Don't get intoxicated by ecommerce's 'quick buck', air cargo players warned
Senior air cargo executives have warned the industry not to become too ‘intoxicated’ by the ...
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The Loadstar is running a series of reports on the ecommerce sector, which has been driving growth in air cargo. But are there clouds on the horizon?
The limited visibility between e-tailers and airlines is becoming increasingly challenging for customs agents inspecting ecommerce parcels, and the de minimis rule may be exploited to get illicit goods into a country without inspection.
The ecommerce market grew 30% in 2023 and shows no sign of abating. The US Customs Border Protection (CBP) agency warned: “The rapid growth of ecommerce has revolutionised the way goods are bought and sold, allowing for counterfeit and pirated goods to flood our borders and penetrate our communities and homes.”
A US Republican congress staff member told The Loadstar: “There’s an economic argument about duty-free status, but it’s also argued that packages coming from China under the de minimis threshold are a way to get fentanyl precursor chemicals into the US. So, there’s also a lot of support to change this rule on drug epidemic grounds.”
They highlighted that many players in the US were lobbying to reduce US de minimis to curb dangerous good imports.
According to the Drug Enforcement Administration, most of the illegal fentanyl found in the US was trafficked from Mexico using chemicals sourced from China. Between 2018-2021, the CBP seized over 400,000 de minimis shipments, over 9% of which were narcotics related.
“Advances in economic activity have led to increasing volumes of imports of small, just-in-time packages, creating inspection challenges,” it said.
This creates concern that reducing the de minimis threshold to increase security checks would up the workload for already overwhelmed customs agents.
“There would be an increase in their workload, but that is a necessary increase. They would be working a lot more for sure,” the congress staff member told The Loadstar.
But there are regulatory efforts being made to curb illicit activity at the source and make it increasingly difficult for e-tailers to facilitate.
Last week, the EC designated ecommerce giant Shein as “a very large online platform” (VLOP) after it reported averaging over 45 million users a month.
As a VLOP, Shein will have to comply with the most stringent rules under the Digital Services Act (DSA) by August. This includes more diligent surveillance of illegal products, such as “counterfeit goods, unsafe products, and items that infringe on intellectual property rights”.
Mitigation measures could include adapting the terms of service, enhancing design for better reporting and detection of suspicious listings, improving moderation processes to swiftly remove illegal items and refining its algorithms to prevent the promotion and sale of prohibited goods.
Shein must also reinforce its internal processes, resources, testing, documentation and supervision, as well as produce an annual, externally and independently audited, risk assessment evaluating any potential adverse effects on consumer health and safety.
Other VLOPs include Alibaba Express, TikTok and Amazon.
Listen to this clip of Flexport’s Neel Jones Shah on why ecommerce is driving air cargo markets
But the CBP noted that while ecommerce shipments posed similar health, safety and economic security risks as containerised shipments, the volume was higher and still growing, which had overwhelmed largely underprepared and understaffed customs operations.
And the Customs and Tariff Bureau of the Ministry of Finance in Japan told The Loadstar: “With the expansion of cross-border ecommerce, the number of import permits is increasing rapidly… We recognise risks such as tax evasion through declaring unreasonably low import value, smuggling of illicit drugs and goods infringing intellectual property rights.”
Additionally, criminal organisations shipping illicit goods perceive shipping small individual packages as a lower risk, and having less severe consequences if intercepted.
The bureau added: “We are making maximum efforts to carry out strict border control on harmful import goods.
“From the perspective of balancing strict border control, such as the prevention of smuggling of illicit drugs, with smooth customs clearance, Japan customs obtains the necessary advance information and utilises it in the screening and inspection of cargo. Also, by cooperation between customs brokers, ecommerce platform operators and other operators,” it concluded.
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