News / Fulfilment specialists pave the road for indirect US e-commerce imports

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Despite the low value, the tidal wave of e-commerce parcels from China to the US is mostly carried on direct flights, but there are question marks over the straight route as US legislators chew on proposals to stem this tide.

E-commerce fulfilment platform ShipBob is building indirect routes to the US market via its USMCA neighbours and is now offering fulfilment via Toronto and Tijuana.

Chinese e-commerce merchandise orders are sent to three warehousing facilities in Toronto and one in Tijuana, where customs clearance is handled before the goods are moved to the nearest US hub to inject the parcels into ShipBob’s carrier network for delivery.

Shipments from its bonded warehouse in Tijuana are moved to ports in southern California. The Toronto facilities are not bonded, which means that duty is raised on US-bound shipments but consumers can claw this back. According to ShipBob, transit times from Toronto to points along the US east coast average two-to-three days.

Aaron Aragonez, director of e-commerce at Nocta, a Nike sub-brand, said the arrangement “has shown huge benefits in terms of duties savings and transportation expense”, with customers getting “essentially a US-domestic shipping experience”.

ShipBob has been using its Toronto stations for domestic and international moves, but recently geared them up to handle US-bound shipments that fall under the de minimis duty exemption for customs processing.

“By leveraging the US Section 321 entry type, merchants shipping high-tariff goods can reduce the paperwork required to import, speed up delivery to US consumers and, ultimately, save money on both transportation and duties,” said ShipBob in its announcement

ShipBob is not the only fulfillment specialist that feeds e-commerce parcels via Canada into the US market. In 2022, ShipHero acquired Canada-based Delivery Net to launch duty-free import services out of warehouses in Toronto and Vancouver.

Others may follow as US legislators explore ways to stymie inbound flows of Chinese e-commerce. Congress is examining various proposals to tighten or seriously change de minimis rules. A warning shot of sorts came in late May, when the US Customs and Border Protection (CBP) agency clamped down on de minimis imports for which it had not received advance data as required, but subsequent import numbers indicate this had little discernible impact on the flow of e-commerce pouring into the US.

CBP handles nearly four million de minimis shipments a day. According to ShipMatrix, Temu and Shein moved about 900,000 packages a day into the US in July.

Just as Chinese manufacturers have moved to avert US import restrictions by setting up production facilities in South-east Asia or Mexico, e-commerce merchants and their fulfilment providers may seek alternative entry routes to the US market if legislators were to erect barriers to direct de minimis shipments

One forwarder commented wryly that “trade is like water; it finds its way”, while another pointed out that implementation of restrictions within the European Union varied from one jurisdiction to another, allowing e-commerce firms and their logistics providers to choose the least-troublesome entry routes into the economic bloc.

For its part, the Canadian government seems willing to work with its southern neighbour to align potential trade barriers. In late May, finance minister Chrystia Freeland declared that Canada would not tolerate moves to use it as an entry gateway to the US market for banned goods.

“Canada will not be a country through which there can be transhipment, and we’re very mindful of that,” she said.

On 26 August, Ottawa announced that it would be following the lead of the US administration and impose a 100% tariff on imports of Chinese electric vehicles, and a 25% duty on steel and aluminium, from China. These tariffs will be imposed from 1 October.

Prime minister Trudeau said his administration would work with the US and other allies to protect their economies against non-market practices of countries like China, adding that it was looking at further measures on other products, like chips and solar cells.

On the other hand, US consumers have shown a seemingly insatiable appetite for goods from China. Separate surveys by Probolsky Research and Omnisend show US shoppers rate Amazon higher in terms of customer experience and speed than Temu and Shein, but find the latter pair offer much lower prices. This is a powerful incentive to those e-commerce platforms to find ways around obstacles erected by lawmakers.