Cross-border shipping is a significant part of the global supply chain, enabling businesses to send goods to distant locations. The International Chamber of Shipping reports that nearly 11 billion tons of goods are shipped to different destinations each year.
While these numbers look enticing for retailers, the industry has abundant challenges to deal with. Complex customs clearance processes are one of them. Documentation, regulations, taxes, delays, and penalties can make things hard for retailers.
Low-value shipments have a unique advantage when it comes to customs clearance. A low-value shipment refers to goods below a certain value threshold established by each country. Such shipments often have simplified customs clearance procedures with reduced duties and quicker processing times.
However, retailers dealing in low-value shipments must understand the nuances of customs clearance for such consignments. In this article, we will explain the concept and highlight the emerging restrictions retailers should be prepared for.
How Different Countries Handle Low-Value Shipments
Varying procedures and thresholds are applicable to low-value shipments being sent to different countries. With these “de minimis” thresholds, shipments are allowed faster customs clearance and duty-free entry in a country.
For example, the U.S. de minimis level was increased to $800 in 2016 from a meager $200. This threshold value is among the highest in the world. The European Union has a low-value threshold of €150, but it is only for duty exemption and does not apply to VAT.
These values vary according to the trade policy and economic conditions of a country. For retailers selling globally, de minimis thresholds have a direct impact on the costs of products and profits. Moreover, they also determine the cost their customers bear when ordering products from abroad.
Customers enjoy reduced costs if the de minimis value in their country is high. Conversely, they have to pay import fees if the low-value shipment threshold is low, making the product less attractive than its local alternatives. Therefore, retailers targeting specific markers must familiarize themselves with country-specific thresholds before exploring their markets.
Emerging Restrictions on Low-Value Shipments: A Closer Look
Understanding the local low-shipment thresholds is a good start for retailers selling globally. However, it is only half the work done, considering the evolving regulations applicable to global trade. As the e-commerce market booms, customs authorities want to increase the vigilance of these shipments to combat misclassification, fraud, and loss of revenue.
Stricter customs requirements for low-value imports in the US are an example, as they could result in shipping delays. Implemented from April 13 this year, these regulations require retailers to file low-value Entry Type 86 shipment data sets before or on arrival of the imported cargo. Earlier, they could do it within 15 days after the shipment’s arrival.
With the revised requirements, the consignment’s entry will be rejected if filed after arrival. Moreover, the cargo will be held until an appropriate entry type is made. Also, Entry Type 86 clearance will no longer be valid for the cargo, even if its value is below the threshold.
The new requirement has been implemented to address challenges related to the growing number of small packages imported into the US. Enhanced data collection and compliance checks aim to reduce the risk of underreporting and facilitate proper taxation. Retailers must ensure adherence by filing accurate, timely, and complete data sets with product descriptions and HS codes.
Challenges Retailers Face with Low-Value Shipments
Low-value shipments may be easier to handle for retailers, but they may also encounter some challenges. Here are a few that need to be considered:
- Delays may be inevitable even with the simplified customs clearance procedures applicable to low-value shipments. Customs authorities may demand additional documentation or conduct random inspections. These situations may slow down clearance and increase delivery times, eventually affecting customer satisfaction.
- Misclassification risks and penalties can affect retailers sending low-value shipments. They may have to pay hefty misclassification penalties if they fail to declare the value or type of goods. Besides penalties, they may face shipment holds or trading bans in specific countries.
- When it comes to low-value shipments, each country has unique customs regulations, making compliance a difficult task. Even a single mistake can lead to fines, delays, and added costs.
Best Practices for Retailers
Global retail challenges seem difficult to address, but the right approach can help business owners steer clear of them. Here are the best practices to create a seamless customs clearance process for your shipments:
Provide Accurate Documentation and Declaration
Smooth customs clearance requires clear, accurate, and complete documentation. Regardless of the value and destination of shipments, you need to ensure fulfilling the documentation guidelines. This includes correct classification of goods, accurate value declaration, and provision of all necessary details in customs forms.
Use Technology to Streamline Customs Clearance
Shipping documentation can be cumbersome, and there are chances of errors and omissions. Technology can help automate the customs clearance process. You can look for reliable technology solutions to ensure proper documentation, compliance, and tracking across multiple destinations.
Partner with Reliable Logistics and Customs Brokers
Retailers can reduce the chances of compliance issues, penalties, and delays by collaborating with experts. Find customs clearance services from providers with expertise and experience in international shipping. With experts looking after documentation and regulations, you will not have to worry about delays and penalties.
Stay Updated on Regulatory Changes and Thresholds
Global regulations surrounding low-value shipments frequently evolve with the changes in the global economy and business landscape. For example, Switzerland abolished the industrial customs duties for products under Chapters 25–97 in January 2024. Retailers must stay informed about changes to avoid unexpected challenges and remain compliant.
Dealing with low-value shipments is a wise move for retailers involved in international e-commerce. It enables them to avoid taxes and lower product prices for their buyers. In the long run, it means faster shipping, lower costs, higher revenues, loyal customers, and a branding advantage.
However, retailers must be aware of the evolving customs requirements and restrictions to make the most of this opportunity. Also, they must adopt these best practices to stay compliant with customs rules and guidelines.
