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Some U.S.-bound packages are being held by Customs and Border Protection for extended periods — and sometimes discarded — as shippers try to adjust to the end of the de minimis exemption, package carriers say.
On August 29, the Trump administration eliminated “deminis,” a trade tool that allowed imports under $800 to enter the U.S. tax-free. Without this exemption, low-cost packages are now subject to stricter tariffs and entry requirements before entering a carrier’s domestic delivery network.
In an emailed statement to Supply Chain Dive, UPS told Supply Chain Dive that changes in U.S. import regulations have resulted in cases where packages are unable to clear customs due to missing or incomplete information. The carrier did not specify how many packages are held up at customs, but said its brokerage team clears more than 90 percent of packages on the first day of arrival. FedEx and DHL Express also cited changes in trade rules as a barrier for some cross-border shippers.
Rathna Sharad, CEO and founder of FlavorCloud, a cross-border shipping platform, said, “All this is a consequence of sudden changes in minimums.
According to recent reports, customs anomalies after minimal work have led to surprise fees and unexpected cases of discarded packages for a wave of consumers. These charges could challenge importers’ efforts to keep customers happy as the peak holiday shipping season approaches.
Here’s what direct-to-consumer shippers need to know about potential customs restrictions, from carrier policies on handling rejected shipments to expert tips on reducing disposal risks.
A worker moves boxes of flowers before they are inspected by U.S. Customs and Border Protection agriculture specialists. Some shippers are struggling to comply with new import regulations, resulting in customs shutdowns.
Joe Rudel via Getty Images
How Top Shipping Companies Handle Customs Clearance Issues
While policies vary by company, UPS, FedEx and DHL Express all said they aim to ensure a smooth and consistent customs clearance process. Standard shipping shipments typically have 15 days to clear customs, after which disposal is one option to maintain CBP compliance, said Thomas Taggart, vice president of global trade at Passport, an international shipping and compliance provider.
UPS says that in cases of customs holdup, it makes several attempts to contact shippers to obtain the necessary information. If UPS can’t get that information to clear the package, the operator said two options are available.
“The package can first be returned to the original sender at your own expense,” UPS said. “Secondly, if the customer does not respond and the package is not cleared for delivery, it will be considered abandoned and we will dispose of it in compliance with US customs regulations.”
FedEx said it works with shippers to update customs documents in cases where information is incomplete or rejected by CBP officials. In cases where clearance remains an issue, shippers can return the package to the sender or request that the shipment be discarded.
“In these rare cases, recipients will be notified of the sender’s order,” FedEx said. This is not a common practice.”
DHL Express said in an email that it will not discard packages that have not been cleared by customs. Instead, it pushes to collect any missing data within 10 days. If unsuccessful, DHL Express will return the shipment to the origin.
“This timeframe allows DHL Express to process the shipment for export before the 15th day to ensure compliance with customs regulations,” the company said.
A DHL plane at Benito Juarez International Airport on December 23, 2020, in Mexico City, Mexico. DHL Express said it has seen an increase in shipments containing incomplete information for US customs clearance.
Hector Vivas via Getty Images
Tips to avoid customs failure
Shippers should work closely with their broker and carrier to ensure their import documents are completed correctly to limit customs issues, which many importers who previously rely on minimums struggle with, experts said. According to Sharad of FlavorCloud, key information required by CBP includes the 10-digit Harmonized System Commodity Code and the product’s country of origin.
Another common issue stemming from the end of the minimum is that US buyers are now designated as the importer of record for many cross-border shipments, according to experts. This puts a heavy burden on end customers to clear goods and pay the costs incurred, which can encourage some to abandon their purchase and attempt a refund instead.
“Shippers may only participate on the front end to make sure the carrier has the buyer’s contact information, or the buyer may contact the shipper to inquire why their package was delayed,” Nick Baker, Kroll’s trade and customs leader, said in an email. But once the package is in the US awaiting customs clearance, it is really the buyer’s responsibility to work with the shipping company to clear the goods and tender any duties owed.
To avoid these scenarios, foreign merchants should work with a third-party customs broker to manage clearance on behalf of customers, especially when using express carriers to move goods, Baker said. Non-US shippers also have the option of registering as a foreign importer to avoid designating the end customer as the importer.
“If you’re a legal shipper and you want to streamline the process, you have to set up and establish as a non-resident importer, and that way you can streamline the process,” Taggart Passport said.
Editor’s note: This story was first published in our Logistics Weekly newsletter. Register here
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