Cargo Chat: EU, UK, Canada may be outpacing US on airfreight regulation

E-commerce shipments to the United States continue to climb as the fourth quarter approaches, with no sign of slowing ahead of the holiday peak season. [caption id="attachment_57144799" align="alignright" width="300"] Alison Layfield[/caption] While the boost has driven strong air cargo volumes throughout the year, de minimis thresholds are in question following U.S. Customs and Border Protection (CBP) warnings that, under current regulations, shipments containing illicit materials can fly under the radar more easily and forced labor practices are difficult to track. De minimis in the U.S. refers to a regulation that states that shipments valued at less than $800 can be imported without tariffs, and therefore with less scrutiny, according to CBP. Online retailers Shein , Temu , Alibaba and Amazon have taken advantage of this regulation to ship low-cost e-commerce goods to the U.S. in quantities that have “quadrupled in recent years,” according to an Aug. 8 release from the U.S. Senate Committee on Finance . While tightening these regulations to reduce-high-risk shipments is valuable, it may hurt competition in the long run by disrupting established supply chains, increasing costs for consumers and hampering the competitiveness of U.S. businesses, Alison Layfield , director of product development at technology shipment solutions company ePost Global , told Air Cargo Next . Layfield shared her insights about the long-term implications of changing de minimis regulations with Air Cargo Next . What follows is an edited version of that conversation. Air Cargo Next : What has led to governments recently looking to change de minimis regulations? Alison Layfield : E-commerce business grew significantly after and during COVID. Volumes have quieted down somewhat since COVID, but they've [overall] been on the rise. So, e-commerce is definitely growing . And I don't see that changing. I've been with the company for 15 years, and one of the major focuses that we have with our customers is on, not only the logistics, but also on customs clearance and knowledge. I have seen so many changes over the years. So, [the U.S. tightening de minimis regulations] is no surprise. I think they're just following the same suit as many countries who have already made changes. The U.K., with Brexit, breaking away from the [ European Union ], they've eliminated their threshold for tax. [Shippers] now have to be registered to ensure that they receive the import fees that should be being paid on the shipments that are entering their country from a foreign country. And I think it all boils down to making everything a fair playing field, because you have your businesses within a country trying to sell their clothing and textiles. And then you now have the worldwide market that you, as a consumer, can tap into, and some of these e-commerce companies have ... learned how to play the game. And by that, I mean, knowing the thresholds and reducing order sizes, putting orders into multiple packages to keep it below that de minimis , or just shipping it via a service where they know it's going to be less scrutinized. And so, the way to resolve this and what these countries have been focusing on is, let's either eliminate that threshold, so that anything that comes into the country is taxed and duties are applicable, or assess a fee. [Countries are also focused on] scrutinizing shipments more at customs clearance. It used to be, especially in the e-commerce world, if you go with a postal option, it's less likely to be scrutinized. But that’s not the case anymore. I think Canada is a perfect example, as well as the U.K. [and] EU. Now, the U.S. is paying attention to this. Air Cargo Next : Who does de minimis help or protect and who does it hurt? AL : This really just allows for a more equal playing field [even though] companies like Shein and Temu know how to skirt around having to pay what should be paid at import. And then you have your e-commerce companies that are doing everything by the book. They're collecting what they need at checkout, and they're remitting what they need to remit directly to the country, or they're paying it at time of import. And they're using a service provider that ensures that all of those steps are followed, and all fees owing are being paid where they should be. So, I think for the e-commerce companies that are doing things as expected and following those regulations, this is a good thing for them. But ... for the consumer, obviously [if de minimis is lowered], there's going to be higher costs. Manufacturers are not going to eat that cost. E-commerce companies may start looking at if they should start charging for shipping and handling. Air Cargo Next : Are there countries that are processing these shipments with greater efficiency than the U.S.? AL : I would say that the EU definitely has tightened things up and also Canada. Canada more recently introduced a new software and all of the customs brokers within the country had to jump on board and get their IT involved to switch over to this new platform. And, by doing so, they were able to introduce an inspection on ground shipments that are coming into the country. So, anything coming via truck into Canada used to clear at the border. ... If a truck came across the border, it would send advanced notice of what was coming in. That data would be uploaded to [the customs] system. And, for the majority of the shipments, nothing would be questioned. But the new system ... allows for randomly selected shipments for inspection. So, when the advance notice goes ... there’s an opportunity to say, “OK, we would like to see these 10 parcels.” And so that driver reports to a bonded facility, the parcels are offloaded, and then they go offsite to a Canada customs inspection. And then [the parcels] are inspected, and they're looking for the data quality. So, I think Canada and the EU are doing it well. [EPost Global has] really had to, you know, stay on top of the changes and internally make technical changes within our own system and software so that we can provide what's needed to our partners and in those countries to get the shipments cleared.

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