Life has changed in relation to the way people shop. While the days of going to the supermarket or department stores to buy household necessities or to buy gifts are not over, the rise of e-commerce companies cannot be ignored. In fact, according to the United Nations Conference on Trade and Development, total online retail sales increased from 16% to 19% as of 2020. For 2021, this trend does not appear to be slowing down. Additionally, healthy competition between brick-and-mortar establishments and e-commerce has increased as businesses reopened and staff returned to work on-site. While this is great news for the economy as a whole, there is one problem involving the supply chain and logistics: trade tariffs. Fortunately, there is also an answer to this conundrum: a law known as Section 321.
In 2019, tariffs on goods imported from China increased from 10% to 25%. This has left companies scrambling for solutions, from finding alternative sources of parts and products to raising prices and passing the cost on to the consumer. While the latter option would not bode well for businesses, and sourcing remains a challenge, owners and operators can opt for Section 321 classification for all their imported products. Consequently, to streamline this process, they also seek the services of compliance companies to ensure that all regulations are followed and to handle logistical planning.
As mentioned, Section 321 classification helps keep costs down for both business owners and their customers. Initially, the classification benefited companies whose shipments do not exceed a de minimis limit of $800. However, e-commerce and other retailers that import their supplies from China invoke this law on a broader scale by involving Canadian fulfillment companies to oversee various aspects of shipping and receiving. This practice allows multiple strategically scheduled shipments to reach their destination without having to pay expensive fees. If these shipments do not arrive all at once, they will qualify for Section 321 classification.
In addition, CBP has incorporated a test to complete procedures electronically. Testing this platform allowed logistics managers to obtain authorization more quickly through type 86 entry into the automated business environment with a lower chance of delays due to real-time response. Furthermore, this new procedure shows a marked improvement in efficiency compared to obtaining authorization through a manifest. Additionally, it reduces the cost for both the fulfillment company and its clients.
And how does this application of article 321 and an effective process affect prices for consumers? Fortunately, avoiding tariffs and other duties along with the streamlined services of Canadian fulfillment companies translates into better prices for customers who will not have to bear the burden of offsetting high taxes and high shipping costs. Additionally, products are more likely to be delivered in a timely manner and directly to the consumer. Consequently, optimal service leads to higher sales and healthy growth for the company which ultimately benefits both the business owner and the customer.
Likewise, there are some considerations business owners should remember regarding Section 321. First, as noted, the same person or organization cannot claim multiple shipments that qualify for the Section 321 designation on the same day. Therefore, business owners and logistics specialists would have to plan a strategy for the timing of shipments. Second, certain items will not qualify for the Section 321 category. These include cleaning products and other substances requiring inspection, products subject to antidumping duty, most tobacco and alcohol products, and items regulated by multiple agencies. such as the FDA and the USDA, among others. Regarding supplies from China and Section 301, if the logistician stays within the limits of Section 321 with respect to value and timing of shipment, there is no cause for concern as Section 321 overrides Section 301.
In short, Section 321 counters the challenges posed by a trade war with China and the subsequent tariffs that come with importing. At the same time, if your items are produced in China and therefore must be imported into the US, Section 321 would still apply to shipments on the condition that they follow the aforementioned regulations and do not value more than $800. Another benefit involves lower cost to the business owner if they partner with a third party, such as a Canadian fulfillment company, who receives, stores and then ships items to customers. Even with this type of collaboration, the person in charge of e-commerce or traditional retail will be better off without the expense of tariffs and other obligations. Additionally, he or she would not have to spend valuable time or more money accurately completing the paperwork because a specialist knowledgeable about Section 321 and logistical planning would have that under control. Therefore, the trade war could continue for the unforeseeable future, but fortunately consumers will not have to pay the price for it.
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Read more Author: Joseph Williams Writer
Categories: How to
Source: vtt.edu.vn