PARCEL CROSS-BORDER & GLOBAL 2023

5 WAYS TO IMPROVE YOUR CROSS-BORDER AND GLOBAL PARCEL SHIPPING PAGE 7

CROSS-BORDER & GLOBAL 2023 PARCELindustry.com

WHAT’S THE DEAL WITH DE MINIMIS? PAGE 10

AI ISN’T JUST A BUZZWORD: IT’S SIMPLIFYING CROSS-BORDER TRADE AND COMPLIANCE. PAGE 24

WHERE HAVE ALL THE CONTAINER SHIPS GONE? PAGE 8

DO YOU KNOW THE 2023-2024 HOT SUPPLY CHAIN SOLUTION COMPANIES?

WORLD PARCEL ALLIANCE

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Volume 30 | Issue 5

06 EDITOR’S NOTE

08 12 16 22 28

More Opportunities, More Challenges

By Amanda Armendariz

08 WHERE HAVE ALL THE CONTAINER SHIPS GONE?

By Tinglong Dai and Christopher Tang

10 A SHORT PRIMER ON SECTION 321 DE MINIMIS IMPORTS

By Andrew M. Danas

12 TOP TRENDS TO ENHANCE THE CROSS-BORDER E-COMMERCE DELIVERY EXPERIENCE

By Michael Lamia

14 THE LEGAL CHARACTERISTICS OF INTERNATIONAL TRANSPORTATION SERVICE PROVIDERS

By Brent Wm. Primus, JD

16 THE LOW-DOWN ON SHIPPING LOW-VALUE GOODS OVERSEAS

26 INTERNATIONAL RETURNS: 5 WAYS TO MANAGE THEM MORE COST-EFFECTIVELY

18 EXTENDED EFFECTS OF COVID-19 LOCKDOWNS ON CHINESE SHIPPING THROUGH 2022

28 ENHANCING SUPPLY CHAIN SECURITY: THE ROLE OF REAL-TIME VISIBILITY IN COMBATING CARGO THEFT

20 THE IMPORTANCE OF ROUTE PLANNING IN WORLDWIDE SHIPMENTS

30 TO SUM UP

By Thomas Taggart

By Gregg Zegras

By Maja Bernstein

22 WHERE IN THE WORLD: COUPS, WARS, FLOODS, AND FIRES

By Merry Law

24 AI ISN’T JUST A BUZZWORD — IT’S SIMPLIFYING CROSSBORDER TRADING AND COMPLIANCE

By James Doyle

4 PARCELindustry.com  CROSS-BORDER & GLOBAL 2023

By Helen Scurfield

By Hannah Testani

SPONSORED CONTENT 07 5 IDEAS TO IMPROVE YOUR CROSS-BORDER AND GLOBAL PARCEL SHIPPING

PRESIDENT CHAD GRIEPENTROG

[ amanda.c@rbpub.com ]

PARCEL (ISSN 1081-4035) is published 7 times a year by MadMen3. All material in this magazine is copyrighted 2023 © by MadMen3. All rights reserved. Nothing may be reproduced in whole or in part without written permission from the publisher. Any correspondence sent to PARCEL, MadMen3 or its staff becomes the property of MadMen3. The articles in this magazine represent the views of the authors and not those of MadMen3 or PARCEL. MadMen3 and/or PARCEL expressly disclaim any liability for the products or services sold or otherwise endorsed by advertisers or authors included in this magazine.

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EDITOR’S PICK

Here are some of the most-read articles on our site in recent weeks. If you haven’t already checked them out, you might want to — there is some great information in there!

EDITOR’SNOTE

MORE OPPORTUNITIES, MORE CHALLENGES

By Amanda Armendariz

W

hen it comes to international commerce, it feels as though the world is simultaneously shrinking and expanding at the same time.

Ever-changing technology and new offerings mean that cross-border and global shipping is more accessible than ever, making our customers in other countries feel much closer than they actually are.

This, of course, means that our customer bases just continue to grow, allowing us to reach buyers in almost every area of the world. This is undoubtedly a very exciting time to be a cross-border shipper.

Of course, shipping internationally presents some different challenges than shipping domestically does. De

6 PARCELindustry.com  CROSS-BORDER & GLOBAL 2023

minimis changes, duties and taxes, product classification codes — the list goes on.

Understanding the complex regulations and requirements necessary to ensure your product lands safely on your customers’ doorsteps is a crucial task of any global shipper.

Customers are already placing a lot of trust in a company when they order internationally — you don’t want to disappoint them. It only takes one bad experience to potentially sour a customer’s perception of your brand, so you want to ensure that your cross-border and global shipping experience is as seamless as possible.

That’s where this issue of PARCEL comes in. We are dedicated to highlighting the most pressing issues facing global shippers today. Whether you’re new to the international shipping arena or you’ve been here for quite some time, there is sure to be a fountain of information within these pages. As always, we thank you for trusting us as your industry resource.

Thanks for staying connected with PARCEL.

The 2024 FedEx GRI Explained – It’s the Details that Matter

By Branden Burt

4 Ways Savvy Shippers Prepare for Peak Season

By Jey Yokeley

What to Know About the USPS’s HAZMAT Update

By Bill Sweeney

SPONSORED CONTENT

5 IDEAS TO IMPROVE YOUR CROSS-BORDER AND GLOBAL PARCEL SHIPPING International shipping has grown 150% from 2016 to 2022 and is forecasted to grow by six percent annually, with volumes expected to reach 225 billion parcels by 2028 (according to Pitney Bowes’ recently published annual global shipping index). With all that volume comes challenges to not only to stay efficient but also the opportunity to grow and deliver even more packages around the world. PARCEL’s special Cross-Border and Global Shipping edition has a lot of information as well as solutions from these 5 companies to help you with your shipping and supply chain. Take the opportunity to go to their websites and even reach out with a call or email to get the answers they can help you with.

Caljan delivers specialized solutions for your international parcel shipments needs. Caljan Print and Apply systems can label almost any type of shipment, regardless of packaging or height. Labels can be applied over redundant bar codes at specific X,Y,Z coordinates. Cost-effective carrier options can be automatically selected based on weight/ dimensions and destination. Caljan document handling solutions can automatically insert consumer paperwork into the package, or into a document pouch on the exterior of the package for international shipments. Caljan experts will be with you every step of the way to ensure your throughput needs are met. https://caljan.com | info.us@caljan.com | 800.338.1751

As global shipping experts and the largest privately-owned international shipping company in the US, ePost Global will solve your e-commerce shipping needs. Their key customer support team has collectively over 850 years of international logistics experience. ePost Global has the most sophisticated automated parcel sorting systems that can run 24/7 and process up to 3,000 packages per hour to handle volume during any season. By utilizing one of the largest networks of global final-mile partners, customers can easily deliver to over 200 countries and territories. For e-commerce deliveries, ePost Global can help reach new markets and simplify your international shipping! epostglobalshipping.com | Inquires@epostglobalshipping.com | 866.784.8444

GLS seamlessly blends global reach with local expertise. Operating in 41 countries, our extensive infrastructure includes 1,600 strategically located depots and 120 advanced parcel sorting hubs. Our dedicated workforce of 22,000 professionals is committed to providing top-notch service, and our 42,000 delivery vehicles ensure reliable transportation. Our unwavering commitment to quality and an unrelenting focus on customer satisfaction define our approach. In 2022, GLS delivered an impressive 862 million parcels, serving over 230,000 customers worldwide. Choose GLS for a shipping experience that combines international capabilities with personalized, local care. www.gls-us.com | sales@gls-us.com | 888.SHIP.GLS

Passport is the modern international shipping carrier for e-commerce.

With best-in-class parcel logistics, an in-house team of shipping and compliance experts, and a user-friendly software platform, Passport is the shipping carrier that growth-focused brands trust to expand their business internationally. passportshipping.com | hello@passportshipping.com

If shipping internationally makes you nervous that your shipments will be lost in transit, Parcel Insurance Plan can help! PIP has been insuring packages since 1966. All policies are underwritten by A+ rated Allianz Global Corporate & Specialty. Coverage can include any destination country except where prohibited by trade sanctions or laws. We can help your company save 50-80% compared to the carrier’s declared value charges. To qualify, your company must ship packages over $100 in value daily or spend at least $1000 annually on declared value. Request a quote at www. pipinsure.com/parcelmedia/ to see how much you can save today. www.pipinsure.com/parcelmedia | office@pipinsure.com | 800.325.7390 CROSS-BORDER & GLOBAL 2023  PARCELindustry.com 7

WHERE HAVE ALL THE CONTAINER SHIPS GONE?

O

BY TINGLONG DAI AND CHRISTOPHER TANG ne of the most recognizable images of the supply chain crisis is that of nearly 100 container ships waiting to unload in October 2021.

Both Los Angeles and Long Beach were represented, as they are sister ports. This summer, the same ports have been uncannily quiet. The time period from January to July of 2023 saw a decrease of 24% in the number of twenty-foot equivalent unit (TEU) containers going through the Port of Los Angeles, compared to that same period in 2022. The Port of Long Beach experienced an even greater decrease of 28.5%.

Where have the ships gone? Will the decline in shipping volume at these two ports be transitory?

Beneath the tranquility of these two

ports, a global supply chain transformation is taking place. This structural change in the chain will affect the future operations of many US ports for years to come.

Two key factors triggered the ongoing supply chain transformation.

First, even the most pro-China US executives now recognize the need to diversify their supplier base away from China. For one thing, they find it costly to source from China due to the rapid rise in labor costs and the persistent 25% import tariffs on goods imported from China. These combinations diminished the economic incentive to source from China.

What’s more, the conventional argument that a China-centric supply chain helps companies tap into the Chinese market is now being called into question. With notable exceptions, such

8 PARCELindustry.com  CROSS-BORDER & GLOBAL 2023

as Tesla’s electric vehicles and Apple’s devices, sales of many US brands have been declining in China since the trade war that began in 2018, and this decline has no signs of abating. For example, GM’s market share in China, including its joint ventures, has fallen from roughly 15% in 2015 to below 10% in 2022. There is a growing sense that American brands are out of favor with Chinese consumers.

Second, prolonged shortages of basic products such as N95 masks and chips during the COVID-19 pandemic have stoked public fear, prompting the White House to develop plans, with bipartisan support, to revitalize American manufacturing and secure critical supply chains for semiconductor chips, pharmaceuticals, EV batteries, and critical minerals.

In the private sector, geopolitical

50% market share of all US imports.

However, as firms import more from Southeast Asia and the Indian subcontinent, it is faster and cheaper to ship through East Coast ports, including the Ports of New York and New Jersey, the Port of Charleston, and the Port of Savannah via the Suez Canal. By 2023, the West Coast’s share for all of the total US market fell to 42%.

At the same time, as more US companies source from Mexico, shipping volumes through Mexico’s major ports are increasing. In 2021, the number of TEU containers processed at all Mexican ports increased significantly, with the Port of Manzanillo experiencing a 15.9% increase over the previous year.

and economic factors have created an urgent need for US companies to diversify their supply base beyond China. To improve the resilience of their supply chains, many US firms are shifting away from China to other friend-shoring countries such as India, Thailand, and Vietnam. In June, Apple announced plans to shift 18% of its global iPhone production to India.

At the same time, many US companies are increasing their sourcing volume from near-shoring countries such as Mexico and Canada to take advantage of the USMCA free trade agreement. In July, HP announced its plan to move production of millions of consumer and commercial laptops to Mexico. In 2022, Mattel announced its plan to expand its existing plant in the northern Mexican state of Nuevo Leon, surpassing other Mattel factories in China, Vietnam, and Malaysia.

These fundamental shifts in the global supply chain will change the dynamics of US shipping, and this change is likely to last for decades.

When US firms were primarily sourcing from China, most containers from China were processed at West Coast ports. In 2017, the West Coast had a

At the same time, many US companies are increasing their sourcing volume from near-shoring countries such as Mexico and Canada to take advantage of the USMCA free trade agreement.

This shift in volume is taking shape as one million TEU containers per year have shifted from West Coast ports to East Coast and Mexican ports.

In the foreseeable future, West Coast ports are unlikely to regain their market share for two major reasons.

First, West Coast port operations are primarily dependent on the import and export volumes between the US and China. With the US de-risking its supply chains and as Chinese consumers are shunning US goods amid continuing tensions, the volume of trade between these two major economies is unlikely to increase in the near term. Import volumes from China are unlikely to increase as US firms make

investments and commitments to shift their supply base elsewhere.

Similarly, the volume of exports to China is unlikely to increase, especially when China’s economy faces headwinds ranging from an aging population, property woes, a high youth unemployment rate, and low consumer confidence.

Second, West Coast ports are inefficient, unreliable, and less competitive than East Coast ports. The ports of Los Angeles and Long Beach are notoriously inefficient. Out of 351 container ports in the world, the World Bank ranked the Port of Los Angeles 336th, and Long Beach 346th. On top of that, shipping through West Coast ports is expensive and will become even more so. After a labor contract expired in July 2022, it took eight months of negotiations between the International Longshore and Warehouse Union and the Pacific Maritime Association to reach a tentative agreement in June 2023. The new agreement includes eight to 10% in the first year and retroactive pay at that increased rate for the hours that dock workers worked during the eight months without a contract.

The ongoing global supply chain transformation is reshaping ocean routes and shifting shipping volumes at US ports. With this inevitable trend, the writing is on the wall for the once-majestic ports of Los Angeles and Long Beach. Adapt or perish. The choice is stark, and the time to evolve is now.

Tinglong Dai is a professor of operations management and business analytics at Johns Hopkins University’s Carey Business School and co-chairs the Johns Hopkins Workgroup on AI and Healthcare, part of the Hopkins Business of Health Initiative.

Christopher S. Tang is UCLA distinguished professor and the Edward W. Carter Chair in business administration. He is senior associate dean of Global Initiatives, and faculty director of the Center for Global Management at the UCLA Anderson School of Management.

CROSS-BORDER & GLOBAL 2023  PARCELindustry.com 9

BY ANDREW M. DANAS

A SHORT PRIMER ON SECTION 321 DE MINIMIS IMPORTS What’s the big deal about small shipments?

W

ith an estimated over two million shipments per day, the legal treatment of de minimis imports, also known as Section 321 shipments, is the subject of ongoing discussions in both Washington and the general parcel shipping industry. Is the current $800 threshold too high? Is Section 321 being abused? If so, how should regulation of the shipments be changed? This article is a short primer on the basic rules and policy issues surrounding Section 321 shipments.

In the law, de minimis means that a matter is so minor as to not require legal consideration. The US de minimis import rules are a statutory and regulatory exemption authorized by 19 USC §1321 (thus “Section 321”) that administratively exempts low value goods from the payment of taxes and duties and the formal importation entry process. The rationale for the exemption is that the cost of administering

the laws to small imports exceeds the benefits of taxing the goods and requiring formal entry.

In effect since 1938, the de minimis rules have gained significant attention after Congress enacted the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA). TFTEA authorized increasing the dollar threshold of de minimis shipments from $200 to $800 in daily imports. Combined with the development of e-commerce direct to consumer shipments, CBP reports that the number of de minimis imports has risen 410% between 2015 and 2022.

Under the exemption, goods valued at below $800 can enter the United States “free of duty and of any tax imposed on or by reason of importation, but the aggregate fair retail value in the country of shipment of articles imported by one person on one day and exempted from the payment of duty shall not exceed an amount specified” by regulation.

As low value informal entries, Section 321 shipments may be entered by the

10 PARCELindustry.com  CROSS-BORDER & GLOBAL 2023

owner, purchaser, or consignee of the shipment, or an appropriately designated customs broker, by presenting to CBP the bill of lading or a manifest listing the origin country of shipment, plus information regarding the country of origin of the merchandise; the shipper name, address, and country; the ultimate consignee name and address; and the specific description, quantity, shipping weight, and value of the merchandise.

Not all packages valued below $800 are entitled to de minimis treatment.

Section 321 applies only if the aggregate value of shipments on a given day, from or to one party, can be valued at $800, based on the value at the country of shipment, not the ultimate US value. CBP has held that consolidated shipments of low value goods will not qualify for the exemption if they are not consigned to or have identifiable separate individual ultimate US consignees at the time of importation. Under CBP regulations, consolidated shipments addressed to one consignee shall be treated for purposes

Section 321 applies only if the aggregate value of shipments on a given day, from or to one party, can be valued at $800, based on the value at the country of shipment, not the ultimate US value.

of the de minimis exemption as being one importation. CBP can also deny the exemption if it has reason to believe that a shipment is one of several lots covered by a single order or contract but shipped separately in order to obtain the benefits of the exemption.

Certain merchandise is not entitled to the Section 321 exemption. This includes alcoholic and tobacco products and merchandise subject to any tax imposed under the Internal Revenue Code collected by other agencies on imported goods. Goods subject to quota restrictions or AD/CVD do not qualify for Section 321. However, CBP has confirmed that Section 301 duties will not apply to eligible goods properly entered under Section 321.

De minimis shipments are also not exempt from other laws or regulations administered by Customs, or other laws administered on behalf of Partner Government Agencies (PGAs), such as the Department of Agriculture, the FDA, and the CPSC, which may have their own rules and regulations that apply to low-value shipments.

Importers are also required to exercise reasonable care in declaring that the de minimis exemption applies, since fines and penalties can be imposed for violations of the Section 321 rules as well as any other applicable regulation.

In 2019, CBP initiated two different programs, the Section 321 Data Pilot and the voluntary Entry Type 86, to develop new procedures to efficiently examine and clear the increased volume in de minimis shipments while obtaining sufficient information to determine regulatory compliance with US laws.

The Entry Type 86 program is open to customs brokers and self-filers. CBP has reported that over 333 million Entry Type 86 transmissions were received in FY 2022, accounting for approximately 43% of all imports that year. CBP is also contemplating the proposal of new regulations regarding the entry procedures and information required for Section 321 imports.

Critics of Section 321, including those in Congress, cite the rapid growth of de minimis shipments as evidence that the exemption is being used as a loophole by foreign companies, especially those engaged in direct-toconsumer e-commerce, to avoid the payment of duties and evade US laws in order to unfairly compete with US companies importing similar goods.

The exemption has also been criticized for providing a loophole to avoid the payment of Section 301 duties that would otherwise apply to imported goods produced in China.

A House Congressional Committee issued an interim report this summer accusing two major Chinese companies of using Section 321 to avoid scrutiny under US laws, including US prohibitions against the use of forced labor.

The US Postmaster General has also been asked by members of Congress to provide information on US mail records

and data pertaining to shipments from China, due to concerns that CBP de minimis data is not comprehensive of mailings handled by the USPS. One suggested change to the current de minimis policy is to simply return the $800 threshold, currently the highest in the world, to $200. Other proposed changes before Congress include a tightening of the use of the exemption, for example, by prohibiting its use for products manufactured or shipped from countries such as China or Russia; establishing reciprocal de minimis US import thresholds to match the value threshold that other countries apply to US exporters; requiring the submission of more detailed documentation or information regarding Section 321 imports; and limiting the eligibility of de minimis shipments to articles transported to the United States by contract carrier to ensure more detailed information is reported to CBP. However, all of these are currently just proposals. For now, the only certainty about Section 321 imports and whether the rules will change is that the controversy surrounding them is not de minimis.

Andrew M. Danas is Partner, Grove, Jaskiewicz and Cobert, LLP. For more information, visit www.gjcobert.com or email adanas@danaslaw.com. The information contained in this article is intended to be general background information. It does not constitute and should not be relied upon as legal advice. Readers should contact a qualified attorney should they have a specific legal question.

CROSS-BORDER & GLOBAL 2023  PARCELindustry.com 11

BY MICHAEL LAMIA

TOP TRENDS TO ENHANCE THE CROSS-BORDER E-COMMERCE DELIVERY EXPERIENCE

A

global surge in cross-border e-commerce activity spurred by the pandemic is expected to continue as consumer buying behaviors have accelerated the international online purchasing of products.

In 2022, the B2C e-commerce market was worth an estimated USD 991.25 billion, and by 2030 it’s expected to reach USD 5,908.29 billion. Cross-border e-commerce is not just a trend, but a permanent change in consumer purchasing behavior. Companies not participating in the international market are truly at a disadvantage both today and in the future.

From a retailer’s perspective, one of the biggest challenges of cross-border e-commerce is simply having the confidence to make the decision to ship internationally.

No matter the size of your business, entering the international market can be intimidating. Before diving into cross-border e-commerce, it’s important

to understand today’s top delivery trends for both customers and brands to develop actionable steps to either begin or expand your international presence.

Delivery Trends Today: Customer vs. Brand Naturally, there are some similarities and differences between customers and brands when it comes to values in the cross-border e-commerce delivery experience. Largely, customers are looking for fast delivery, low shipping costs, and an easy returns process. While speed has always been an important consideration, e-commerce has completely changed the game. Today, 90% of consumers expect two-to-three day shipping domestically and five-to-seven day shipping internationally, with 32% of global shoppers willing to abandon their carts if they believe the estimated shipping time is too long. This shift can largely be attributed to the “Amazon effect”

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and a business model based on fast, free shipping. As a result, customers expect the same experience from other retailers, with cross-border no exception.

Customers also prioritize low shipping costs and easy returns, which can place a burden on brands. Approximately 10% of consumers returned all or part of their recent cross-border e-commerce purchase (75% for free and 23% at a cost) with the highest countries for returns being China (25%), New Zealand and Switzerland (22%), and the US (21%). Today, keeping shipping costs low and offering free/lowcost returns can present an even bigger challenge due to inflation, unpredictable fuel prices, and labor costs.

Brands, meanwhile, prioritize aspects such as on-time performance and having a one-stop shop for their delivery experience. Tracking on-time performance is arguably the most important KPI for brands to assess their cross-border e-commerce fulfillment strategy and how

well it’s working, and retailers should look for 98.5% as a standard. On-time order fulfillment and delivery is one of the best ways to earn brand loyalty and build trust with the consumer (particularly with cross-border e-commerce customers who can naturally be more uneasy during the purchasing journey).

Additionally, small- to medium-sized brands are looking for providers who can support a one-stop shop strategy, including those who can manage product classification, duty and tax calculation embedded on their web shop, and more for a seamless cross-border e-commerce delivery experience.

Balancing Speed and Cost With an understanding of today’s top customer and brand cross-border e-commerce delivery trends, the next step is for retailers to be aware of their available carrier options. Brands have a number of options ranging from those with extremely fast shipping that tends to be more expensive to others with slower shipping but lower costs. Generally, product price points will guide a brand’s shipping rate. For example, higher-priced, higher-margin goods typically translate to brands being able to offer a higher-priced shipping service model.

The carrier choices generally fall into one of three buckets: 1) integrators, 2) direct-to-consumer non-asset based lastmile and 3) parcel/postal consolidators.

Integrators offer the fastest shipping, but at the highest cost. The second category averages cost and delivery time, and parcel/postal consolidators offer the lowest cost, but longest shipping time.

Once deciding on a desired delivery experience that works for both your company and customers, it’s time to compare the actual rates and transit

times offered in your selected carrier category and ask specific questions that will allow you to better understand the capabilities of your options.

Asking the Right Questions Ideally, brands should select a carrier that offers a relatively fast delivery service at a reduced cost that is reliable.

There are starter questions to ask during the selection process to best understand how a carrier can meet your individual goals related to key service areas.

On-time Performance Rate: Does the carrier have the ability to deliver on time, consistently? It’s important to ask for performance reporting by service type and country along with total end-toend transit days reporting by country to which you’ll be shipping internationally.

It’s also critical to request performance rates on delivery exception types including damages, undeliverables, and gateway holds. Other areas to discuss are a carrier’s speed vs. cost model as well as how they plan to conduct test shipments, which is critical to execute prior to making a final decision.

Carrier Network Structure: First, find out if a carrier is asset-based or non-asset based. An asset-based carrier will have more control over its network but cost more. Non-asset based carriers will have less control over the entire network, but cost less. Additionally, ask where the carrier’s US gateways are located. Gateways closer to a brand’s desired shipping location will translate to lower first-mile transit times and lower first-mile costs. Other important questions to ask involve how a carrier manages end-to-end visibility along with its integration capabilities with major shipping platforms along with specific e-commerce or enterprise resource

planning systems. If custom integrations are required, it will likely be more expensive and time consuming.

Product Classification, Duty and Tax Calculation, and Customs Clearance: Navigating the complexities of each country’s laws and regulations is a huge component of cross-border e-commerce and ultimately affects the price of goods and shipping. Brands need to be aware of changing laws and regulations to maintain a competitive advantage.

Important questions to ask prospective carriers include: Can you classify (HS code) your product portfolio? Are you able to calculate duty and tax based on the HS code of the shipment and destination country? Do you provide a delivery duty unpaid (DDU) or a delivery duty paid (DDP) service? DDU services tend to burden brands’ customers with additional fees, duties, and taxes at time of delivery, while DDP avoids this.

Cross-border e-commerce is not only here to stay, but is projected to experience explosive growth in the years ahead. It’s imperative to stay updated on today’s delivery trends and create a cross-border e-commerce shipping strategy with the appropriate carrier that best aligns with consumer demands and your business needs by asking the right questions during the selection process. Doing so will set your brand up for success as cross-border e-commerce continues to boom in the coming years.

Michael Lamia is the Senior Vice President of GEODIS MyParcel and GEODIS eLogistics.

GEODIS MyParcel is a small parcel shipping service that currently ships from the US to 26 European countries, the UK, and Canada. For more information, visit geodismyparcel.com.

Tracking on-time performance is arguably the most important KPI for brands to assess their cross-border e-commerce fulfillment strategy and how well it’s working, and retailers should look for 98.5% as a standard.

CROSS-BORDER & GLOBAL 2023  PARCELindustry.com 13

BY BRENT WM. PRIMUS, JD

THE LEGAL CHARACTERISTICS OF INTERNATIONAL TRANSPORTATION SERVICE PROVIDERS

T

he legal characteristics of the entities providing transportation service in international commerce fall into three broad categories: International Air, International Ocean, and North American Ground Transportation.

Within each of these categories there are three major subcategories. The first subcategory is comprised of the carriers.

These are the entities that actually operate the airplanes, ocean ships, trucks, and trains to move the cargo.

The second subcategory is comprised of what I call “true intermediaries.”

These entities contract with carriers to transport shipments on behalf of their shipper customers. The third subcategory is what I call “hybrid intermediaries.” These are intermediaries that are shippers with respect to the carriers and carriers with respect to their shipper customers. It should be noted that while each type of provider that we will analyze is separate and distinct from a legal point of view, a single

corporate entity may function in more than one of these capacities.

For parcel shippers, it is very important to understand the critical distinctions between carriers and the various intermediaries when doing business with them. First, when a shipper deals directly with a carrier and pays its charges, the shipper’s payment obligations have been met. However, when dealing with an intermediary, when a shipper pays the intermediary its invoice, it could still be liable to the carrier if the intermediary fails to pay the carrier who actually transported the shipment.

Second, carriers and hybrid intermediaries are liable for loss and damage to cargo while in transit, while, as a general rule, true intermediaries will not be. Details may be found in the PARCEL Counsel Special Edition: Loss & Damage to Cargo in International Shipments in the 2022 Cross-Border & Global issue of PARCEL (visit PARCELindustry.com/ LossandDamagetoCargo to read).

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International Air An air carrier is defined by federal statute as a “citizen of the United States undertaking by any means, directly or indirectly, to provide air transportation.” While many shippers do deal with airlines (direct air carriers), most shippers deal with air freight forwarders.

There are many nuances to the term “air freight forwarder.” They often function as an “indirect air carrier” defined by federal statute as follows: An “indirect air cargo air carrier” is a US citizen who uses in whole or in part the services of an air carrier for all or part of the indirect air transportation of property.

A “foreign air freight forwarder” is defined as “any person not a citizen of the United States that undertakes indirectly to engage in the air transportation of property.

Air freight forwarders can also act as agents for an air carrier when it reserves the option to do so when a shipment is accepted. In this role they are a true intermediary, not a carrier. An air freight

forwarder becomes an “indirect air carrier” when it issues its own airway bill as opposed to issuing the airway bill of the airline for which it is acting as an agent.

Pursuant to federal regulation, every indirect cargo air carrier is required to give notice in writing to the shipper when any shipment is accepted of the existence or absence of cargo liability accident insurance, and of the limits on the extent of its liability, if any. This notice needs to be clear and conspicuously included on its rate sheets and airwaybills and, for foreign air freight forwarders, any other documentation.

International Ocean In international ocean shipping, there are three types of legal entities: Ocean Carriers, Non-Vessel Operating Common Carriers (NVOCCs), and Ocean Freight Forwarders. An “ocean carrier” is defined by statute as a vessel operating common carrier who holds itself out to the general public to provide transportation by water of passengers or cargo between the United States and a foreign country for compensation and uses, for all or part of that transportation, a vessel operating on the high seas.

A “Non-Vessel Operating Common Carrier (NVOCC)” is defined as a common carrier that does not operate the vessels by which the ocean transportation is provided and is a shipper in its relationship with an ocean carrier. Because an NVOCC is considered to be a carrier even though it does not actually operate vessels, it is subject to the provisions of the Carriage of Goods by Sea Act (COGSA) just as an ocean carrier is.

An “ocean freight forwarder” is defined as a person that in the United States, dispatches shipments from the United States via an ocean common carrier and books or otherwise arranges space for those shipments on behalf of shippers, and processes the documentation or performs related activities incident to those shipments. It is not considered to be a carrier and, accordingly, is not subject to liability under COGSA. Part of the licensing requirements for an ocean freight forwarder is that it hold a $75,000 surety bond to secure payment by the ocean freight forwarder for the freight charges of the ocean carriers which it uses.

The statutes also include the definition of an “ocean transportation intermediary” stating that the term refers to both ocean freight forwarders and non-vessel operating common carriers. Although this statute describes an NVOCC as an intermediary, an NVOCC is what I call a “hybrid intermediary.”

Since a surface freight forwarder is considered to be a carrier with respect to its shipper, it has the same liability for loss and damage to cargo as does a motor carrier.

North American International Shipments The legal entities providing transportation service from the United States to Mexico or Canada are the same as those providing transportation services within the United States. They include motor carriers, surface freight forwarders, transportation brokers, railroads and companies arranging for transportation services by railroad often called “intermodal marketing companies (IMCs).”

The statutory definition of a “motor carrier” is pretty straightforward: A person providing commercial motor vehicle transportation for compensation.

A “surface freight forwarder” is a person holding itself out to the general public to provide transportation of property for compensation and in the ordinary course of its business assembles and consolidates shipments or provides for breakbulk and distribution operations of the shipments AND assumes the responsibility for the transportation from the place of receipt to the place of destination AND uses for any part of the transportation either a motor carrier or a rail carrier.

The critical feature of a surface freight forwarder is that they are considered to be a shipper with respect to the linehaul carrier and a carrier with respect to its shipper customers. Since a surface

freight forwarder is considered to be a carrier with respect to its shipper, it has the same liability for loss and damage to cargo as does a motor carrier.

A “transportation broker” is a person that arranges for transportation by motor carrier for compensation. Since a transportation broker is a true intermediary, generally speaking it does not have liability for cargo loss and damage.

Canadian motor carriers will transport shipments between Canada and the United States and Canadian brokers will arrange for such shipments. With respect to shipments from Mexico to the United States, Mexican carriers typically do not cross into the United States.

Cabotage There is another critical concept that is involved in international transportation, that is, cabotage. Cabotage is defined by the Merriam-Webster dictionary as “trade or transport in coastal waters or airspace or between two points within a country.” Under US law, foreign carriers are prohibited from engaging in cabotage within the United States. Many other countries have similar prohibitions against cabotage.

The effect of this regulation means that, for example, a Canadian motor carrier could transport a load of cargo from Toronto to Dallas (assuming it had the appropriate US FMCSA licenses) and then return to Toronto with a load that it picked up in Dallas. It could also go without cargo from Dallas to Chicago, and then take a shipment from Chicago to Toronto. What is prohibited is for the Canadian motor carrier to take a shipment from Dallas to Chicago. While a motor carrier is used in this example, the prohibition includes all modes of carriage — motor, air, and ocean.

Brent Wm. Primus, J.D., is the CEO of Primus Law Office, P.A., the Senior Editor of transportlawtexts, inc., and Director of Virtual Education for the Transportation and Logistics Council, Inc. Previous columns, including those of William J. Augello, may be found in the “Content Library” on the PARCEL website (PARCELindustry.com). Your questions are welcome at brent@primuslawoffice.com.

CROSS-BORDER & GLOBAL 2023  PARCELindustry.com 15

By Thomas Taggart

THE LOW-DOWN

ON SHIPPING LOW-VALUE GOODS OVERSEAS

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n today’s digital age, launching an online shop has never been easier. Platforms like Shopify can transform budding businesses into fully operational e-commerce merchants in just one day, equipped to accept orders worldwide.

They’re also robust enough to provide scalability as companies evolve into market leaders. In fact, dominant brands such as Allbirds, Gymshark, and Kylie Cosmetics have all harnessed the power of Shopify to extend their reach to a global audience.

However, as the e-commerce industry has streamlined the selling process, the shipping space has grown increasingly complex. Customs and tax authorities across the globe are now pushing for more accurate data, holding merchants accountable for the information they submit.

Compliance Shifts in Recent Years Traditionally, when it came to shipping low-value goods overseas, merchants only needed to know how to print a shipping

label. Customs brokers and carriers would handle the intricate details, from the description of goods to the product value and HS tariff. However, the past five years have seen more regulatory modifications than the preceding 50, and these are reshaping international e-commerce. Furthermore, this trend shows no signs of slowing down.

Before we get into the significant changes that have recently been implemented, let’s define what’s considered a low-value good (LVG).

LVGs vary by market, but are usually defined by customs and tax authorities based on a duty de minimis threshold.

For example, they can include orders below 135 GBP in the UK, 150 EUR in Europe, or 1,000 AUD in Australia.

Now we can dive into some of the compliance developments we’ve seen in recent years. These can broadly be categorized into tax reforms and customs changes.

Tax Reforms:  2018 – Australia follows New Zealand

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in requiring non-resident merchants to register for a goods and services tax (GST) ID if they cross a sales threshold.  2021 – The EU and UK remove the value-added tax (VAT) de minimis, requiring VAT to be paid on all imports and imposing registration requirements.  2023 – Singapore and Malaysia launch a new GST program for low-value goods, with the Organisation for Economic Co-operation and Development (OECD) pushing for similar actions in other emerging markets.  2023 – Brazil launches a tax reform program encouraging merchants to register and pay taxes on imports in exchange for eliminating the 60% tariff on shipments under $50 USD. Customs Changes:  2018 – The Synthetics Trafficking & Overdose Prevention (STOP) Act to curb illegal opioid imports into the US has broad-reaching impacts across supply chains.

 2022 – The Uyghur Forced Labor Prevention Act goes into force with other major markets like the EU expected to follow suit.  2023 – ICS2 requires at least a six-digit HS code for all products and an accurate description of goods for shipments to the EU, Norway, Switzerland, and Northern Ireland.  2023 / 2024 – The CBSA Assessment and Revenue Management (CARM) initiative shifts the fiscal responsibility for customs surety from the customs broker to the importer, and requires all importers into Canada to be directly involved in the duty and tax settlement process.

cross-border transactions lies in these numerous possible points of failure and an error at any part in this chain can cause major impacts down the line.

While a variety of AI-based solutions have been developed to help merchants accurately determine HS codes for their products, the effectiveness relies heavily on having precise product descriptions.

This is where the first problem typically arises. Many companies use product descriptions to catch customers’ attention as opposed to describing in detail what the product is, what it’s made of, and what it’s used for — the three key elements required for a proper HS classification.

Enforcement of New Regulations What’s often not widely published is how customs and tax authorities are going about enforcing new regulations. Take Australia’s tax system, for instance.

The requirements seem straightforward — if you sell more than $75,000 AUD (~$50,000 USD) worth of products into Australia within any 12-month period, you must register for a tax ID and collect the 10% GST at checkout. But how is this regulated? The Australian Tax Office (ATO) has contracted a third party to identify merchants who have crossed the sales threshold but haven’t registered for or remitted GST. An Australian tax lawyer and former ATO official explained it this way: “The ATO has wide powers of information collection from third parties and regularly receives updated feeds of various information.” These wide powers include surprisingly accurate information about your online sales across e-commerce platforms. Many merchants aren’t aware of the GST requirements and are shocked to receive compliance letters demanding back taxes and payment of penalties and fees.

To navigate this new landscape successfully, it’s important for merchants to work with carriers, customs brokers, and other industry experts to ensure compliance as requirements become more complex.

Importance of Accurate Data All customs and tax data are connected.

Like the Skeleton Dance from childhood, the Product Description’s connected to the — HS Code; the HS Code’s connected to the — Duty Rate; the Duty Rate’s connected to the — VAT Charge, and so on until you get to the Total Landed Cost. A common challenge with

On top of ensuring customs and tax data is accurate, achieving consistency across multiple platforms, systems, and partners can be tricky. Even if the product data in your e-commerce platform is flawless, it can become distorted, just like a game of broken telephone, as it travels from your fulfillment center to your carrier, then to your customs broker, and finally to the customs authority. Without a structure in place to assimilate this information into a closed loop, data can change unbeknownst to the merchant as it moves through the shipping process.

Navigating the Shifting Compliance Landscape Cross-border compliance has undergone a notable transformation in recent

years with regulatory agencies now requiring merchants to take more responsibility for accurate shipment details. This transition has significant implications for global e-commerce brands that are not experts in customs or tax regulations, potentially leading to fines, penalties, and fees, as well as increased customs holds and inspections.

To navigate this new landscape successfully, it’s important for merchants to work with carriers, customs brokers, and other industry experts to ensure compliance as requirements become more complex. Brands should also consider partnering with providers or investing in technology solutions that can help them manage their customs and tax compliance more effectively.

An example of this is implementing a closed-loop system that ensures data accuracy from storefront to stockroom to shipment delivery. This comprehensive approach can identify and rectify data errors at various potential points of failure, leveraging actual customs entry data from successful shipments. By doing so, shippers can reduce customs holds, inspections, and discrepancies in the total landed cost, ultimately ensuring a smoother cross-border shipping process.

While the evolution of compliance in recent years has created challenges for e-commerce merchants, companies who adapt quickly can gain a competitive advantage in the global marketplace. Brands who stay up to date with the latest customs and tax regulations, or partner with professionals who do, will gain access to key markets and unlock international growth opportunities.

Thomas Taggart is a cross-border commerce executive with more than 20 years of experience in international trade, supply chain, and product development. As the Head of Global Trade for Passport Shipping, Thomas helps e-commerce brands go global by simplifying international trade, tax, and product compliance issues. For any inquiries, feel free to reach out to hello@passportshipping.com.

CROSS-BORDER & GLOBAL 2023  PARCELindustry.com 17

EXTENDED EFFECTS OF COVID-19 LOCKDOWNS ON CHINESE SHIPPING THROUGH 2022

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or eight years, we have been tracking both regional and international shipping data to compile our Pitney Bowes Parcel Shipping Index, which measures parcel volume and spend for business-to-business, business-to-consumer, consumer-to -business, and consumer-consigned shipments with weight up to 31.5kg (70 pounds). The Index tracks data for Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, Norway, Sweden, the United Kingdom, and the United States and represents the parcel shipping activity of 3.8 billion people across these markets.

This year’s index data follows the post-pandemic aftermath of COVID-related supply chain disruption, rising costs, and labor shortages, and shows that major markets like China are still showing signs of slowdown, impacting the overall global parcel volume.

B y G re g g Z e g r a s

In 2022, global parcel volume reached 161 billion, which is 5,102 parcels shipped every second, a mere one percent increase from 2021. This slowdown is largely due to China’s economy and a reset from the stratospheric growth seen during peak covid. China parcels increased two percent to 111 billion parcels, which is the slowest rate of growth since the Index’s inception.

From 2013 to 2021, China’s parcel volume had maintained a double-digit growth rate, until 2022 when COVID-related lockdowns nearly halted growth. Pre-pandemic China parcel volume forecast was 25% CAGR 2018 to 2022. Actual volume growth was lower, at 22% CAGR 2018 to 2022.

Despite China’s slowing growth, India led with the highest parcel volume increase at 18% driven by significant expansion in e-commerce. Italy (4%), Australia (2%), and Brazil (2%) also followed suit with volume growth, while

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Sweden (-11%) and Canada (-9%) reported significant declines.

Overall, we did not see a significant change in global parcel revenue with only a one percent decline, which netted out at $485 billion. This decline was impacted by a strong USD and its increase in value compared to other currencies in the Index.

Only the United States, Brazil, India, and Australia showed growth in parcel revenue, with the US leading in carrier revenue with seven percent growth in 2022. Revenue per parcel varied significantly, with Canada highest at $9.8, followed by the US at $9.3 and France at $9.1. Despite lower volume, the US generated more revenue than China due to a significantly higher fee per parcel — almost seven times that of China. China’s revenue per parcel is $1.4, the lowest globally, followed by India at $1.7 and Norway at $1.9.

While we found there is strong alignment between parcels per person and GDP per capita in the US, Germany, Brazil, and India, parcels per person in China, Japan, and UK exceed GDP, most likely due to significant exports.

In Norway, Sweden, and Australia there is a reverse effect, with low parcels per person compared to GDP, suggesting a fairly low penetration of e-commerce.

We analyzed relationships between parcel volume growth and e-commerce growth, and discovered that in the US, Canada, Brazil, Japan, and India there is a large eight to 12% gap between parcel volume growth and e-commerce growth, influenced by online purchases that don’t require parcel shipping, such as online groceries, Click-and-Collect, and alternative delivery methods (gig drivers, drones, bicycle deliveries in India). In the remaining countries, the parcel volume and e-commerce growth are well aligned with a low gap, where online purchases utilize traditional carrier-based shipping methods.

In today’s rapidly evolving shipping environment, data is the one throughway that gives industry leaders the confidence they need to mitigate the challenges brought by the pandemic and help plan for the next disruption.

Gregg Zegras is Executive Vice President and President, Global Ecommerce at Pitney Bowes.

For detailed insights by region, please download the ebook at https://www.pitneybowes.com/ us/shipping-index.html where you can also view a short video, infographic, and map.

BY MAJA BERNSTEIN

THE IMPORTANCE OF ROUTE PLANNING IN WORLDWIDE SHIPMENTS

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n the realm of domestic or international shipping, the planning of delivery routes is of utmost importance in order to ensure efficiency, sustainability, and profitability. This is particularly crucial for businesses that operate within global markets. To achieve success, such businesses must possess a comprehensive understanding and have access to data-driven information on available shipping methods and routes in real time. The selection of the appropriate option can prove to be pivotal.

Why Does Route Planning Matter?

Time Efficiency - In the world of business, time is money, and efficient route planning ensures that parcels reach their destinations in a timely manner without any unnecessary and unavoidable delays. As an example,

if we consider a vital component that has been delayed, it has the potential to halt an entire assembly process (for example, in a vehicle plant), leading to missed sales opportunities or contractual penalties.

Cost Optimization - When devising a transportation plan, prioritizing speed over direct transportation cost (or the other way around) can be a costly mistake. Instead, it is imperative to take into account other expenses, such as transit time, labor, environmental, and warehousing, in order to identify the most economical option. Through the optimization of the transportation plan, substantial savings can be realized, particularly when the operation is scaled.

Safety and Compliance - When it comes to global shipments, various regulations are followed by various coun-

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tries, and an efficient route plan should take these regulations into consideration in order to ensure compliance and avoid potential legal issues, which may lead to parcels being confiscated. In addition, there is always the potential that there may be safety constraints relating to geopolitical issues or environmental hazards.

Sustainability Aspects - With the current push globally around sustainability, businesses are working harder to minimize their carbon footprints and achieve their sustainability goals. This is another area where efficient route planning can support green logistics initiatives and their ability to identify areas and routes that will result in reduced fuel consumption.

Tech-Driven Solutions in Route Planning To counter multiple complex chal-

lenges involved in global shipments and route planning, technology has ascended as the beacon of hope, providing options to businesses for advanced, data-driven analytics through technologies like artificial intelligence and machine learning, which are transforming how route planning is approached and executed.

Predictive Analysis - Through AI integration, route planning platforms can now identify and predict routes that are potentially disruptive, whether due to weather conditions or man-made situations, allowing for proactive rerouting.

Data-Driven Decision-Making - While predictive analysis and real-time monitoring provide future and current information, historical data can also offer invaluable insights into route efficiency, helping businesses identify patterns in terms of delayed deliveries on specific shipments or routes in order to plan future shipments accordingly.

Delving Deeper – Beyond the Basics of Route Planning In some instances, the observance of cultural or religious holidays in either the country of origin or the country of destination may result in the temporary closure of delivery warehouses or limited shipping operations. This circumstance can impede the timely delivery of parcels. Therefore, being mindful of such occurrences can aid in effective route planning, saving time and money.

Moreover, as global shipping involves the use of multiple modes of transport, achieving a seamless transition between the various modes is critical. Route planning is, therefore, essential to gain a holistic view of the various legs of a journey from start to finish.

The utilization of technology to design transportation routes has evolved from being non-existent to becoming an indispensable tool in recent years.

Nevertheless, due to the unpredictable nature of the global supply chain,

it is vital for businesses to leverage a combination of technology, data analysis, and human expertise to plan effectively.

In route planning, the establishment of human communication and transparency is of utmost importance, as they foster trust and situational awareness among stakeholders.

It’s crucial to focus on the journey rather than the destination, as this is the most important aspect of efficient route planning. A collaborative approach between technology, human experience, and data is essential to navigate the complex terrain of global shipping.

Maja Bernstein is the VP of Industry Relations at Fluent Cargo. She has vast experience in logistics having previously worked at Rock-it Global as a freight forwarder specializing in live events for several years and most recently at Oceanworks as operations manager.

CROSS-BORDER & GLOBAL 2023  PARCELindustry.com 21

WHERE IN THE WORLD: COUPS, WARS, FLOODS, AND FIRES

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By Merry Law

ith extreme weather occurring around the world, we are hearing about severe destruction of many thousands of square miles in Spain, Italy, Greece, Türkiye (formerly Turkey), Syria, China, the Philippines, Mozambique, Malawi, Madagascar, South Africa, Zimbabwe, Canada, and the US, among others. In other words, the whole world has been affected. Most recent are a devasting earthquake in the Atlas Mountains of Morocco, with the death toll approaching 3,000 people, and the third eruption in 2023 of Hawaii’s Kilauea volcano.

Beyond natural disasters, civil war in Somalia has added to the refugee population and to famine in that area of east Africa. Famine conditions were triggered by the war in Ukraine, which was a major exporter of food and energy resources. The coups d’état in Burkina Faso, Mali, Niger, and Gabon brought the total number of coups in Africa to seven over the last three years.

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Both extreme weather and wars kill and displace people and destroy infrastructure. Not everything will be rebuilt, and certainly the people impacted may not recover or return. For international mailers, the immediate impact is undeliverable or greatly delayed delivery. Longer term, the problem with undeliverable mail continues unless the mail owner takes action to remove or correct address. And, as we all know, undeliverable mail is expensive and wasteful. Looking at three events — the wildfires in Canada, the earthquake in Türkiye and Syria, and the floods in Greece — provides an insight to the potential long-term effects.

The Canadian wildfires have occurred in all 13 provinces and territories. Particularly large fires in Alberta, British Columbia, the Northwest Territories, Nova Scotia, Ontario, and Quebec displaced people, destroyed prairies and woods, homes and businesses, and led to air-quality alerts as far south as North Carolina. They are expected to continue into the winter. As of early September, government figures said 6,187 fires had burned 165,646 square kilometres (63,956 sq mi; 40,932,000 acres), with 964 active wildfires, and 597 of those out of control. While much of that area is not heavily populated, over 155,000 people were evacuated. Local officials note that structures were lost in some towns and rural areas.

On February 8, a 7.8 magnitude earthquake hit southeastern Türkiye and northwestern Syria. It was followed by another of 7.7 magnitude six hours later. Aftershocks continued for months and floods triggered by the earthquakes occurred over a region larger than 350,000 sq. km. (140,000 sq mi). All of this affected about 14% of the Turkish population according to the UN report. In Syria, the area around Aleppo, largely destroyed during the civil war, was hit by these earthquakes and aftershocks. The winter weather added to the difficulties for the survivors and rescuers. Estimate of how long the rebuilding in both countries will take is estimated to be five or more years, with some media sources suggesting rebuilding will not occur in all affected regions.

The disastrous flooding in Greece follows wildfires on both the mainland and the islands earlier in the year that forced evacuations on Corfu and Rhodes and in Athens and other mainland cities. The floods in southeast Europe in early September following Storm Daniel hit Greece, Bulgaria, and Türkiye. In Zagora, 889 millimeters (2.917 ft) of rain fell in one day. Because of the floods, the main highway between Athens and Thessaloniki was closed and train service was shut down. Buildings and bridges were wiped out and some towns were under water.

In this small sample, transportation infrastructure, buildings, and lives were destroyed. With this level of disruption and tragedy, mail delivery is not a high priority — and we can all understand that and sympathize with those who suffered losses. Still, mail is central to our businesses and there are steps we can take to reduce the impact of civil disruptions and severe weather in our mail programs.

First, stay informed. International news is freely available on the internet. English-language coverage is available from all parts of the world. I like the daily update from the BBC.

Along with the BBC, The Guardian, Al Jazeera, Africa News, and others provide daily email digests mail owners and mail service providers need to be up to date on events that affect the receipt and delivery of mail.

As disruptive weather events are likely to increase, according to weather experts, we need to put business plans in place to deal with their aftermath.

Follow us on social to stay connected!

Hold mail to affected areas. Immediately following a coup d’état, mail will not be delivered in the immediate area of the coup, usually the capital city or the residence of the deposed head of state. If the coup becomes a civil war, the disruption will spread and last longer. Severe weather events may not be forecast, but it will be in the news. The USPS does not immediately stop mail to these areas. It takes time for the affected country to notify the Universal Postal Union (UPU), which forwards notices to postal administrations in other countries, or to notify other postal administrations directly.

Follow up on customers or other mail recipients in affected areas. Organizations often have more than simply a mailing address for those on a mail list. Verify that the postal item arrived or that it can now be sent to the same address or a new one. Remember that all communications can be disrupted for some time and it may take multiple attempts for a successful delivery. The cost of these attempted communications can be compared to the cost of undelivered mail over time. If these mail recipients are customers, these attempts can increase customer loyalty.

Flag database addresses that are questionable or undeliverable, but take care. This can save on sending repeatedly to addresses that are temporarily or permanently undeliverable.

Depending on your business, there can be legal issues with not mailing. Financial institutions are particularly under legal obligations to mail in a timely manner.

As disruptive weather events are likely to increase, according to weather experts, we need to put business plans in place to deal with their aftermath. While we can hope that civil disruption will decrease, we can plan for that, too. The planning will mitigate the costs and negative effects that have been experienced over the roller coaster we’ve all been on this year. Please do keep in mind that these events put people’s lives and livelihoods at risk as you plan your communications.

Merry Law is President of WorldVu LLC and the editor of Guide to Worldwide Postal-Code and Address Formats. She is a member of the UPU’s Addressing Work Group and of the U.S. International Postal and Delivery Services Federal Advisory Committee.

CROSS-BORDER & GLOBAL 2023  PARCELindustry.com 23

By James Doyle

AI ISN’T JUST A BUZZWORD — IT’S SIMPLIFYING CROSS-BORDER TRADING AND COMPLIANCE

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I is on everyone’s lips, regardless of industry.

Yet, it’s the game-changer in cross-border trade and compliance, solving today’s and tomorrow’s challenges.

For postal and logistics companies, AI isn’t just a buzzword — it’s the key to future-proofing their operations.

Redefining Compliance Through Data As the volume of international package shipments surges in tandem with the growth of e-commerce, regulators have ramped up scrutiny to tackle fraud and tax evasion within cross-border trade.

The outcome is a heightened complexity in compliance requirements. Notably, the year 2021 marked a turning point with the Universal Postal Union (UPU) mandating the use of advanced electronic data (AED) for designated operators to pre-report package information. This transformation represents a shift toward more accurate data capture and reporting, fundamentally reshaping how the industry operates.

In the next three years, parcel data will be used for more than just calculating duties and taxes. It will be an intrinsic requirement for transport security, product safety, and sustainability reporting. The data sent ahead of a shipment will need to confirm a product’s raw materials, report every

stage of its supply chain, and quantify its carbon footprint. Without data, there will be no shipment. As the volume of data surpasses human handling capacities, AI emerges as a vital player, ensuring data accuracy and managing the influx of information.

But some will always meet adversity with innovation, and we’re starting to see a bigger change brewing. Operators like Geopost (formerly DPDgroup), Wish, and Joom Logistics are beginning to leverage data technologies like AI and ML to automate compliance and reporting.

Regulations Are Moving Beyond Human Capabilities Logistics and postal operators have had many challenges thrown at them over the last three years. As well as the obvious issues we’ve all been grappling with — a global pandemic, war in Europe, and an economic downturn — these industries have been hit hard by an onslaught of regulatory changes. Cross-border compliance is an increasingly diverse environment, and regulations such as the STOP ACT in the US, Canada’s CARM importing regime, the UK’s new Customs Declaration Service, and Europe’s ICS2 electronic advanced data regulatory changes are just a few of the changes any business routinely shipping goods across borders has had to contend with in the last year.

The regulatory environment is now simply too complex for human teams to manage alone. Most senders are focused on keeping their heads above water; perfect compliance isn’t a possibility for many. Instead, their focus is on mitigating and limiting inevitable costly errors.

Consignee Demands Are on the Rise Consignees are seeking both transparency and fast package deliveries.

Their awareness of the complexities of regulations is limited. Their primary desire is for a seamless and prompt delivery process. Amidst the diverse factors causing delays, regulatory compliance stands as a barrier against customs-related hold-ups. By employing AI to manage compliance and process extensive datasets, the benefits extend not only to logistics operations but also envelop the entire supply chain up to the consignee.

Cart abandonment for international shoppers is a known issue, with over 40% of US shoppers saying they’ve abandoned their cart because duties and taxes were unclear or unrealistic.

For senders already automating duties and tax calculations for compliance, extending this automation to the checkout is a very light lift, providing accurate, real-time calculations to shoppers directly. Similarly, parcel-level data can be leveraged to tackle last-mile

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delivery issues or reduce carbon output.

Growing Pressure to Move Toward Green Logistics As the global focus on sustainability and environmental responsibility intensifies, the cross-border trade industry is grappling with the imperative to adopt more eco-friendly practices. According to a report by the United Nations Conference on Trade and Development (UNCTAD), the carbon footprint generated by international shipping has steadily risen over the past decade, contributing significantly to overall greenhouse gas emissions. This pressing concern has prompted governments, businesses, and organizations to reevaluate their supply chain strategies.

In this context, AI assumes a pivotal role in the reduction of emissions and optimization of delivery routes, leading to more sustainable practices. Moreover, advanced electronic data holds the potential to introduce transparency into supply chains, enabling authorities to monitor carbon emissions and product

safety, thus fostering a more sustainable trade ecosystem.

So, Concretely, What Can AI Do? Digitalization sits at the center of everything. Improvements in digital technologies provided opportunities for authorities to refine data collection, and it is data technologies in turn that will provide senders with cost-effective tools to augment the capabilities of their human teams. Artificial intelligence is the ultimate data technology. This software analyzes massive data sets, identifying patterns and trends in near real time, and predicting a set of likely outcomes based on those trends.

In the context of cross-border trade, AI has a number of applications and a broad range of uses. For postal and logistics companies, AI can streamline reporting and reduce inaccuracies that lead to fines or seizures. For example, it can automate HS code assignment, using product descriptions and numerical values such as weight, volume, price, and quantity — as well

as the unique requirements of the customs authority at the destination – to automatically assign accurate codes to hundreds of thousands of parcels in mere seconds. It can instantly screen for denied parties, or accurately calculate duties and taxes for consumers in any destination at point of sale.

Paving the Future of Cross-Border Trade Digitalization has driven significant changes in the cross-border trade environment and will drive still more as improvements in data technologies increase the scope of the data available to both authorities and businesses.

For postal and logistics companies, AI will soon be a necessary tool — they won’t be able to remain compliant without it.

This gives us an exciting opportunity as a sector to not only apply these technologies to meet compliance requirements but to pioneer their use to optimize business processes and refine customer journeys.

James Doyle is CEO of US and LATAM, Eurora.

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CROSS-BORDER & GLOBAL 2023  PARCELindustry.com 25

By Helen Scurfield

INTERNATIONAL RETURNS: 5 WAYS TO MANAGE THEM MORE COST-EFFECTIVELY

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eturns are a perennial headache for online retailers, costing US retailers $816 billion in lost sales in 2022, according to the National Retail Federation.

And the issue is gaining momentum.

Asendia’s latest report, How to sell direct in the age of the conflicted shopper, found that over half of 800 global retailers surveyed (57%) felt returns volumes would increase in the next 12 months. The problem is that escalating returns rates, combined with rising transport and processing costs, are gnawing away at e-commerce

retailers’ profit margins. International fashion brands including Asos, Zara, J.Crew, and Uniqlo, are moving away from free returns, rather than accepting lost profits.

Domestic returns are challenging, but the intricacies of cross-border reverse logistics are testing the mettle of even the most innovative retailers. Here are five ways that retailers with overseas customers can manage returns more cost-effectively.

Partnering for Global Reach and

2 Efficiency

Collaborating with a shipping partner

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that boasts a robust global network can significantly enhance cross-border returns management. This partnership facilitates consolidation in key locations, reducing the risk of carrier delays, and provides a seamless experience for consumers returning items from international destinations.

A notable advantage of this approach is the potential for partners to handle tax reclamation on behalf of retailers — where doing so is commercially worthwhile — ensuring compliance with intricate international tax regulations.

Managing the paperwork efficiently in both directions, and advising on

the best ways to reclaim tax, should be top priorities for any US retailer’s international logistics partner. the Pricing Spectrum 2 Navigating Introducing a fair pricing model for return shipping options can be instrumental in managing costs effectively. Transparent communication is pivotal to customer satisfaction.

Additionally, retailers can seize this opportunity to educate consumers about the environmental impact of expedited international returns, fostering conscious decision-making. the Customer with 2 Empowering Enhanced Tools By implementing size and fit tools on their websites, retailers empower customers to make informed choices, reducing the likelihood of returns due to sizing issues. Technological advancements offer further promise with AI-driven personalized sizing recommendations and virtual try-on experiences.

German online retailer Zalando is piloting a virtual fitting room experience, available across 25 countries. Customers can create a 3D avatar by entering their height, weight, and gender. For a selected range of jeans, customers can see on-screen how different sizes from various brands would fit them, with a heatmap indicating where the item sits tight or loose on the avatar they created.

Meanwhile, with Google’s new virtual try-on feature, users in the US can select models ranging from size XXS to 4XL, with different skin tones, body shapes, and hair types. Google is using generative artificial intelligence, available through its search engine, which, to begin with, is usable on women’s tops.

Communication and 2 Seamless Tracking Streamlining communication

between retailers and their overseas customers throughout the returns process is paramount, especially where timelines will be longer due to distances involved. By providing live notifications and tracking capabilities, retailers can mitigate the costly burden of customer service associated with returns.

In an era where consumer expectations continue to evolve, successful retailers will strike a harmonious balance between cuttingedge technology and strategic partnerships, ensuring a cost-effective and customer-centric returns ecosystem.

Real-time updates on return status and anticipated refund processing times enhance transparency and trust, contributing to an overall positive customer experience. Offering “no printer required” returns will give a degree of choice and flexibility consumers really like.

Leverage a Purpose-Built

2 Returns Solution

Returns of online fashion orders in the US incur an estimated $25.1 billion in processing costs for companies annually, according to Coresight Research. How can retailers see an immediate improvement in processing cost-efficiency?

One best practice is to look for returns solutions that integrate into retailers’ systems, increase speed, offer choice, and improve customer satisfaction. A logistics partner can support faster returns processing by grading and inspecting goods at strategically located returns centers.

Equally, aggregation of returned items for long-distance, cost-effective returns presents another viable option.

An end-to-end returns platform will offer a comprehensive suite of services, encompassing return item assessment, refurbishment, and repackaging, ensuring a seamless and efficient returns process. Data analytics can flag costly problems. For instance, retailers can see which SKUs are being returned, which countries they’re coming from, and the reasons for return. The power is in spotting the trends and taking timely action to reduce returns rates.

Technology and Partnership for Returns Success Technology has emerged as a formidable ally in the battle against escalating returns rates. Innovative solutions, such as AI-driven sizing tools and virtual try-on experiences hold promise. However, the complexity of cross-border returns necessitates collaboration with experienced shipping partners.

In an era where consumer expectations continue to evolve, successful retailers will strike a harmonious balance between cutting-edge technology and strategic partnerships, ensuring a cost-effective and customer-centric returns ecosystem.

Helen Scurfield is Innovation and Development Director at Asendia.

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By Hannah Testani

ENHANCING SUPPLY CHAIN SECURITY: THE ROLE OF REAL-TIME VISIBILITY IN COMBATING CARGO THEFT

I

n April 2023, the early morning silence of a Walmart parking lot in Northeast Philadelphia was abruptly broken. A nondescript trailer, harboring $750,000 worth of dimes from the Philadelphia Mint, was stationed overnight, awaiting its impending journey to Florida. However, the breaking of bolts reverberated through the air, disrupting the cargo’s serenity. Unseen, an intruder absconded with one million dimes, amounting to $100,000.

While the notion of pilfering a mountain of dimes might appear unconventional, law enforcement authorities deem such incidents to be increasingly typical, symptomatic of the growing epidemic of cargo theft across the nation.

Per insights from a Philadelphia police captain, the spectrum of stolen goods is vast, ranging from perishables like lamb and chicken to durable goods like TVs and refrigerators.

This illicit trend is by no means minor; the FBI estimates that cargo theft inflicts a colossal annual financial toll of $15–$30 billion on trucking companies and retailers in the United States alone. Illuminating the severity of the problem, cargo theft and associated fraudulent activities witnessed a striking 41% surge during the initial 20 weeks of 2023.

This raises pertinent questions: Is there a beacon of hope in navigating this intensifying tide of theft? Can deploying advanced technologies such as real-time visibility effectively deter this alarming trend?

The complexities of the modern supply chain landscape are met with escalating challenges, with cargo theft being a significant concern causing substantial economic ramifications and disruptions. The increasing sophistication of theft tactics necessitates a strategic and innovative approach to secure freight and mitigate associated risks. In this evolving scenario, real-time visibility emerges as a pivotal solution, enabling proactive management and enhanced security of shipments.

28 PARCELindustry.com  CROSS-BORDER & GLOBAL 2023

Understanding Cargo Theft Cargo theft continues to be a pervasive and intricate issue, presenting itself through a spectrum of methods, each with its own set of challenges. The act of thieving unattended goods from diverse locations like transit vehicles, warehouses, and truck yards is relentless and evolving, emphasizing the indispensable need for fortified security protocols and heightened operational cognizance.

Varied Manifestations  Pilferage: Small-scale thefts occurring during handling and storage can accumulate over time, posing significant cumulative losses and marking businesses as susceptible targets.  Strategic Theft: This sophisticated method involves deceptive and calculated tactics, such as fraudulent pickups and identity theft, requiring an intimate knowledge of supply chain operations to counter.  Fraudulent Pickups: Criminals masquerading as lawful transporters exploit vulnerabilities and human errors to unlawfully acquire cargo, necessitating stringent verification processes.

Escalating Incidences Recent data illustrates a worrying escalation in cargo theft occurrences, propelling an urgent reassessment of prevailing security strategies. The versatility in theft tactics ranges from intercepting goods during transit to exploiting stationary cargo.

The proliferation of these incidents underscores the criticality of innovative and adaptive measures to enhance cargo security.

Holistic Awareness and Adaptation The ongoing surge in cargo theft incidents necessitates a holistic understanding of the multifaceted nature of cargo theft and the adoption of comprehensive security measures. This

encompasses not only the development of advanced security protocols but also the cultivation of a culture of vigilance and adaptability within the industry. The commitment to continuous learning and adaptation is pivotal in staying ahead of evolving threats and ensuring the integrity of the supply chain.

Seeking Solutions In light of the rising tide of cargo theft, the quest for innovative and effective solutions is imperative. Integrating technology, enhanced security protocols, and a proactive approach to risk management are fundamental in navigating the complex landscape of cargo theft and ensuring the resilience and security of supply chain operations.

The Significance of Real-Time Visibility Real-time visibility is a cornerstone in enhancing supply chain security. It enables shippers to track goods constantly, offering insights into the location and status of their shipments. This capability is crucial in facilitating the immediate resolution of transit issues, optimizing operational efficiency, and improving the overall end-customer experience. Additionally, it significantly diminishes the resources — staffing, time, and cost — expended to acquire visibility through manual means.  Proactive Exception Management: Real-time visibility enables the analysis of shipment data to make actionable decisions swiftly, allowing logistics teams to address various shipment-related issues proactively.  Enhanced Customer Satisfaction: The ability to preemptively notify and resolve issues underscores customer satisfaction as a priority, fostering trust and reliability in the shipping process.  Operational Efficiency: The insights gained through real-time visibility allow for a deeper dive into operational gaps, leading to more efficient loss and damage claims management with carriers.

Combating Cargo Theft with Strategic Insights The integration of real-time visibility in supply chain operations empowers shippers to stay ahead of potential threats. The immediate access to shipment information and status allows for swift response to any discrepancies, thereby reducing the likelihood of cargo theft. Strategic insights derived from real-time data enable shippers to identify and address vulnerabilities in their supply chains, fortifying their defenses against the evolving tactics of cargo thieves.

A Large High-Tech Company Relies on Real-time Visibility to Drive Improved Exception Management A case study involving a high-tech company illustrates the impact of real-time visibility on exception management. The large company utilized real-time visibility solutions to provide their customers with 24/7 shipment location information, improving on-time performance and the overall customer experience, as well as a better pulse on potential cargo or package theft.  24/7 Shipment Location Information: The implementation of real-time visibility offered continuous insights into shipment locations, significantly enhancing on-time performance and improving the overall end-customer experience.

 Proactive Exception Management: The real-time data enabled swift and proactive resolution of transit issues, allowing the logistics team to mitigate potential disruptions effectively.  Enhanced Customer Interactions: The ability to provide customers with real-time updates fostered trust and reliability, underscoring the company’s commitment to customer satisfaction.  Efficient Claims Management: The documentation provided through real-time visibility facilitated more streamlined and effective loss and damage claims management with carriers.  Operational Insights: The application of real-time visibility solutions allowed for a deeper exploration of operational gaps and vulnerabilities, leading to refined and more secure supply chain operations.

Navigating the Future: Embracing Innovation for a Secure Supply Chain Adopting real-time visibility solutions is paramount in addressing the rising challenges in cargo security. It not only allows shippers to enhance the security and efficiency of their supply chain operations but also elevates the level of service provided to the end customers. In a landscape marked by escalating threats and operational complexities, real-time visibility stands as a beacon of innovation and strategic foresight, guiding the way toward a more secure and resilient supply chain ecosystem.

Hannah Testani is CEO, Intelligent Audit.

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TO SUM UP

In the next three years, parcel data will be used for more than just calculating duties and taxes. It will be an intrinsic requirement for transport security, product safety, and sustainability reporting.

The complexities of the modern supply chain landscape are met with escalating challenges, with cargo theft being a significant concern causing substantial economic ramifications and disruptions. The increasing sophistication of theft tactics necessitates a strategic and innovative approach to secure freight and mitigate associated risks.

— HANNAH TESTANI

— JAMES DOYLE

Cross-border e-commerce is not only here to stay, but is projected to experience explosive growth in the years ahead. It’s imperative to stay updated on today’s delivery trends and create a cross-border e-commerce shipping strategy with the appropriate carrier that best aligns with consumer demands and your business needs by asking the right questions during the selection process.

— MICHAEL LAMIA

In route planning, the establishment of human communication and transparency is of utmost importance, as they foster trust and situational awareness among stakeholders. It’s crucial to focus on the journey rather than the destination, as this is the most important aspect of efficient route planning. A collaborative approach between technology, human experience, and data is essential to navigate the

the customs authority.

In effect since 1938, the de minimis rules have gained significant attention after Congress enacted the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA). TFTEA authorized increasing the dollar threshold of de minimis shipments from $200 to $800 in daily imports.

Combined with the development of e-commerce direct to consumer shipments, CBP reports that the number of de minimis imports has risen 410% between 2015 and 2022.

— THOMAS TAGGART

— ANDREW M. DANAS

complex terrain of global shipping.

— MAJA BERNSTEIN On top of ensuring customs and tax data is accurate, achieving consistency across multiple platforms, systems, and partners can be tricky. Even if the product data in your e-commerce platform is flawless, it can become distorted, just like a game of broken telephone, as it travels from your fulfillment center to your carrier, then to your customs broker, and finally to

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