A crackdown by Customs officials in the US on cheap products mailed by online firms set up by China’s Shein and Temu is expected to spur delays and bottlenecks.
Customs and Border Protection said last week it suspended “multiple” brokers from a quick clearance programme for duty-free, direct-to-consumer imports, partly over concerns that contraband is sent into the country this way. Six companies are believed to have been affected.
The move is part of a CBP effort that includes increased inspections of such packages at US airports and reviews of electronic information submissions by customs brokers.
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“All ports of entry are being affected so there really isn’t a way to avoid delays,” Chad Schofield, co-founder of US-based e-commerce logistics platform BoxC.
Slowdown in trade worth billions
The crackdown comes as more than 1 billion packages, averaging around $50 in value, are forecast to arrive in the US this year driven by robust consumer demand for fast-fashion made by Chinese factories, among other things.
E-commerce powerhouse Shein, which is trying to expand its market share before going public, and Chinese-owned e-retailer Temu depend on the expedited clearance process, which is available for direct-to-consumer shipments valued at $800 or less.
US brokers handling those packages submit shipping information electronically to CBP, speeding up processing.
Customs brokers that participate in that program handle clearance for 62% of those shipments, an administrative burden that would otherwise fall on exporters or transportation firms, said Cindy Allen, CEO of consultancy Trade Force Multiplier LLC.
Shein could not be immediately reached for comment. Temu said its operations were unaffected.
Political factors involved
The CBP’s action landed amid intense election-year political pressure on the Biden administration to protect US businesses and stem the flow of illegal drugs into the country, said Brandon Fried, executive director of the Airforwarders Association industry group.
Some US lawmakers say the rules allowing duty-free imports on packages below $800 in value give e-commerce firms in China and other nations an unfair advantage over domestic retailers. Critics also charge that the administration has not done enough to stop the country’s deadly fentanyl crisis.
CBP said last week that the suspended brokers’ data entries “posed unacceptable compliance risk” and that “bad actors” were exploiting the regulations to move contraband, including materials to make drugs like fentanyl.
The agency did not name the customs brokers.
One of those affected, Illinois-based SEKO Logistics, filed a lawsuit with the US Court of International Trade on Saturday against the action. It claimed CBP failed to give it proper notice of the suspension, specify alleged violations or provide a way to remedy the situation.
SEKO told Business Insider in January 2023 that it managed transportation for Shein and other e-commerce clients. The company did not specify whether it handled electronic customs filings for Shein.
CBP also suspended SEKO from the agency’s Customs Trade Partnership Against Terrorism security programme, according to SEKO. Many Fortune 500 companies require their vendors to have that certification.
On Tuesday, SEKO said it won conditional CBP reinstatements for both programs.
“We are incredibly disappointed by, and strongly disagree with, the original decision by CBP,” SEKO CEO James Gagne said on Tuesday, adding that the company maintained a “99.999+%” compliance rate in the expedited clearance programme.
Other companies involved in that programme include UPS and DHL Express, who said they had not been suspended.
- Reuters with additional editing by Jim Pollard
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