As the world adjusts to life with COVID-19, the surge in popularity of online shopping shows no signs of slowing down. According to the U.S. Department of Commerce, ecommerce sales during the first quarter of 2020 were an estimated 14.8% higher than the previous year and accounted for 11.5% of total retail sales. At the ecommerce behemoth Amazon, North American sales for Q1 2020 increased 29% over last year to $46.1 billion, with international sales growing 18% to $19.1 billion.
The ongoing growth in ecommerce sales is driving a shift in how goods are crossing the U.S. border, putting pressure on freight forwarders and customs brokers to streamline operations to handle escalating volumes of shipments. Many of these ecommerce shipments are processed as low-value, Section 321 Type 86 customs entries in an effort to simplify the entry/release process, expedite shipments, and increase visibility into ecommerce imports for U.S. Customs and Border Protection (CBP) and Partner Government Agencies (PGAs).
What is Section 321 U.S. Customs Type 86 Entry?
To help manage the flow of goods, CBP introduced the voluntary Section 321 Type 86 entry on September 28th, 2019. This entry type eliminates duties and taxes for merchandise shipments valued at less than de minimis level of US$800, imported by one person on one day. Goods may enter the country by air, land, and sea through all commercial ports of entry (except for merchandise imported by mail).
This new Automated Commerce Environment (ACE) entry type simplifies the import process for the estimated 1.8 million package shipments valued at less than $800 that arrive in the U.S. each day. Plus, Section 321 Type 86 expands the number of imports that are eligible for informal entry, including cosmetics, food items, and other products typically regulated by PGAs.
Customs brokers and self-filers can use Entry Type 86 to submit low-value entries electronically through CBP’s Automated Brokerage Interface (ABI), which previously did not support small-package ecommerce.
So what does all this mean for freight forwarders and brokers?
automating customs clearance to drive revenue
With ecommerce volumes on the rise and the pandemic, trade wars, and rising freight costs threatening profits, customs brokers and freight forwarders must find a cost-effective and efficient way to keep pace with the accelerating stream of shipments and keep revenue flowing.
The good news is the ability to process high volumes of Section 321 Type 86 filings clears the path to revenue growth. The bad news is the standard manual “release from manifest” process is time-consuming, error-prone, and impractical for handling large volumes of this entry type.
Processing efficiency is the key to capitalizing on the financial and operational benefits of Section 321 Type 86 entries. Freight forwarders and customs brokers looking to use Type 86 filings to their advantage require a system that can automate and consolidate a high volume of transactions in a single filing to boost clearance efficiency. Solutions that can submit thousands of house bills on one master, automate rating, and enable automatic billing can further streamline operations for increased productivity.
EXPECT SCRUTINY
Section 321 Type 86 entries are subject to a higher degree of scrutiny from CBP, especially regarding accurate valuation. U.S. Customs is using multiple methods, including pricing comparisons, to ensure accuracy and verify that goods do not exceed the $800 threshold.
Adding complexity to the process, compliance for goods filed under Entry Type 86 involves multiple exceptions and exemptions. Certain types of goods are ineligible, including tobacco and alcohol products, goods requiring inspection or subject to quota, goods taxed under the IRS code, and goods subject to anti-dumping and countervailing duties (AV/CVD).
Given the intricacies of Type 86 eligibility and the need to maintain an audit trail for high volumes of low-value shipments, customs brokers and freight forwarders require an automated compliance solution that can flag exceptions, enable accurate record keeping, and demonstrate reasonable care. With technology on their side, brokers can leverage Type 86 filings to improve productivity and accelerate shipment clearance—all while helping their customers pay zero dollars on duties and taxes.
CUSTOMERS DEMAND VISIBILITY
In today’s digital world, customers expect continuous visibility into ecommerce shipments as goods move throughout the shipment lifecycle—and they’re leaning more on their logistics service providers to provide that insight.
To meet the needs of their customers, forwarders and customs brokers are turning to technology. Automated solutions enable end-to-end visibility for Type 86 shipments, from purchase order to the point-of-delivery, by sending in-transit updates and delivery and clearance status reports without the need for manual queries by user or customer.
Deploying a digital front-end to freight forwarding operations not only provides a convenient and efficient customer experience but can also improve internal operations and streamline previously manual processes, such as carrier rating, invoicing, and tracking.
USING SECTION 321 TYPE 86 TO THRIVE
With customs brokers and freight forwarders looking for ways to trim costs and boost the bottom line in the wake of COVID-19 supply chain disruptions and escalating ecommerce demands, the introduction of Section 321 Type 86 entries was a well-timed gift for importers bringing low-value goods into the U.S.
Although the sheer volume of ecommerce shipments poses both customs compliance and customer service challenges, the ability to automate the customs clearance—en masse—for these types of shipments creates an opportunity for growth. By using a robust solution to automate and consolidate Type 86 entries and digitally submit import data to ACE through ABI, customs brokers and freight forwarders can expedite clearance, cut costs, and improve operational efficiency and accuracy to create a streamlined customer experience. Is your organization maximizing the potential of Section 321 Type 86 entries yet?