Two CBP pilot programs have seen over 300 million filings since they began in September 2019. Photo credit: Shutterstock.com.
Two US Customs Border and Patrol (CBP) pilot programs focused on inbound e-commerce goods are providing the agency with shipment-level visibility to help identify high-risk imports and speeding up the clearance process of shipments with a declared value of less than $800.
CBP launched the so-called Section 321 data and the Entry Type 86 pilots in 2019 as part of a larger strategy around e-commerce aimed at addressing potential risks posed to US consumers by a growing volume of imported small parcels, including counterfeit goods and tainted food products.
The Section 321 data pilot allows CBP to accept shipment-level information directly from online marketplaces and match it with the data received from traditional sources such as ocean carriers to better segment risk, according to Laurie Dempsey, director for trade policy and programs for the CBP. The pilot is currently limited to nine participants: Amazon, eBay, Zulily, FedEx, DHL and UPS, PreClear, XB Fulfillment, and BoxC Logistics.
The Entry Type 86 pilot, which is opened to a much wider range of participants including e-commerce shippers, freight forwarders, and customs brokers, allows for entries valued at less than $800 — also known as the “de minimis” threshold — to be filed via the Automated Broker Interface (ABI) for clearance according to the CBP website. De minimis refers to the maximum value of a shipment of merchandise imported by one shipper on one day that may be imported free of duties and taxes.
Since the pilots began in September 2019, there have been 118 million Section 321 data filings through January 2021 and over 200 million Entry Type 86 filings for the same period, according to Dempsey, with some participants experiencing over 90 percent fewer holds and Type 86 participants experiencing faster clearance times. Prior to the pilot, filings for these types of shipments were submitted manually.
“The pilots are yielding significant CBP and private sector time and cost savings,” Dempsey said in an email to JOC.com.
The results of the pilots, both of which will continue running through the end of August, will be integrated into a new shipping documentation filing process through a notice of proposed rulemaking (NPRM). The new process will leverage findings from the pilots to collect data about the nature and origin of e-commerce shipments, said Dempsey.
Drawbacks to pilots
Jill Hurley, director of US consulting for customs broker Livingston International, described the number of pilot filings as “impressive,” adding that the pilots are “helping to facilitate the drive of international e-commerce into the US.”
However, there are a few drawbacks for both shippers and customs brokers to the Entry Type 86 pilot, according to Billie Graves, import operations implementation manager at forwarder and customs broker Shapiro.
“To ensure that filers do not exceed $800 per day, only one shipment per day can be cleared under this pilot,” said Graves. In other words, if a shipper has more than one shipment that combined equals the de minimis of $800, one shipment will have to wait until the next day to be cleared. “Also, customs brokers participating in this pilot have to be listed as ‘importer of record’ on customs documents,” Graves said.
If the customs broker has to be listed as the importer of record, Graves expects more entries to shift to FedEx and UPS because the parcel carriers already act as the importer of record on behalf of their e-commerce customers. Some customs brokers are hesitant to take on the liabilities associated with being named the importer of record instead of the shipper. An importer of record technically takes ownership of the shipment ensuring all documentation is completed on time and accurately and is also responsible for paying any customs duties or fines.
Dempsey said the majority of Section 321 pilot filings are from air freight. However, for shippers that utilize the United States Postal Service (USPS), “using ocean freight allows parcels to clear customs commercially and enter the US as USPS’ lower-priced Parcel Select or Priority Mail ground service, which makes this combination a less expensive and more cost-effective option,” Kate Muth, executive director of the International Mailers Advisory Group, an advocacy group representing the US international mailing and shipping industry, told JOC.com. Ocean freight was added to the pilot in December 2019.
However, with capacity and equipment shortages keeping average container spot rates from Shanghai to the US West Coast above $4,000 per FEU, the cost of ocean freight services may outweigh any cost savings on inland transportation, essentially forcing shippers to use even more expensive air freight services. The average spot rate for air cargo from Shanghai to North America has jumped 152.8 percent year over year to $6.07 per kilogram as of Feb. 8, according to the TAC Index.
Regardless, Muth questions whether customers would even be willing to wait for e-commerce shipments to arrive via ocean freight, which typically takes weeks as opposed to days on an aircraft.
Brian Bourke, chief growth officer for SEKO Logistics, one of only a handful of global forwarders certified to handle both air and ocean shipments under the Entry Type 86 pilot, believes they will. It comes down to economics, Bourke told JOC.com. “Customers will not care about transit times if they are buying goods that they are either unable to find in their home country or they can find at a much cheaper price in China,” he said.
Contact Cathy Morrow Roberson at [email protected] and follow her on Twitter: @cmroberson06.
