Table of Contents
- Duty Free Entry Type 86 Clearance: Section 321 Programs
- Section 321 Data Pilot and Type 86 Clearance
- Duty Free Entry Type 86 Clearance Requirements
- Type 86 Filing
- Changes for Filers
- CrimsonLogic Solutions for Duty Free Entry Type 86 Clearance
Online shopping has accelerated and shows no signs of slowing down in the post-COVID world. Ecommerce sales in the United States during the first quarter are estimated to be 14.8 percent higher than same period last year and made up 11.5 percent of overall retail sales. In the first three quarters of this year alone, US ecommerce sales reached $581.5 billion, representing an astounding 32.4 year-over-year increase. The second quarter was the strongest with ecommerce sales hitting a record high of $211.6 billion. The data is not surprising considering that lockdown measures kept consumers at home who then turned to online shopping. Some analysts say the pandemic has accelerated the shift to ecommerce by as many as five years and businesses can find opportunities for growth through ecommerce and duty free entry type 86 clearance services.
eCommerce sales are not only increasing, the U.S. ecommerce market share of total retail sales is also expanding. The estimated 1.8 million parcel shipments entering the country each day have created problems for agencies like Customs and Border Protection (CBP) and trade participants. High volume parcel flows are pushing customs brokers and freight forwarders to scale operations to handle demand. Traders are looking for the best ways to balance reliability with affordability when it comes to logistics and last-mile deliveries.
Most ecommerce parcels are low-value and eligible to enter the U.S. free of duty and tax. In order to streamline the processing and release of these high-volume parcels, CBP has introduced a test alternative to the usual Section 321 release on manifest clearance process.
Duty Free Entry Type 86 Clearance: Section 321 Programs
Section 321 of the Tariff Act of 1930 allows CBP to exempt from duty and tax all goods valued at $800 or less, as long as the shipment is imported by one person per day. This de minimis entry process enables CBP to protect against illegal trade and monitor high-risk shipments while promoting duty free entry for qualified imports, the majority of which are ecommerce parcel shipments.
Section 321 Data Pilot and Type 86 Clearance
A voluntary test is ongoing to test the functionality of advance processing of data from e-commerce participants like online retailers. This is for risk assessment purposes and identifies more accurately the shipper, consignee or final recipient and the contents of the package.
Another voluntary test, entry type 86, has been active since September 2019 and allows importers and customs brokers to submit de minimis entries through the Automated Broker Interface (ABI) in the Automated Commercial Environment (ACE). These include low-value shipments regulated by partner government agencies (PGAs) like the Food and Drug Administration (FDA).
For CBP, the goal of entry type 86 is to provide greater visibility into regulated and normal parcel shipments and ensure that regulatory requirements are met.
Duty Free Entry Type 86 Clearance Requirements
Entry type 86 shipments are similar to release on manifest Section 321 shipments, except entry type 86 expands the coverage to include PGA-regulated goods. Normally, PGA-regulated low-value shipments require importers and carriers to submit additional data to the controlling agency before release. These goods are entered using the more complex informal entry type 11 or a formal entry.
Type 86 removes this requirement for eligible parcels, provided the importer or their broker submits the 10-digit Harmonized Tariff System of the United States (HTSUS) code for each shipment. Other required data elements for this entry type:
- Bill of lading or air waybill number
- Entry number
- Planned port of entry
- Shipper name, address and country
- Consignee name and address
- Country of origin
- Quantity
- Fair retail value in the country of shipment
- Importer of Record (IOR) number of the owner, purchaser or broker (for PGA-regulated goods)
Type 86 Filing
Type 86 is open to all importers and brokers of Section 321 goods both PGA-regulated and otherwise in all modes of transport (except for merchandise imported by mail). Unlike the release on manifest process, filers of entry type 86 are required to appoint a customs broker to act as the importer of record (IOR) for the shipment. Brokers must have a valid power of attorney and comply with applicable laws.
The electronic shipment data must be submitted to CBP via ABI in ACE. Because of the HS code requirement, some importers may choose to release their parcels through the normal manifest process and reserve type 86 filing for PGA-regulated goods. Knowledge of HS code classification is essential to take full advantage of Type 86 entry benefits, as inaccurate codes and false information may lead to heavy fines, delays and even denial of entry.
In June this year, CBP warned of several hours of delays in type 86 processing due to pandemic-induced online shopping and the resulting surge in parcel imports. CBP told importers to file type 86 entries only when all related bills are submitted and restrict entries to a maximum of 30,000 per hour. Filers should also hold ACE cargo manifest queries until the entry process is complete.
Changes for Filers
For importer self-filers and brokers, Type 86 opens up ABI for the submission of low-value entries. This automation is a huge plus for companies handling many PGA-regulated parcels each day, as the clearance process is significantly faster and simpler.
It is also cheaper. After arrival at the entry port, most importers clear air and ocean parcel shipments through ECCFs (Express Consignment Carrier Facilities), which costs about $1 per parcel. Type 86 entries are not only duty and tax free, they can skip the ECCF or CFS process and proceed straight to the warehouse or to delivery.
Type 86 entry filing requires an understanding HS code classification. This is easy for retailers who already work with customs brokers and logistics firms. Companies newly engaged in international e-commerce are at a disadvantage, however, unless they work with a broker agency or third-party providers.
How Third Parties Can Help
Skyrocketing parcel volumes, high freight costs and other challenges make it difficult for small and medium sized e-commerce retailers to complete with giants like Amazon and Walmart. Capturing a slice of the profitable U.S. e-commerce market requires automation and intelligent technology that adapts to regulatory changes. Third party providers can help your business with solutions that automate not only type 86 entry and Section 321 filing, but also eManifest, e-AWB, HS code classification and similar processes for thousands of parcel shipments.
CrimsonLogic Solutions for Duty Free Entry Type 86 Clearance
CrimsonLogic is here to help you maximize e-commerce opportunities in the world’s largest economy. CrimsonLogic expertise in international trade and its intelligent technologies enable trade participants to automate entry type 86 clearance for high-volume parcel imports. Our scaling technology, brokerage assistance and CFS arrangements allow importers and shippers to fulfill on-time deliveries cost-effectively and optimize compliance with CBP regulations.
eCommerce Managed Services include automated shipment clearance, airport ground handling, CFS, and shipment deconsolidation. CrimsonLogic CFS processing offers more airport and pricing options than any other ECCF and skips the $1 per HBL customs fee. For release on manifest Section 321 shipments, CrimsonLogic provides ACE ABI for streamlined entry/entry summary filing, ACE eManifest for all modes of transport, e-AWB submission, PGA reporting, ISF 10+2 and more.
All solutions are flexible and can be tailored to meet specific business needs. Trade software can be accessed online or integrated with existing systems. CrimsonLogic can only file entries and other electronic documents on your behalf.
Learn more by visiting our page on duty free entry type 86 clearance or contact us today!
