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US Customs is stepping up inspections of Chinese e-commerce shipments

Posted on by darion

The recent increase in inspections of e-commerce shipments from China by U.S. Customs and Border Protection (CBP) has led to significant airport congestion, delays and suspension of several flights, particularly affecting major e-commerce players such as Shein and Temu.

The attack led to significant operational disruptions. “All freighters arriving at LAX from mainland China, many of them carrying shipments from Shein and Temu, are being sent directly to bonded warehouses for full inspection,” a source at LAX said. These inspections revealed numerous illegal items, including fentanyl, drug production equipment, and misdeclared values ​​in order to meet the de minimis threshold.

The resulting arrears resulted in congestion at customs warehouses and delays in the handling of e-commerce shipments. With approximately 100 freighters a day carrying approximately 100 tons of e-commerce cargo, each inspection process is significant. As a result, some planned high-frequency flights to Chicago and New York were suspended.

A major shipper confirmed that CBP is reviewing cargo documentation and descriptions “very carefully,” signaling an attempt to tighten inspections. Sources indicate that while shipments from Hong Kong are not being checked, the U.S. remains focused on flights from mainland China.

The complexity behind the trial

Contrary to assumptions about a sudden protectionist move by the US government towards Chinese e-commerce giants, the reality is based on the enforcement of existing trade regulations. In particular, Art. 321 of the Tariff Act of 1930 (Smoot-Hawley) exempts shipments with a value equal to or less than a certain threshold from customs duties and formal entry requirements. This threshold was raised from $200 to $800 under the Trade Facilitation and Law Enforcement Act of 2015 (TFTEA), signed by President Obama in 2016, which aims to facilitate trade and simplify customs procedures.

However, other countries have moved in the opposite direction, reducing de minimis values ​​to subject more low-value shipments to duties and taxes, leveling the playing field with domestic retail channels.

Entry type 86 and its implications

The introduction of Type 86 Entry in the Automated Commercial Environment (ACE) in September 2019 allowed Section 321 datasets to be filed within 15 days of their arrival. Earlier this year, CBP highlighted enforcement challenges related to low-value shipments under this type of entry, including the importation of illegal substances such as fentanyl, counterfeits, intellectual property rights violations, and goods produced through forced labor. Violations detected included unauthorized entry, incorrect cargo manifesting, misclassification, erroneous delivery, underestimation and improperly executed powers of attorney.

To address these challenges, CBP announced that, effective February 15, customs agents will be required to submit complete, accurate and timely data sets, including full product descriptions and HS codes, on or before the arrival of goods.

Industry response and future prospects

Increased inspections have made the air transport industry nervous. “Temu has a large number of places booked until the end of the year and it is starting to get very annoying,” commented the charter broker. The uncertainty has prompted some mainland Chinese carriers to temporarily hold freighters to ensure shipments are fully inspected before leaving for the U.S.

Carriers such as CMA CGM Air Cargo that were planning to start flights from China to the US may have to delay their launches. Sources suggest the United States is unlikely to stop these thorough inspections soon, especially after the discovery of fentanyl and drug-making equipment.

U.S. Air Forwarders Association executive director Brandon Fried warned that the government’s focus on preventing the import of illicit drugs or drug ingredients could lead to 100% inspections of all incoming shipments, effectively causing further delays and congestion. He urged the government to find alternative methods to solve these problems.

The broader question for U.S. air logistics is whether these illegal shipments will lead to additional screening measures for all incoming cargo. Given that fentanyl was responsible for the deaths of 200 Americans per day in 2022 and more than a quarter of a million deaths since 2018, the need for effective enforcement is acute.

As the situation evolves, the industry anticipates potential adjustments to compliance procedures to reduce delays while ensuring security. The outcome will have a significant impact on e-commerce platforms, logistics providers and customs brokers handling low-value shipments to the US.