DC Velocity - August 2018

BY TOBY GOOLEY, CONTRIBUTING EDITOR

GLOBAL TRADE MANAGEMENT
Strategy

Agencies are struggling to process a surging tide of time-sensitive e-commerce shipments while keeping tabs on security and regulatory compliance.

EARLIER THIS YEAR, WORLD CUSTOMS ORGANIZAtion (WCO) Secretary General Kunio Mikuriya spoke of e-commerce bringing a “tsunami of small packages to the doorsteps of customs administrations and other regulatory agencies around the world.” Mikuriya was not exaggerating.

Millions of international packages are shipped to consumers daily, and that volume is rising fast. E-Commerce Logistics in the United States, a 2018 report by the market research firm Armstrong & Associates, says cross-border e-commerce today accounts for 15 to 20 percent of the world’s online traffic. Growing at about twice the rate of domestic e-commerce, it’s expected to represent 22 percent of global online sales by 2020, the report says. The surge is straining customs operations and creating challenges for authorities around the globe.

WHO GOES THERE?

Historically, customs agencies have dealt with large-scale industrial transactions between established companies that are known to government authorities. But the Internet makes it easy for even the smallest businesses and entrepreneurs to sell their wares overseas. As a result, business-to-consumer (B2C) transactions often involve “one-off” orders shipped by companies or individuals that customs authorities may not know and that are bound for individuals who are also unfamiliar. This has made it harder for authorities to identify criminals and fraudulent activity, including duty evasion, smuggling, and improperly described goods.

Furthermore, e-commerce has created a new category of
casual buyers and sellers with limited knowledge of export/
import processes and regulations. Consequently, documen-
tation, product descriptions, and declared values for B2C
shipments often are incomplete or inaccurate.

In such circumstances, imports can be flagged for review and held up for hours, or even days. But e-tailers who compete on timely deliveries are anxious to keep orders moving. That puts pressure on customs authorities to clear shipments quickly, sometimes without sufficient staffing to handle the soaring volume, said Amy Magnus, president of the National Customs Brokers & Forwarders Association of America (NCBFAA) and director of customs affairs and compliance for customs broker A.N. Deringer, at the Coalition of New England Companies for Trade’s (CONECT) Northeast Trade & Transportation Conference in April.

THE DE MINIMIS DILEMMA

For U.S. Customs and Border Protection (CBP), perhaps the biggest issue is that many e-commerce orders fall below the de minimis value threshold. That means the shipment’s value is so low that it’s exempt from duties and only minimal information must be provided to CBP when the goods enter the United States.