The US is implementing a new round of crackdown on customs brokers handling billions of dollars in low-cost online shopping orders from China, which is likely to cause delivery bottlenecks and delays for businesses like Shein and Temu, according to experts in the industry who spoke to Reuters.
Last weekend, the US Customs and Border Protection (CBP) announced the suspension of qualifications for “several” intermediaries participating in the expedited customs clearance program for imported goods directly sold to consumers without taxes. Part of the reason is concerns about prohibited items entering the US through this method. While the agency did not specify the exact number, customs experts said they knew of up to six companies whose qualifications had been suspended.
This action is part of CBP’s efforts, which include increased inspections of such parcels at US airports and reviewing the electronic information submitted by customs brokers.
Chad Schofield, co-founder of the US e-commerce logistics platform BoxC, noted that “all ports of entry are affected, so delays are indeed inevitable.”
It is predicted that over 1 billion parcels with an average value of around $50 each will arrive in the US this year. There is a strong demand from consumers for fast-fashion low-cost products produced in Chinese factories.
Shein has been trying to expand its market share before going public. The e-commerce giant, along with the Chinese-owned online retailer Temu, relies on the fast clearance process. This process applies to shipments directly sold to consumers valued at $800 or less.
Cindy Allen, CEO of Trade Force Multiplier LLC, stated that customs brokers participating in the program are responsible for processing 62% of the clearance procedures for such goods, which would otherwise be handled by exporters or shipping companies.
Some US lawmakers argue that the provision allowing duty-free imports of parcels valued under $800 gives an advantage to e-commerce companies from China and other countries, unfairly impacting domestic retailers. Critics also accuse the government of not doing enough to prevent deadly fentanyl from entering the US, leading to a crisis.
Last week, CBP stated that the data submitted by the intermediaries whose qualifications for the expedited customs clearance program were suspended posed “unacceptable compliance risks,” with “bad actors” exploiting this channel to traffic prohibited items, including materials for manufacturing fentanyl and other drugs.
Illinois-based SEKO Logistics is one of the affected companies. The company filed a lawsuit against this action with the US International Trade Court last Saturday (June 1).
SEKO CEO James Gagne expressed on Tuesday, “We are very disappointed with CBP’s initial decision and strongly oppose it.” He added that the company’s compliance rate in the expedited clearance program is “99.999+%.”
According to SEKO, CBP also suspended SEKO’s qualification in the Customs-Trade Partnership Against Terrorism (C-TPAT) program. Many Fortune 500 companies require their suppliers to obtain this certification.
Other companies participating in the expedited clearance program include UPS and DHL Express, which stated that they have not been suspended.
Shein and Temu may face similar situations in the European Union. Under current EU regulations, parcels purchased from non-EU countries worth less than €150 (approximately $163) are exempt from tariffs.
The German Retail Association, HDE, has been lobbying the German government, arguing that this exemption has led to a significant increase in small parcels entering the EU through platforms like Shein and Temu, while customs authorities lack the capacity to inspect all products for compliance with EU regulations.
This could ultimately lead to a comprehensive reform of EU import taxes, ending the duty-free policy for low-cost parcels.