NEW YORK CITY, USA – Since the recent end of nearly a decade of trade rules known as “de minimis,” U.S. consumers and businesses have been exposed to shipping delays, damaged packages and high tariffs on international goods, foreshadowing a potentially chaotic holiday season.
For major international airline UPS, dealing with the latest regulatory changes has proven more difficult than for competitors FedEx and DHL.
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Matthew Wasserbach, a brokerage manager at Express Customs Clearance in New York, a company that helps importers with documentation, tariff classification, valuation and other federal requirements, is seeing the impact of this as UPS customers seek his company’s help clearing packages entering the United States.
“In recent months, we have seen a particularly large number of UPS packages being stuck, lost or discarded…all due to the demise of De Minimis,” Wasserbach said. “Once De Mini Miss ended, their (UPS) entire business model changed. And they just didn’t have the ability to do customs clearance…A lot of people expect to receive international packages, but they’ll never receive it.”
UPS did not respond to Al Jazeera’s request for comment.
Suspension of customs duty exemption
Since 2016, the Minimis Trade Exemption states that packages valued at $800 or less are not subject to taxes or duties. According to U.S. Customs and Border Protection (CBP), the number of shipments entering the U.S. with exemptions is expected to reach more than 1 billion by 2023, up more than 600% from 139 million in 2015.
In August, the situation changed completely. President Donald Trump signed an executive order ending mini-miss status for all countries, leaving U.S. imports in a new situation of red tape and formalities subject to tariffs and tariffs based on origin.
Just one month after the end of De Mini Miss, Tezumi Tea, an online Japanese tea and teaware company that sells its products online and through meet-and-greets in New York City, became the victim of a customs holdup at U.S. Customs while shipping products via UPS. Tekaku lost about 150 kg (330 pounds) of matcha, totaling about $13,000.
“We responded by increasing buffers in our supply plans across the dozen or so farms we work with,” said Tezumi co-founder Ryan Snowden. “Even with those adjustments, the loss had a severe impact on many of the cafe’s customers, who suddenly had to switch to a different matcha blend.”
UPS is currently not accepting shipments from Japan, and Tesum has switched to shipping supplies through alternative carriers such as DHL and FedEx.
Disposal of shipments
Wasserbach witnessed similar cases where UPS lost imported goods.
“If a UPS package isn’t cleared, it’s basically just sitting at a UPS facility uncleared for a period of time,” Wasserbach said. “And UPS has shown in their follow-up investigations that they dispose of packages without actually making any effort, as far as I can see, to contact the sender or recipient to obtain the information necessary to obtain authorization.”
Wasserbach shared with Al Jazeera an email chain from a UPS customer who was looped into his company after a UPS customs clearance failure.
In one interaction, UPS customer Stephan Niznik responded to a notification from the UPS Alternative Brokers team that a package had been “abandoned.”
“The tracking states on multiple occasions that UPS has attempted to contact the sender (me), which is false. Other than a request for more information on September 5th (which I promptly responded to), UPS has never attempted to contact me,” Niznik wrote. “It’s absolutely disgraceful that my package was mishandled. Clothes and children’s toys were destroyed at the hands of UPS.”
In a separate email chain, UPS told customers that the package was released after receiving an email from Express Customs Clearance stating that the shipment had cleared customs.
A week later, Lee’s package was still listed as “pending release,” and when she asked for an update on the package, UPS responded, “Due to de minimis, we are unable to provide an ETA at this time as we are currently backed up in quantity and awaiting delivery.”
“Add more pressure”
In addition to customs holdups, cost prevention may be one reason why UPS chooses to dispose of packages rejected by U.S. customs rather than return them to the sender, said David Bieri, an associate professor at Virginia Tech.
“All of these additional rules and regulations will put further pressure on already relatively tight profit margins for companies like UPS, FedEx and DHL,” Bieri said. “They need to make money, and sometimes it’s easier to not fulfill a service than to incur the additional costs of clearing customs and ensuring it reaches its final destination.”
Bieri added that UPS’s resort to destroying packages may indicate that it believes it has a powerful enough monopoly position to do “such a horrendous act, a unilateral breach of contract.”
“We don’t see these problems with FedEx and DHL shipping,” Wasserbach told Al Jazeera.
When asked if FedEx had disposed of any packages held in customs, a spokesperson said, “If documentation is not completed or is rejected by U.S. Customs and Border Protection, FedEx will actively work with the sender to update the documentation for resubmission to CBP.” In some cases, the sender may request that the package be disposed of if they do not wish to pay the return fee to the sender. In such rare cases, the recipient will be notified at the sender’s direction. This is not common practice. Our company will continue to operate as usual. ”
Final delivery fee to your doorstep
However, FedEx and DHL face some of the same challenges as UPS. Since August, when de minimis ended and small packages were suddenly subject to taxes and duties, anyone ordering from abroad could find themselves hit with unexpected fees on their imports.
Without minimal protection from import fees for packages valued at $800 or less, consumers essentially become importers.
“You may find a great deal on an item overseas and order it, but if you don’t pay attention to where the item is coming from, it could be shipped from China and you could be in for a rude awakening the moment it arrives at your door,” Bayley said. “You paid and thought that was it. But the delivery person says no, they are actually passing the cost on to you because you are acting as the importer.”
These fees may cost as much or more than the ordered item itself. “You have to pay special attention to the small print,” Bayley said.
With looming costs and lost luggage on the horizon, shoppers are likely to ask the “alternative question” of “renovating or going on vacation,” Bayley said. Are you splurging on Christmas presents or treating yourself to a meal out?
“I think this is an interesting time to make choices and ask ourselves what we can do in the face of an affordability crisis, whether it’s rent, insurance, making ends meet,” Bayley said. “That’s what’s happening right now.”
To better adapt to evolving trade policies, Wasserbach said UPS will likely seek to hire a large number of entry writers to help with the paperwork needed to legally move goods across borders. But with this being the busiest time of the year in terms of getting people their Christmas shopping, Wasserbach suspects mass hiring is unlikely to make much of a difference given the amount of training required.
The company’s profits have already been hurt by President Trump’s policies. Imports from China, UPS’s most profitable route, reportedly fell by 35% earlier this year due to tariffs on China and the elimination of the de minimis rule.
“I think things will be better next year,” Wasserbach said. “But I don’t think we’ll be able to solve this problem by Christmas.”
