As we adjust with Covid-19, eCommerce shows no signs of slowing down. Based on data by the U.S. Department of Commerce, online sales were estimated to be 14.8% higher during the first quarter of 2020 compared to the previous year and made up for 11.5% of all retail sales.
With the continued growth in eCommerce sales, there has been a shift in how goods are getting through the U.S. border, adding pressure on customs brokers and freight forwarders to streamline operations and take care of escalating shipment volumes.
Section 321 allows many of these shipments to be processed as low-value to ease the entry/release process, increase United States’ Ecommerce import visibility, and expedite shipments.
What is Section 321?
The CBP came up with the Voluntary Section 321 Type 86 entry regulations late last year to fasten the flow of items. This gets rid of duties and taxes for shipments worth or less than de minimis amount US$800, per day, per person.
Merchandise shipments may get into the country on air, sea, and land through all entry ports, excluding goods imported via mail.
This is an Automated Commerce Environment (ACE) type of entry that streamlines the importation process for an estimated 1.8 million shipments with a value of less than $800.
Additionally, Section 321 expands the extent of imports that are qualified for informal entry like food items, cosmetics, and other goods regulated by PGAs.
Self-filers and customs brokers are eligible to use Section 321 Type 86 to submit entries via CBP’s automated Brokerage Interface that previously didn’t support small-package online sales.
What does this mean to you?
If you own an eCommerce store or a retail business in the U.S. and are looking to protect your bottom line from the rising freight costs, trade wars and high duties, you can simply do so by taking advantage of Section 321.
How to Declare Section 321
In many cases, goods worth equal or less than $800 will enter the country duty-free. However, should the shipment of your goods require an eManifest, here’s how you can indicate a Section 321 CBP order:
- Select “Section 321” in the eManifest
- Note down the number of goods
- Add details regarding the shipper, consignee, country of origin, and the value
- Submit your eManifest to CBP
To avoid penalties, it’s essential to ensure that your carrier doesn’t make more than one Section 321 claim a day.
Receiving a Section 321 Shipment
Upon the arrival of your shipment, customs officials will require you to have the bill of sale, valid identification, and an invoice before releasing the merchandise.
If you’re not the one picking the shipment, you can write a letter to the port director to allow anybody of your choosing to pick the goods on your behalf. Being specific in your letter will make the process of proving ownership seamless.
Should you choose to work on the process alone, the shipment will take 15 days at the port, after which it will be shipped to a warehouse. You’ll take care of the storage fees to have the goods released.
The CBP reserves the right to sell shipments that remain unclaimed for six months.
- Only one shipment is allowed per person per day
- You need to provide evidence of your items’ worth through the Bill of Landing (BOL), oral declaration, or a manifest with all BOLs
- Shipments that are consolidated and sent to a consignee are regarded as single importation. This implies that you can’t split a large order into other smaller shipments.
- Alcohol, cigars and cigarettes may be included in the exemption
- There’s no absolute tariff-rate quota given to merchandise of a class
- The merchandise shouldn’t be subject to anti-dumping duties
- High-risk goods may be denied entry
- Items shouldn’t require customs inspection
- The items shouldn’t be regulated by the FDA, NHTSA, CPSA, FSIS, or USDA
Section 321 Best Practices
To avoid penalties from multiple transactions in a day, we recommend the following shipment filing regulation tips:
- Identify the shipment whose Section 321 claim will be used every day.
- Have formal entries created on all your other entries
- Work with one customs broker to keep the filing of import or export transactions consistent.
- Develop solid communication lines with the team taking care of your logistics, including the customs brokers, carriers and freight forwarders.
Making Canadian Fulfillment Work for You
With increasing online sales and high customer expectations, knowing how section 321 works is crucial to entrepreneurs who intend to import low-value products into the United States.
Swimming through a ton of paperwork and regulations is definitely not pleasant, whether you’re for first-time or an experienced importer.
Of course, you don’t have to go through all the hassle to ensure that your shipment complies with Section 321 statutes alone. By taking advantage of Canadian fulfillment, you will enjoy all the benefits of not paying duties, without all the hassles of import paperwork, warehousing, and dealing with staff.
What is Canadian Fulfillment?
While I’m sure everyone is familiar with order fulfillment, right now you might be wondering what, exactly, is Canadian fulfillment. It’s a partner company, based in Canada, that would intercept your larger shipments of goods from China, for example, and then break those shipments down into individual orders to import into the US under Section 321.
By using Canadian fulfillment, import duties can be avoided, and you can offload a lot of the order fulfillment and returns hassle that many companies spend too much time and money managing for themselves.
For small businesses in the United States, importing directly from countries like China may seem like the most efficient way to do business, but as we’ve seen with Section 321, this is not necessarily the case. Import duties can be avoided if you are doing low value import shipments.
And for those doing values above $800, Canadian fulfillment is a strategy that at least has to be considered. With the potential to lower the overall cost of business and products for Americans, while at the same time reducing the overhead needed for warehouses, staff, and trucking, it’s almost a must to stay abreast of competition. Whether or not companies decide to use these strategies themselves, they will certainly have to compete with it.