CBP’s De Minimis Crackdown Hits Seko Logistics, Customs Brokers
U.S. Customs & Border Protection (CBP) is cracking down further on shipments that fit the Section 321 de minimis trade provision, suspending multiple customs brokers from a program that expedites the arrangement of these shipments.
The crackdown puts yet another spotlight on the tense relationship between U.S. officials and foreign-owned businesses like Shein and Temu, and illustrates the increasingly complicated environment logistics companies like customs brokers and freight forwarders must navigate when working to import products into the country.
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Reports from The Information and The Loadstar identified logistics services provider Seko Logistics as one of the brokers suspended for 90 days from participating in the Entry Type 86.
When filing an Entry Type 86 customs form with the CBP, importers and customs brokers can import shipments of goods less than the $800 de minimis threshold in order to avoid paying taxes. It is designed to expedite the customs process so businesses can get low-value products in the U.S. quicker.
Seko’s temporary ban started Monday and will be in effect until Aug. 24.
Sourcing Journal reached out to both the CBP and Seko Logistics. The Loadstar said six brokers in total were suspended.
“We are incredibly disappointed by this unfortunate decision,” Seko told customers in a note seen by The Loadstar. The company says it processes millions of annual parcels through the rule at airports in New York, California and Illinois.
The third-party logistics (3PL) provider said it had an “exceptionally high, 99.999 percent, compliance rate” in the program, claiming that it has always sought to be compliant in its partnership with the CBP, and further address any concerns that were raised.
“Despite our extraordinary compliance rate, we were given less than seven days before the suspension went into effect and no opportunity to address any potential deficiencies,” Seko said.
Seko also said it strongly disagrees with the decision, and intends to press for reinstatement as soon as possible. The 3PL told customers it would help to try to minimize disruption to their business.
The Loadstar report indicated that a major seizure had been made related to shipments from Shein.
Sourcing Journal reached out to Shein.
Although the exact reason for the suspension has not been clarified, the holdup for Seko and the other brokers follows the CBP’s recent implementation of stricter filing requirements for Entry Type 86.
Effective Feb. 15, 2024, CBP modified the deadline to file Entry Type 86 so that it must be filed prior to arrival or upon arrival of the cargo. Previously, ET 86 could be filed as many as 15 days after the product arrived. If filed after the cargo has arrived, the entry will be rejected and the cargo will be held until a separate entry or appropriate entry type is made.
To comply, customs brokers must file complete, accurate and timely data sets including full product descriptions and harmonized system (HS) codes that classify traded products.
The changes were aimed at enhancing the CBP’s efforts in preventing the importation of illicit substances (like fentanyl and other narcotics), counterfeits and other intellectual property violations, or goods made with forced labor.
However, the unrelenting push of companies like Shein and Temu into the U.S. marketplace has resulted in other concerns from American lawmakers and retailers regarding the fairness of trade and e-commerce competition. Arguments posed against the de minimis threshold are that it undercuts U.S. businesses by driving prices unfairly low, essentially forcing e-commerce companies to compete in a race to the bottom.
Both companies have been shipping so much air freight that industry players have attributed capacity constraints throughout 2024 to their massive orders, with potential limitations expected to further come into play in the peak shipping season.
Such a suspension for brokers like Seko is unlikely to significantly impact the wider operations of Shein or Temu given that the companies both individually ship more than 1 million packages per day into the U.S., according to estimates from logistics consultancy ShipMatrix. But it could be another strike against Shein at least as the fast-fashion giant seeks to go public. The company is shifting its IPO ambitions to the U.K. after getting spurned in the U.S. as lawmakers lay scrutiny on the brand.
According to data released by the CBP, total de minimis imports into the U.S. have increased from 636.7 million in 2020 to 1 billion in 2023, and are at an estimated 705.1 million for 2024 “mid-year.”
However, while the total de minimis volume has increased, the total de minimis value decreased from $67 billion in 2020 to $54.5 billion in 2023. The 2024 mid-year total was $32.8 billion.