereby avoiding the declaration of the additional HTS and payment of those duties.
Among other things, this means avoiding dramatic increases to continuous bond limits of liability and the underwriting, financials and additional guarantee instruments that would elsewise be required.
At Kesco Logistics, our eCommerce solution affords companies looking to direct ship consignments valued at $800 or less per day a vehicle to do so legally, efficiently and cost-effectively. For more information on how to ship your eCommerce orders to consignees and legally avoid paying Section 301 trade remedy duties, contact us today.