As e-commerce continues to expand, US Customs and Border Protection (CBP) is increasingly turning its attention to customs brokers, who now find themselves at the forefront of ensuring compliance amid a surge of smaller, less-documented shipments. This growing focus on brokers marks a significant shift in the regulatory landscape, as CBP seeks to address the challenges posed by the booming online retail industry.
The New Expectations for Customs Brokers
The rise of e-commerce has led to an influx of shipments that differ significantly from traditional freight. These smaller parcels often come with less comprehensive documentation, creating a new set of challenges for customs authorities. In response, CBP is placing greater expectations on customs brokers to bridge the gap, ensuring that these shipments comply with US laws and regulations.
Customs brokers are now being asked to take a more proactive role in understanding the full scope of their clients’ import activities. This goes beyond the basic requirements of filing entries accurately. Brokers are expected to gain deeper insights into the products being imported, the supply chains involved, and the overall admissibility of the goods.
Navigating New Regulatory Requirements
One of the most significant changes on the horizon is the anticipated regulation that will require customs brokers to verify the identities of the importers they work with. While brokers have always been concerned with ensuring the legitimacy of their clients, this upcoming legal requirement represents a new level of responsibility.
This shift underscores the evolving role of customs brokers as key players in the trade compliance ecosystem. Brokers will need to adapt by educating their clients about their own obligations, particularly in understanding who they are doing business with. This heightened scrutiny reflects a broader trend of increased oversight, as regulators aim to crack down on forced labor, intellectual property violations, and other serious infractions within global supply chains.
The Impact of E-commerce on Customs Oversight
The explosion of e-commerce has also exposed vulnerabilities in the US customs system, particularly through the de minimis provision. This rule allows for duty-free shipments under $800, which has led to a massive increase in the volume of low-value parcels entering the country. While this has been a boon for consumers and small businesses, it has also created what some experts describe as a “loophole” that poses significant risks.
Customs brokers have long argued that the high de minimis threshold exposes the US to potential dangers, as it reduces the layers of scrutiny typically applied to higher-value shipments. With the sheer number of these smaller parcels overwhelming the system, CBP is increasingly relying on brokers to help manage the compliance load.
Legislative Efforts to Address the De Minimis Challenge
In response to these concerns, several bills have been introduced in Congress aimed at curtailing the use of the de minimis provision. The staggering number of de minimis shipments—1 billion in just the first half of 2024—highlights the urgency of the situation.
The trade compliance community sees a direct connection between the growing expectations placed on brokers and the rising tide of smaller shipments. Overwhelmed by the volume and speed of e-commerce, customs authorities are shifting more responsibility onto the trade community, including customs brokers.
This shift is also evident in the increasing scrutiny of “Type 86” shipments—those under the de minimis threshold where limited data is provided to CBP. Brokers handling these entries are now facing heightened expectations to ensure that the products being imported are fully compliant with US laws.
Facing New Compliance Challenges
Customs brokers are finding themselves in uncharted territory as they navigate these new responsibilities. The “reasonable care” standard, typically applied to importers of record, is now becoming a significant concern for brokers dealing with de minimis shipments. These brokers must rely on the information provided by their clients, which can be limited and may not meet the new compliance expectations.
As the flow of information becomes more restricted, brokers may need to engage in more extensive communication with their clients to ensure that all necessary details are disclosed. This increased involvement is not only a departure from traditional practices but also a source of discomfort for many brokers and importers alike.
Conclusion: Adapting to the New Normal
The landscape of trade compliance is rapidly evolving, with customs brokers playing a critical role in ensuring the integrity of the supply chain. As e-commerce continues to grow, so too will the expectations placed on brokers to safeguard against risks such as forced labor, intellectual property violations, and environmental harm.
Customs brokers must adapt to these changes by deepening their knowledge of their clients’ operations and fostering closer relationships with importers. By doing so, they can help navigate the complex regulatory environment and ensure that global trade remains secure and compliant in the digital age.
