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Improving your profitability by minimizing fulfillment costs and streamlining logistics is vital for any eCommerce business. On the other hand, when shipping your goods from overseas, such initiatives can become difficult.
These challenges can be attributed to customs duties and taxes, which make cross-border shipments much more costly. However, with Section 321, a law by the US Customs and Border Protection (CBP), these issues can be avoided.
To start, Section 321 is a law by the CBP that allows low-value shipments to be cleared through customs free of any taxes and duties, with less paperwork.
It states the de minimis value, which is the worth of a shipment of goods imported by a single person in one day that may enter the US free of any levies. This de minimis threshold was changed by the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA) from $200 to $800.
In short, Section 321 is a shipment type that allows your business to reduce the cost and increase the speed of cross-border shipping into the US, as long as it meets the following criteria:
As for its primary benefits, we’ll quickly walk you through them.
As it allows you to import products from overseas into the US duty-free and tax-free, Section 321 greatly reduces your international shipping costs. It also benefits your business as a whole, since it makes it more practical to produce or source your items from countries where the costs are less.
International eCommerce is huge. 57% of consumers, in fact, say that they have made an international online purchase online in the past six months. With Section 321, shipping for such purchases will be better optimized.
Section 321 lets you import your items and have them cleared through customs with less paperwork. It speeds up the cross-border shipping process, minimizes delays, and allows you to get your products to customers quicker.
Having all of the necessary details ready, like proof of value and consignee information, for your shipment is one way of ensuring a smooth trip through customs. Section 321 is also able to streamline the shipping process thanks to its Entry Type 86 Test.
This is a voluntary test that allows entries qualified for de minimis to be filed through an Automated Broker Interface (ABI). This ABI permits qualified participants to electronically file and import their data with CBP.
The advantages of the Entry Type 86 Test are:
Plus, with data and transactions being processed electronically, the Entry Type 86 Test accelerates the release of goods for its users. Messages about current information and issues are also sent to participants. Currently, more than 96% of all data entries are filed through ABI and it’s available to:
The previous benefits allow you to easily cater to the US market. It won’t cost as much and, as you can also speed up cross-border shipping, you can provide your customers with more affordable and faster shipping options.
It’s important to note, that Section 321 has various restrictions you should be aware of.
This limitation means you can only claim one Section 321 shipment per day, but it doesn’t mean that you can’t receive more than one shipment on the same day. Just make sure, that if you’re doing in-house shipping, you or your freight partner don’t make multiple claims on the same day.
A key point you should also remember is that shipments to business addresses aren’t covered by Section 321, which means you can’t make claims for anything similar.
The exemptions to duties and taxes that Section 321 provides are for goods with a fair retail value of less than $800 in the country of shipment. However, some goods aren’t covered. Here are some examples:
Don’t forget that you must provide proof of your products’ retail values. Also, to comply with Section 321, each shipment must also have consignee names and addresses.
Due to their economic trade war, the US has imposed import duties for products specifically from China. These Section 301 tariffs have increased levies on various items such as:
However, your shipment can qualify to be covered by Section 321 and exempted from Section 301 tariffs, so long as your products meet the de minimis value.
As for how Section 321 can be utilized, we’ve outlined various examples below.
Duty-free and tax-free customs clearance effectively reduces your cross-border shipping costs. This allows you to offer your customers cheaper shipping options, which is a vital aspect of eCommerce.
It plays such a huge factor that, in fact, 87% of online shoppers indicate shipping is the 2nd most important deciding factor for them when making a purchase, immediately after product price.
Section 321 shipments require less paperwork, minimizing any delays at customs. In turn, this means you are able to offer options where customers receive their orders much quicker, which can greatly benefit your business.
Speedy shipping also makes it easier for your business to land more online shoppers, especially with 27% of them saying they abandoned their online purchases because their orders wouldn’t be delivered quickly enough.
Not having to worry about duties and taxes allows you to manufacture or source your products overseas, for a lower price. In fact, compared to the US, manufacturing labor costs in countries like Mexico and China are significantly less.
Doing this streamlines your supply chain, allowing you to move your items quicker. For example, you can locate your warehouses and distribution centers:
With fulfillment taking place over shorter distances and manufacturing in cost-effective regions, you significantly reduce your expenses and shipping times.
Lastly, we’ll briefly take you through what a Section 321 claim typically looks like.
To be entitled to Section 321’s duties and taxes exemption, your customer’s order should have a fair retail value of $800 or less. Once their order is placed, it will be sent out for shipping.
If the shipment meets all of the requirements and has its details and paperwork in order, which the carrier will present to the border officer upon request, it should encounter no customs delays.
It should be able to enter duty-free, without formal entry, and will then be delivered to your customer’s chosen domestic carrier.
Finally, the domestic carrier is then responsible for accomplishing the order’s delivery. Afterward, you should receive a confirmation once your customer has received it.
Minimizing your costs and streamlining your shipping can make a huge impact on your business. Utilizing international shipping and trade laws like Section 321 is a great way of doing that.
It may get complicated, or sometimes daunting, but you don’t have to traverse it alone. MyFBAPrep works with SEKO Logistics to get our customers access to end-to-end services from Asia to the US — making Section 321 shipments so much easier.
MyFBAPrep customers can leverage Section 321 through SEKO thanks to the following:
What’s more, SEKO Logistics has a powerful compliance program at origin and destination. To learn more, get in touch!