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How proliferation of e-commerce influenced US CBP’s e-commerce strategy and Section 321 data pilot

Worldwide e-commerce sales in 2022 will exceed $5 trillion for the first time, accounting for more than a fifth of overall retail sales and despite slowing growth, total spending will surge past $7 trillion by 2025. 

On the US home front, as per eMarketer, Amazon will account for 39.5% of all US retail e-commerce sales in 2022, or nearly $2 in every $5 spent online. In contrast, the next 14 biggest digital retailers altogether will make up just 31.0%, with the remaining 29.5% of the e-commerce pie going to everybody else.

Fun Facts: Amazon customers purchased more than 300 million items during 2022’s Prime Day (July 12-13 2022) reaching $11.9 billion in revenue, up from $11 billion compared to 2021. The company said it sold more Amazon devices during this Prime Day than any other and that Prime members saved more than $1.7 billion from shopping the deals. – Wall Street Journal

e-commerce influence and proliferation

Numbers like these put the emphasis on e-commerce in today’s world, especially since the onset of the COVID-19 pandemic, highlighting how consumer habits have changed with consumers spending more on goods than services empowered by the access to internet and online marketplaces. 

 

US CBP and CTPAT

The U.S. Customs and Border Protection (CBP) has identified e-commerce as a growing and significant segment of the U.S. economy for the past several years. The CBP is responsible for keeping terrorists and their weapons out of the U.S., while facilitating lawful international travel and trade using a comprehensive approach to border management and control, combining customs, immigration, border security, and agricultural protection into one coordinated and supportive activity.

Customs Trade Partnership Against Terrorism (CTPAT) is a layer in U.S. Customs and Border Protection’s (CBP) multi-layered cargo enforcement strategy aimed at strengthening international supply chains and improve border security in the United States of America through cooperation with the trade community. 

As per the CBP, “these advances in economic activity have led to increasing volumes of imports of small, just-in-time packages, creating inspection challenges for U.S. Customs and Border Protection (CBP). E-Commerce shipments pose the same health, safety, and economic security risks as containerized shipments, but the volume is higher and growing.” 

Transnational criminal organisations are shipping illicit goods to the United States via small packages due to a perceived lower interdiction risk and less severe consequences if the package is interdicted. Furthermore, new or infrequent importers often possess less familiarity with U.S. customs laws and regulations, which can lead to the importation of non-compliant goods. CBP must increase its ability to address the administrative and resource challenges this creates, particularly when coupled with the growing volume of e-commerce trade,” as per Kevin K. McAleenan, Acting Commissioner of U.S. Customs and Border Protection. 

The general public and trade community need to be made aware of these challenges facing the country and need to understand the requirement and responsibility to comply with customs regulations when importing goods. 

 

CBP’s e-commerce strategy

The CBP is working with partners and selected stakeholders in promoting their e-commerce strategy developed with the above challenges in mind. 

The strategy, which highlights private industry and foreign governments as key resources for the continuous assessment of the e-commerce environment in the USA emphasises enforcement initiatives, such as streamlining enforcement processes affected by increasing e-commerce volumes, leveraging enforcement partnerships with partner government agencies and foreign governments, and improving data collection from CBP targeting systems and field personnel. 

In 2018 when the e-commerce strategy was developed, the CBP saw an increase of over 1000% in the volume of e-commerce shipments in just one port compared to 1997 with an estimated US$ 25 million of predominantly informal and de minimis value shipments including shipments via mail packages by post, sea and rail. 

De minimis shipments refers to shipments imported into the USA under section 321 of the Tariff Act of 1930 which provides for an administrative exemption from duty and taxes for shipments of merchandise (other than bona-fide gifts and certain personal and household goods) imported by one person on one day having an aggregate fair retail value in the country of shipment of not more than US$ 800. 

With approximately 1.8 million Section 321 shipments being received per day, the CBP has been hard pressed in targeting and controlling Section 321 shipments, while still maintaining the clearance speeds the consumer expects to receive. These challenges are mainly due to the fact that the CBP does not receive adequate advance information in order to effectively and efficiently assess the security risk of the large number of shipments that arrive each day.

 

What is Section 321 Data Pilot

In line with the volumes handled and to address the challenges mentioned above, the CBP initiated Section 321 Data Pilot to test the feasibility of obtaining advance information from regulated and non-regulated entities, such as carriers, brokers, freight forwarders, and online marketplaces.

Online marketplaces could be a gold mine of data for CBP because they are internet-based entities that facilitate e-commerce by connecting third-party sellers with consumers and receiving and processing payment information from consumers, including receiving and processing payments on behalf of the third-party sellers.

The information that online marketplaces could provide include information relating to the party bringing the goods into the USA, the final recipient, detailed descriptions, and pictures of the goods along with unique identifiers of sellers.

This pilot will enable CBP to assess the ability of online marketplaces to transmit information to CBP that enables CBP to better utilise resources used in inspecting and processing these shipments and better understand the operation of online marketplaces.

BoxC an e-commerce logistics management platform, is one of 9 participants who are part of the CBP Section 321 data pilot. Although BoxC doesn’t have a legal relationship with the CBP like a customer broker has, BoxC has been invited to support CBP’s initiative as a non-traditional participant who have common links to the e-commerce market.

As an e-commerce logistics management platform catering to both e-commerce retailers and logistics service providers, BoxC is linked to many of the compliant companies that are willing to provide CBP with the information necessary to achieve the above objectives.

BoxC has also been invited to participate in the 2022 Trade Facilitation and Cargo Security Summit which is being held at the Hilton Anaheim in Anaheim, California between July 18-20.

Commenting on the pilot and the summit, Michael Pakula, the CEO of BoxC said, “It is great to see there are so many participants in the summit.

These companies are not there because they are bad actors, they are attending the summit because they are trying to understand what’s going on and trying to do the right thing. This is a space where companies are thinking about how they are going to collaborate even more with providers in their supply chain.”

“We should not be fighting the flow of the sea at the beach, all the changes that the CBP wants to implement, are coming,” added Pakula.

 

Conclusion

The Section 321 data pilot is a great step towards strengthening CBP’s ability to protect the health and safety of American citizens and the U.S. economy from non-compliant goods and players. This, combined with the e-commerce strategy will help in transforming CBP’s operations and help in advancing its four primary goals

1)    Enhance legal and regulatory authorities to better posture CBP and interagency partners to address emerging threats.

2)    Enhance and adapt all affected CBP operations to respond to emerging supply chain dynamics created by the rapid growth of e-commerce.

3)    Drive private sector compliance through enforcement resources and incentives.

4)    Facilitate international trade standards for e-commerce to support economic prosperity.

These measures will help in driving compliance, promoting cooperation domestically and internationally and build a strong trade posture in e-commerce, ensuring a shared economic prosperity for the future of the United States of America.


Michael Pakula - BoxC - e-commerce logistics management platformAbout the Author : Michael Pakula is the CEO of BoxC, an e-commerce logistics management platform built and designed for e-commerce in a globalized world.

Unlocking a global network with one technology platform to manage the compliance, processing, sorting, linehaul, customs clearance, taxes and duties, and last mile carriers.

Michael’s experience covers international logistics, online and traditional retail, and product sourcing.

Michael has extensive business and operational experience in China, Hong Kong, and Asia in general and has been involved in D2C shipping from the country of manufacture for over 10 years.

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