Importing goods into the United States can be a challenging, high-cost endeavor. Moving purchases across country borders can mean duty and other importation taxes that increase the cost of shipping for brands and shoppers alike. Enter: Section 321 shipments.
U.S. Customs and Border Protection (CBP) administers numerous laws and restrictions on imports, but one in particular makes it simpler, and less expensive, for brands across the globe to import goods into the U.S. That’s statute 19 USC 1321, or more widely known as Section 321. For Section 321 shipments, qualifying goods are admitted from Canada to the U.S. duty- and tax-free if they fit three requirements. The goods are: 1.) imported by one person; 2.) on one day; 3.) and have a total fair retail value of $800 USD or less.
For brands shipping high volumes of smaller items, this ability to bypass the taxes and duties typically levied on international shipments is game changing. However, these duty-free entries into the U.S. have their own complexities.
To get into the details of what brands need to know about Section 321 to realize the benefits of quicker, less expensive international shipping, we chatted with logistics sales expert Bill Rammos.
Here’s what he had to say:
What is Section 321?
BR: Section 321 was put in place by U.S. Customs and Border Protection and this law changes the de minimis value (where anything below a set value does not pay duties). Section 321 shipments allow goods less than $800 USD to enter the US duty free.
How does Section 321 operate?
BR: Let’s say you’re a brand selling direct-to-consumer and your products are below the $800 threshold. You can take advantage of Section 321 by providing U.S. customs an invoice and manifest clearly displaying the value of included products. The key here is to make sure each item is segmented along with the recipient’s U.S. address and phone number.
Why should brands be Section 321 fluent?
BR: Brands stand to gain a number of benefits from Section 321. For Canada-based companies, Section 321 effectively opens the door for entry into a broader U.S. market. With Section 321, brands can claim back the taxes and duties typically imposed on international imports. These cost savings that can be passed directly to their customers in the form of shipping cost reductions. Affordable shipping results in increased sales, so that’s a win-win for brands.
Another important benefit is faster shipping times. Products eligible for Section 321, require less customs paperwork resulting in expedited border clearance and shorter transit times.
What could restrict brands from claiming Section 321?
BR: There are a few things. First, there is a list of non-compliant goods. On this list are any goods that require inspection as a condition of release from customs, regardless of their value. Goods regulated by a governing body such as the Federal Drug Administration or U.S. Department of Agriculture are also not eligible for Section 321 shipments. Merchandise subject to anti-dumping or countervailing duty, as well as radiation-emitting, non-medical devices like microwaves and televisions are also a Section 321 no-go, as are tobacco products and alcohol.
One thing most brands may not be aware is they can only file one claim per day. The monetary penalties could be quite severe for failing to follow the rules. Brands could face a $5,000 penalty for the first offense alone.
How can a 3PL help brands reap the benefits of Section 321 shipments?
BR: Third-party logistics (3PL) providers can streamline the entire process. A 3PL can facilitate the documentation, manifestation, and clearance of Section 321 eligible shipments without issue.
When I look at it, brands should seek out a 3PL partner that’s already working with a multitude of brands taking advantage of these cost savings. There are a number of steps that go into successful Section 321 shipments. Without a 3PL partner, brands not only have to pick, pack and prepare all the necessary documents, they also need to organize shipping from the origin to the final destination. By partnering with an end-to-end 3PL provider with vast Section 321 experience, brands can realize a cost effective and quick shipping solution into the US.
How does a 3PL better serve brands in managing Section 321 shipments?
BR: With a 3PL partner handling all of a brands Section 321 shipments, they can establish one point of contact to make sure everything goes through their process seamlessly. Think of outsourcing logistics as a way for brands to be able to focus on what they do best, which is providing top-notch products. If a brand is handling these shipments internally, or working with multiple partners, they run the risk of complicating the process. It takes just one item on a manifest, like a non-compliant good, to hold up the entire shipment. That’s why it’s important to have a strong 3PL partner.
At GoBolt, we provide third-party logistics and Section 321 solutions. Many of our brands are realizing the cost savings and the enhanced customer experience GoBolt provides. Section 321 shipments provide substantial cost savings to help offset the rising costs in your supply chain.