Posted On April 8, 2019
Recent changes to Section 321 and the announcement that the United States may withdraw from the Universal Postal Union agreement have put shippers on notice that their world is changing—quickly.
To learn more about those changes, we interviewed William (Bill) Sweeney, Director of Business Development for Ram International. Bill has more than four decades of logistics experience with the United States military, DHL, and now Ram International.
Could you explain the Section 321 program?
Section 321 is an exemption to the Tariff Act of 1930, which itself is part of the Title 19 of the United States code that regulates customs clearance. The section allows for goods valued at $800 or less to enter into the United States duty and tax free and without formal entry. It’s a great way for importers to save time and money.
That’s the simple explanation–but there is more to it. If you’re looking for a good resource to learn more about Section 321 and transportation law in general, Cornell’s law school has some great information. You can find the link here.
A few years ago, the federal government and customs made some changes to section 321. Can you give us a bit of background on those changes? How have those changes impacted small businesses and other shippers?
The biggest change allowed the value of allowable imports to increase from $200 to $800, which allows bigger-ticket items to be brought into the country. In addition to that, small to mid-size businesses that manufacture their products outside of the United States now gain an additional fulfillment channel that does not require maintaining inventory here in the U.S. That would also promote a direct relationship with their customer, rather than going through an intermediary. There is also the reduction or elimination of local storage and handling costs—and the list can go on and on.
Manufacturers and parcel consolidators in other countries—most notably China—can also use the changes as a selling point if they have an established relationship with a dedicated Section 321 processing partner.
What role do the major selling platforms (Amazon, Wish.com, Alibaba, etc.) play in this story, if any?
Small to mid-size sellers have varying experiences with these platforms when it comes to providing timely tracking data, delivery timeframes, and competitive costing. It will always be up to the sellers—unless they are also fulfilling through the site—to use delivery solutions that support these requirements if they want the exposure of selling on these high-traffic sites. The best way to do that is to choose a solution with high data integrity and full accountability to the parcel level.
Some of the platforms are probably looking at their own domestic inbound solutions due to recent increases in postage costs and Customs Manifest requirements. Many of these conversations will be driven from the final mile carrier level. So, either the carrier or platform owner should be asking the same questions in their analysis of a Section 321 provider.
Looking at the overall situation with these types of imports, massive growth in Section 321 Imports is highly probable.
And what does massive growth mean?
To me, saying massive growth is more of a warning to the inbound infrastructure system owners that need to support it. Section 321 originates with international inbound passengers who wish to declare their foreign purchased goods upon returning to the United States. That is the process that United States Customs is primarily designed to support. That volume is a far cry from the tens of thousands of ecommerce parcels now being imported under Section 321. Customs is catching up. As it does, shippers would be wise to prepare for potential changes that allow U.S. Customs to provide its excellent service to this sector of ecommerce. Working with a partner that understands the current situation and is prepared to flex based on future requirements will pay dividends long term to shippers and consumers.
Is there anything on the horizon with the Postal Service or Customs that shippers should know about?
Besides increasing rates, accurate manifest data will be especially critical to understanding the performance of any solution that shippers use to deal with this new reality.
Does the Flat World family of companies offer solutions for shippers that directly address some of these challenges?
Absolutely. In addition to the extensive experience our Logistics teams provide on international inbound and domestic transportation, we also offer:
Air2Post, a Section 321-managed clearance solution.
Expert inbound freight management.
Integrated final mile carrier solutions.
A team of experts who will keep you informed, updated, and ready to take advantage of changes to postal rates, Section 321, and any other developments that impact shipping.
Any final words for readers?
I have been speaking with many of my industry friends and past colleagues. There is evidence industrywide of a “ramping up” to react to changes caused by current solution cost increases as well as developments like America’s review of its membership in the Universal Postal Union. There are major industrywide changes going on that can be viewed as scary to many.
But it doesn’t have to be scary.
Partnering with freight forwarding and customs experts like the team at the Flat World family can lead to amazing opportunities for shippers—and we look forward to helping our customers take strategic advantage of a changing shipping and customs environment.