WEBVTT
00:00:04.639 --> 00:00:09.679
Welcome to another episode of the Decoding Cross Border E-Commerce Podcast.
00:00:09.839 --> 00:00:11.119
Aaron, welcome back.
00:00:11.359 --> 00:00:11.759
We're here.
00:00:11.919 --> 00:00:12.240
We're here.
00:00:12.320 --> 00:00:19.280
We're here to basically for round two of the executive order around strengthening customs enforcement.
00:00:19.440 --> 00:00:23.600
But um uh I know you have a lot of thoughts on this, and so I'm gonna let you kick it off.
00:00:23.679 --> 00:00:27.280
You're gonna do be a little bit more of the uh the host with the questions, I think, today.
00:00:27.600 --> 00:00:28.399
Yeah, absolutely.
00:00:28.559 --> 00:00:33.520
This is where um Clint, I actually know you have the most thoughts on this, which is why I'm gonna ask the questions.
00:00:33.679 --> 00:00:37.280
In fact, you had so many thoughts that you decided to write an article about it.
00:00:37.520 --> 00:00:41.200
Um so I I'd love to kind of dive into that and unpack it.
00:00:41.280 --> 00:00:43.920
And it's crazy where we're going.
00:00:44.000 --> 00:00:46.159
Like this has been this has been out a couple months already.
00:00:46.240 --> 00:00:47.600
I think it was back in June.
00:00:47.840 --> 00:00:50.399
Um and things are moving fast.
00:00:50.479 --> 00:01:00.479
I know CBP had some mandates in there uh on on things they had to do, and they're starting to to to take steps to um you know enforce the border.
00:01:00.560 --> 00:01:05.680
And I look at it, I'm like, holy cow, it's almost like it's almost Halloween season, right?
00:01:05.840 --> 00:01:06.719
Yeah, it's close.
00:01:06.879 --> 00:01:12.159
Um, and in fact, uh I often like to throw a party at a haunted house.
00:01:12.239 --> 00:01:13.359
Do you know why?
00:01:13.680 --> 00:01:14.480
Uh why?
00:01:14.719 --> 00:01:17.280
Because the ghosts bring all the booze.
00:01:21.120 --> 00:01:21.439
Okay.
00:01:21.760 --> 00:01:24.560
All right, and on that bad joke, let's let's pivot then.
00:01:24.719 --> 00:01:33.280
Um so Clint, you wrote um an open letter, really and it's titled A Reckoning is Coming.
00:01:34.640 --> 00:01:40.239
And that's tied back to that executive order and really a response or reaction to that, correct?
00:01:40.400 --> 00:01:40.879
Yep.
00:01:41.120 --> 00:01:47.120
And what I found interesting as I read this is uh lots of really interesting things in here.
00:01:47.200 --> 00:02:01.359
But as I get down to the bottom of it, um, towards the end, I there's a quote in here that I find a little different than what you'd expect from a customs enforcement executive order to a titled article that says a reckoning is coming.
00:02:01.599 --> 00:02:07.280
And this quote is for the honest, this is the best news in a thousand years.
00:02:08.159 --> 00:02:09.199
What do you mean by that?
00:02:09.439 --> 00:02:26.879
So, so think about how long this has been a problem for customs, just to deal with um, you know, from the days of the Silk Road, trying to enforce what's coming through the border and the amount of fraud and bad actors and everything that's going in through there.
00:02:27.039 --> 00:02:29.680
But you also have good actors.
00:02:30.400 --> 00:02:31.680
But how do you know, right?
00:02:31.759 --> 00:02:39.199
So you're doing inspections even on the good actors, and how do you and then trying to find ways to solve this problem?
00:02:39.360 --> 00:02:42.879
It's always been difficult for CVP, and we hear this from them directly.
00:02:43.520 --> 00:02:48.479
They they they want to know who's good so they can focus on who's bad.
00:02:49.759 --> 00:02:52.639
The vast majority of the trade is good.
00:02:53.360 --> 00:02:55.360
What do they I completely agree?
00:02:55.520 --> 00:02:57.520
What do they have to work with to know who's good?
00:02:57.840 --> 00:02:58.560
Not a lot.
00:02:58.879 --> 00:02:59.919
I mean, some things, right?
00:03:00.000 --> 00:03:00.960
There's some signals, right?
00:03:01.039 --> 00:03:14.560
It could be they are familiar with um uh it could be the the shipper on that, it could be the importer of record, it could be um uh the broker, right?
00:03:14.800 --> 00:03:18.000
They they they have signals that they can look for for sure.
00:03:18.240 --> 00:03:21.680
Um, and then there's some things that are kind of missing.
00:03:21.840 --> 00:03:31.199
And so what's been hard is, and this is why the executive order came out, is when it is a bad actor, how do you hold them accountable?
00:03:31.439 --> 00:03:32.560
And so what was going on?
00:03:32.639 --> 00:03:34.560
What were the bad actors doing, Aaron?
00:03:35.439 --> 00:03:41.759
Well, if you think specifically about the executive order, it was targeting importer of record.
00:03:41.919 --> 00:03:42.479
Right.
00:03:42.719 --> 00:03:49.360
In the US, a lot of people could be imported record without much substance here in the in the U.S.
00:03:49.680 --> 00:03:51.280
What kind of people could be imported record?
00:03:51.520 --> 00:03:53.120
Uh anybody, any foreign entity.
00:03:53.360 --> 00:03:53.919
Foreign entity.
00:03:54.080 --> 00:04:03.599
Uh there could be it'd be really easy for someone to kind of spin up a shell company of sorts, act as the importer record, and then when CVP comes calling to enforce, they disappear.
00:04:03.680 --> 00:04:06.400
They become like those ghosts that are bringing all the booze to the party.
00:04:06.719 --> 00:04:09.599
Um, so the I even brought that to you.
00:04:09.759 --> 00:04:09.919
You did.
00:04:10.000 --> 00:04:10.400
I was cute.
00:04:10.639 --> 00:04:11.599
Isn't that amazing?
00:04:11.840 --> 00:04:18.319
Um yeah, and so look, the the rules of the game are changing, but honestly, the environment's been changing.
00:04:18.639 --> 00:04:25.120
Uh uh, and it it has I kind of go back to your quote uh that I that I quoted earlier of best news in a thousand years.
00:04:25.279 --> 00:04:30.879
I actually think this is all really important to even go back to the history of trade.
00:04:30.959 --> 00:04:37.600
And you touched on it a little bit, but um you know, specifically, we live in the low-value e-commerce world.
00:04:38.639 --> 00:04:47.759
And let's can you just give us a little history lesson here and kind of like what led us up to this point, and maybe even tie in some specifics around low value e-commerce.
00:04:48.000 --> 00:04:53.120
So so think you know, late 2000s and e-commerce starts booming, right?
00:04:53.680 --> 00:04:56.319
And there's all this volume.
00:04:57.040 --> 00:05:03.759
And customs hasn't had a great way to deal with small parcels, and so some countries has had like de minimis in place, even the U.S.
00:05:03.839 --> 00:05:11.279
had a de minimis, it was$250, but that that was still there was way too much volume for customs to deal with at$250.
00:05:11.439 --> 00:05:13.439
So, in I think it was 2016, right?
00:05:13.600 --> 00:05:19.360
Is when the um uh Barack Obama changed it to$800 on the de minimis.
00:05:19.680 --> 00:05:22.399
In fact, you wrote a letter at that point in time, too.
00:05:22.639 --> 00:05:22.879
I did.
00:05:22.959 --> 00:05:23.120
I did.
00:05:23.680 --> 00:05:24.560
What was your opinion then?
00:05:24.800 --> 00:05:25.839
Um Do you remember?
00:05:26.079 --> 00:05:26.639
I do.
00:05:26.879 --> 00:05:31.920
I I thought it was a mistake for a lot of different reasons.
00:05:32.079 --> 00:05:37.360
Mostly I understand that I definitely understand the overwhelming side for the government to deal with the packages.
00:05:37.759 --> 00:05:42.800
Where where it was a mistake is neighbors, right, uh, to the U.S.
00:05:43.120 --> 00:05:47.759
didn't have a de minimis that high, and the vast majority of the world didn't have a de minimis that high.
00:05:48.000 --> 00:05:54.160
And it made it very difficult for US businesses to compete with foreign entities.
00:05:54.399 --> 00:06:09.439
And then we saw, well, I'm you know, I won't say I was right, but you know, we saw how a lot of this played out over the coming years for US companies is uh you could just park your warehouse on the border in Canada or in Mexico.
00:06:10.560 --> 00:06:17.040
And so instead of let's say let's say you warehouse in Texas versus warehouse in Mexico, just like miles apart.
00:06:17.519 --> 00:06:22.319
The difference is if you what happened, how much are the tariffs if you warehouse in Texas?
00:06:23.120 --> 00:06:26.399
Um whatever the tariffs are on all of your goods.
00:06:26.959 --> 00:06:27.279
Why?
00:06:27.439 --> 00:06:32.639
Because you're bringing in larger, more expensive over the$800 to minimis.
00:06:33.279 --> 00:06:39.600
If you bring in that same container but house it in Mexico, and then you only ship individual orders across individuals.
00:06:40.639 --> 00:06:42.480
What's the value of each one of those shipments?
00:06:42.639 --> 00:06:43.439
Uh less than$800.
00:06:43.680 --> 00:06:44.319
Less than$800.
00:06:44.560 --> 00:06:45.439
What's the duty on that?
00:06:45.680 --> 00:06:46.000
Zero.
00:06:46.160 --> 00:06:46.480
Zero.
00:06:46.639 --> 00:06:49.839
And so this caused there, it just that's one type of problem.
00:06:50.000 --> 00:06:55.439
The other thing is China could then just bring in a plane load of goods and kind of get the same effect by keeping a warehouse in China, right?
00:06:55.519 --> 00:06:57.120
The TMU's in the Sheen.
00:06:57.680 --> 00:06:59.920
And it wasn't just about the tariffs.
00:07:00.000 --> 00:07:01.439
That's not what this is about, all about.
00:07:01.519 --> 00:07:05.120
It was about being able to know what's in the package, right?
00:07:05.279 --> 00:07:06.720
Like they don't have visibility.
00:07:06.959 --> 00:07:10.079
So I I think all this problem, this explode, right?
00:07:10.160 --> 00:07:17.920
This goes back to what you were you were asking earlier is the the the reason that this came into play is there was so much volume you couldn't see it.
00:07:18.160 --> 00:07:25.839
And then they had to figure out, okay, crap, we um this is causing all sorts of problems because now I have foreign entities that I don't know who they are.
00:07:26.079 --> 00:07:39.120
And let's say they're they're skirting tariffs or other bad behavior, and then customs wants to go after this imported record, and it's like ABC company, you know, with a bad phone number, and they're not getting any money.
00:07:39.199 --> 00:07:44.240
And they, yeah, sure, they're they're bond, you know, they have the smallest bond possible.
00:07:44.480 --> 00:07:51.199
Uh, but CBP would be left holding the bag, and a bad actor could they spin up another shell company.
00:07:51.439 --> 00:07:51.839
Yeah.
00:07:52.399 --> 00:07:55.600
This is not just the US, Europe is trying to solve the same problem.
00:07:55.680 --> 00:07:57.600
Everywhere around the world wants to solve this problem.
00:07:57.759 --> 00:08:12.560
How this was solved, though, is when you, and this was the executive order, they wanted to put this on an actual person inside the United States that's a citizen or a real business with assets in the US, right?
00:08:12.720 --> 00:08:17.120
So they're they need somebody to go after and hold accountable.
00:08:17.279 --> 00:08:26.959
And this is causing now has all sorts of consequences, uh in and how the executive order and what it talks about and what it's going to punish and all this.
00:08:27.040 --> 00:08:36.159
But back to why is this good for the the uh the good actors out there is it's going to create clarity.
00:08:36.320 --> 00:08:40.960
If you were, if you were, um, let's say you're let's let's talk about a good actor.
00:08:41.039 --> 00:08:44.000
Yeah, let's go at non-e-commerce, then we can kind of go to e-commerce.
00:08:44.320 --> 00:08:45.600
You're bringing a container.
00:08:45.759 --> 00:08:52.320
I was doing this not uh, you know, for just uh funny um Halloween costumes, actually.
00:08:52.559 --> 00:09:01.440
Um uh so we're bringing a shipment of Halloween costumes and some other things for a small family business, um, and add some pool pump stuff anyway.
00:09:02.080 --> 00:09:12.080
The broker I was working with, who will not be named because it's not the broker that we purchased, uh said this is what the new tariffs had new tariffs had come out.
00:09:12.159 --> 00:09:17.679
This was this was uh um a little over a year ago, and he was panicking and he called me, he's like, whoa, whoa, whoa, whoa.
00:09:17.840 --> 00:09:19.440
He's like, dude, you have all these new tariffs.
00:09:19.519 --> 00:09:23.679
He's like, so um what we we need to change the value on the shipment.
00:09:24.639 --> 00:09:26.480
And I'm like, we need to what?
00:09:26.879 --> 00:09:30.559
And he's like, yeah, so can we like if we just change the value, then we can save on your tariffs.
00:09:30.639 --> 00:09:31.679
And he's like, can we just change it?
00:09:31.840 --> 00:09:33.360
He's like, what do you want me to change it to?
00:09:33.440 --> 00:09:35.279
And I'm like, you don't change it.
00:09:35.440 --> 00:09:36.320
This is a broker.
00:09:38.080 --> 00:09:46.159
And then it's it's like, so he doesn't change it, and the guy changes the harmonized code anyway to try, he's thinking he's doing me a favor.
00:09:46.399 --> 00:09:51.360
Changes the harmonized code anyway on the freaking entry to save me on tariffs.
00:09:51.440 --> 00:09:52.799
And you know what ended up happening?
00:09:52.960 --> 00:09:57.200
Customs ended up changing it later, and then I ended up paying, of course, the difference.
00:09:57.279 --> 00:09:59.600
I'm just like, what are you doing?
00:10:00.480 --> 00:10:11.200
And so these are the type of situations when I'm a good actor, I'm paying my full tariff on the goods, and I know that competitors possibly are not, right?
00:10:11.360 --> 00:10:16.720
If they're working with, you know, this guy, they're I already know how he's been operating.
00:10:17.440 --> 00:10:34.720
And so now if I know the if people know you have to be an entity here, and in this case, I don't know if uh maybe, maybe they could have been, but if he had to be the import of record and his business was on the line, this might have been he might have he might have handled that situation a little differently if he had a little more skin in the game.
00:10:34.960 --> 00:10:36.399
Okay, but let's say he didn't, right?
00:10:36.559 --> 00:10:37.200
What happened this week?
00:10:37.279 --> 00:10:37.759
What do we hear?
00:10:37.840 --> 00:10:38.240
What's the rumor?
00:10:38.480 --> 00:10:39.840
Yeah, what's on the rumor mill, Aaron?
00:10:40.240 --> 00:10:45.840
We know we know of a broker just this week that got shut down doing that was doing type 11 entries, right?
00:10:46.480 --> 00:10:49.840
I don't want to say necessarily why, but I'll uh we could we could be general.
00:10:50.159 --> 00:11:06.159
It is in general, there's some weird patterns with tariffs that were no longer applying, those kind of things that uh and what happened was is there was a part of their book of business that was not very compliant, and another part of their business got affected.
00:11:06.240 --> 00:11:10.080
Yeah, and now is that other part of business that is compliant is now scrambling to find a new.
00:11:10.399 --> 00:11:14.559
So this is this puts um shippers in a big dilemma, right?
00:11:15.519 --> 00:11:20.399
Before, if you really probably didn't think that hard about who is brokering the shipments.
00:11:20.879 --> 00:11:34.639
You know, you're probably looking to save on price, and now all of a sudden you, you know, you're you're scrambling to get your shipments cleared because your broker wasn't really doing reasonable care.
00:11:34.799 --> 00:11:40.000
And it's hard to at scale in this low e-commerce environment.
00:11:40.240 --> 00:11:48.000
We have come at it with a very interesting perspective because we know and understand extremely well the what's happening on the other side of the pond, right?
00:11:48.080 --> 00:11:55.440
Like with um where they're selling on the platforms, what that what how e-commerce transactions work, what kind of data is accessible.
00:11:55.519 --> 00:11:59.200
So we we just have a different viewpoint on it, kind of coming into brokerage.
00:11:59.519 --> 00:12:19.120
Um but as things start to clamp down, you know, if your competitor is doing B2B to C, which by the way, is most of the time, I would say, um uh you know, BS, B2C, like it's just it's it's uh there's there's a few cases where you can can legitimately do B2B to C.
00:12:19.679 --> 00:12:30.320
One thing that they were doing on that is they would just tell, and this is how you know that it was all messed up, they would just tell the the foreign entity, let's just spin you up a little entity in Wyoming.
00:12:30.879 --> 00:12:31.519
Right?
00:12:32.080 --> 00:12:36.960
And that's going to be, we're we're just gonna, that's B2B, that's your B2B in the US.
00:12:37.120 --> 00:12:39.120
This executive order is going after people like that.
00:12:39.279 --> 00:12:51.039
So if you've been hearing, you know, things in your overseas about trying to save on terrorists, when you're trying to do that, it the US and other countries are going to try to find mechanisms.
00:12:51.200 --> 00:12:56.879
And and the the linchpin in this was putting the onus on a business or a person.
00:12:57.039 --> 00:12:59.840
And then it goes through and goes through all the punishments and things it's gonna punish you.
00:13:00.080 --> 00:13:10.639
When we actually have accountability, yep, and someone has um a reason to uh want to be compliant versus someone that says, Yeah, well, the I'm outside the law.
00:13:10.720 --> 00:13:14.240
I I'm a I'm a foreign importer of record, good luck coming after me.
00:13:14.399 --> 00:13:18.320
And they they can shut down and spin up another entity overnight.
00:13:18.559 --> 00:13:22.320
And and in fact, they uh from what I understand, uh there's a lot of them.
00:13:22.399 --> 00:13:27.840
They just have multiple entities all ready to go, and they just spin up, they just close down one, move to the next.
00:13:28.080 --> 00:13:42.960
Um, but I but I as I listen to the story, I also think about um the the why and how we got here and how it's actually, especially in e-commerce, this is this is a new world that we're entering globally, not just in the US.
00:13:43.200 --> 00:13:50.559
And there's there's a tendency to want to say, well, it's always been done this way, or this is how it so someone else is doing it, and it's always worked.
00:13:50.720 --> 00:13:52.639
I I the rules of the game are changing.
00:13:52.720 --> 00:13:57.600
And part of that is A, if you go back to the De Minimus across the world and the U.S.
00:13:57.759 --> 00:14:02.080
raising theirs, on low-value shipments, they just chose to ignore them.
00:14:02.320 --> 00:14:10.960
That's what the de minimis is like, yeah, I'm not gonna worry about it because there's a whole bunch of a whole bunch of operational problems and things like these aren't that big of a piece of the pie.
00:14:11.039 --> 00:14:12.240
Let's just let's just ignore them.
00:14:12.399 --> 00:14:21.919
Well, then all of a sudden, security and compliance uh you know issues started arising in that in that uh lane because it got exploited.
00:14:23.039 --> 00:14:26.000
Now they're saying, okay, how do we deal with that?
00:14:26.240 --> 00:14:30.399
And that's where I think it now Springboards and you know, Europe's getting rid of their de minimis.
00:14:30.480 --> 00:14:32.320
There's a ton of countries talking about it.
00:14:32.559 --> 00:14:32.799
U.S.
00:14:32.960 --> 00:14:34.320
got rid of their de minimis.
00:14:34.720 --> 00:14:41.200
And if you look at this, now they're saying who's gonna be responsible to make sure all of these low value shipments are compliant?
00:14:41.600 --> 00:14:45.519
They want someone, they want someone to hold accountable, which is the importer of record.
00:14:45.679 --> 00:14:49.039
The importer record, who is a US business most likely.
00:14:49.759 --> 00:14:52.879
Yeah, it's a company that has assets or it's a person.
00:14:53.120 --> 00:15:03.679
So let now now what's the I want I want to talk a little bit about the what this punishes, because like in the executive order, uh maybe you have something else you want to get to.
00:15:04.399 --> 00:15:08.159
I actually want to touch on why the this all sounds super negative.
00:15:09.200 --> 00:15:19.600
But why is that a good thing if you're a legitimate US business trying to run your your business above board, how the freaking luya?
00:15:19.759 --> 00:15:25.440
Yeah, because you've been competing against that against BS for sure for years.
00:15:25.679 --> 00:15:28.720
Yep, and now you can finally compete on a on a fair plane.
00:15:29.200 --> 00:15:37.840
And and there's a lot of honest foreign sellers, absolutely you know, and sometimes there's in different regions, right?
00:15:37.919 --> 00:15:42.240
There there's uh there's some behaviors sometimes that are different and not as honest.
00:15:42.399 --> 00:15:47.440
And in other regions, they're super honest, and they're competing against another region overseas too, shipping to the US.
00:15:47.519 --> 00:15:48.480
They have US customers.
00:15:48.639 --> 00:15:50.320
This is great for them, right?
00:15:50.399 --> 00:15:58.159
You're an Australian business or Canadian business, and you've been doing it right, like this this will in the end can end up really, really good for you.
00:15:58.399 --> 00:16:03.039
And the ones they're gonna scream the loudest are the ones that were not so honest.
00:16:03.200 --> 00:16:08.320
And so they're gonna try to find ways to change the tariff and whatever.
00:16:08.399 --> 00:16:11.279
And then CP's gonna notice they're gonna shut down the brokerage, right?
00:16:11.759 --> 00:16:13.039
Like which we've seen.
00:16:13.360 --> 00:16:19.200
And then that because that broker's the IOR, and eventually, right, this is going to weed things out.
00:16:19.360 --> 00:16:23.840
But it did, it started with yes, the having someone to hold accountable.
00:16:24.080 --> 00:16:28.799
Now, uh can we get to let's do it.
00:16:28.879 --> 00:16:31.200
Uh, all right, so some of what does this punish?
00:16:31.440 --> 00:16:37.039
Punishes misrepresentation, so that's undervaluation, especially, right?
00:16:37.279 --> 00:16:42.000
But changing again the description, anything like that, you're gonna get smacked, right?
00:16:42.080 --> 00:16:44.240
We talked about the shell companies, sellers.
00:16:44.320 --> 00:16:46.639
You need to be able to produce the export paperwork.
00:16:46.720 --> 00:16:55.440
Um, they're gonna build a registry of they're really trying to clean up the whole registry of importer of records, and so um it's going to build that up, but then there's gonna be penalty floors.
00:16:55.679 --> 00:16:59.039
So that these penalties, man, there's been some crazy stuff.
00:16:59.279 --> 00:17:08.799
So um, like negligence can be like 2x the duty cost, gross negligence, 4x, broker misconduct is like you know, 30k.
00:17:09.200 --> 00:17:19.839
Uh in 2013, there were pharmacy parcels like coming through with UPS, and there was a four is 40 million dollars was the fine.
00:17:20.319 --> 00:17:24.799
And then CBP went after FedEx in uh 2014 where they were criminally indicted.
00:17:24.880 --> 00:17:27.440
It's 1.6 billion dollars.
00:17:27.680 --> 00:17:30.000
Uh I think this one was also around pharmaceuticals.
00:17:30.240 --> 00:17:32.240
FedEx ended up winning and had to go to trial.
00:17:32.480 --> 00:17:40.720
And so it's not that they were actually like purposely, it doesn't even sometimes matter, even if you're saying you're doing your best isn't good enough.
00:17:40.880 --> 00:17:43.920
And this is now the broker, the situation the brokers are in.
00:17:44.319 --> 00:17:49.359
Well, and and what you can't do is say you're doing your best while you have your hands over your eyes, too.
00:17:49.680 --> 00:17:50.319
That doesn't work.
00:17:50.880 --> 00:17:52.880
No, I'm I'm I'm doing my best.
00:17:53.039 --> 00:17:58.400
And why should I have to know and prove that they sold it at this price on that platform?
00:17:59.279 --> 00:18:00.559
And here's why.
00:18:00.799 --> 00:18:02.480
This is a technology problem.
00:18:03.119 --> 00:18:04.880
This is not a clearance problem.
00:18:05.039 --> 00:18:08.720
Like I'm sorry, if it's a technology problem, then it can be solved, right?
00:18:08.960 --> 00:18:10.319
Go solve the problem.
00:18:10.480 --> 00:18:11.680
You need to know what happened.
00:18:11.759 --> 00:18:17.440
So this the executive order doesn't call out specifically what you need to do, it doesn't need to.
00:18:17.759 --> 00:18:24.720
So if you read what the punishments are, it's easy to conclude what then you have to do to meet that bar.
00:18:24.960 --> 00:18:32.400
Okay, Aaron, in order to avoid undervaluation, someone lying on the undervaluation, how can you try to avoid that?
00:18:32.480 --> 00:18:33.839
What are some ways?
00:18:34.160 --> 00:18:39.279
Well, um, I can tell you actually, yeah, how I've seen it work.
00:18:39.440 --> 00:18:40.480
How do they do it today?
00:18:40.720 --> 00:18:57.359
I've seen it because we we are involved in a lot of different international transactions over the years, but if there's a odd-looking valuation, I've seen a manual outreach from the broker to say, Hey, I need a receipt on this transaction.
00:18:57.440 --> 00:18:58.160
And they give it away.
00:18:58.240 --> 00:18:59.359
And who are they outreaching to?
00:18:59.519 --> 00:19:01.039
Uh, it's often the person that bought it.
00:19:01.119 --> 00:19:01.440
Uh-huh.
00:19:01.599 --> 00:19:04.799
Because they got a receipt from whoever they don't have a connection with the person that sold it.
00:19:05.039 --> 00:19:05.359
Exactly.
00:19:05.440 --> 00:19:05.759
Yep.
00:19:05.920 --> 00:19:07.519
And so it's a painful process.
00:19:07.680 --> 00:19:08.559
And then they'll get a receipt.
00:19:09.119 --> 00:19:13.359
If it doesn't match, then they actually update the the entry to what if they don't get the receipt?
00:19:13.440 --> 00:19:14.319
What do they do with that package?
00:19:14.400 --> 00:19:16.720
If it'll often, you know, it gets held.
00:19:16.880 --> 00:19:17.359
Yeah, yeah.
00:19:17.680 --> 00:19:18.880
It's called caging, right?
00:19:19.039 --> 00:19:21.759
So they'll cage things because it's missing information.
00:19:21.920 --> 00:19:30.240
And so uh that this is how okay, now now how could this be done at scale?
00:19:30.960 --> 00:19:32.880
Um, well, that's a great question.
00:19:33.039 --> 00:19:38.880
Let's let's think about in the and this is where I'm gonna narrow it down to the e-commerce space right now.
00:19:39.039 --> 00:19:39.759
Yes, yes.
00:19:40.000 --> 00:19:46.640
If I go to buy something online, uh there's a lot of information given to me when I buy, correct?
00:19:46.799 --> 00:19:47.119
Yeah.
00:19:47.359 --> 00:19:50.160
On the website when I buy, I know how much I bought it for.
00:19:50.319 --> 00:19:51.839
I have to put in my payment method.
00:19:52.000 --> 00:19:53.680
I get an invoice emailed to me.
00:19:53.759 --> 00:19:54.720
All this information is there.
00:19:54.960 --> 00:19:55.759
Did you have a coupon?
00:19:56.000 --> 00:19:56.799
Did you get a discount?
00:19:56.960 --> 00:19:58.240
There's all sorts of exactly.
00:19:58.319 --> 00:20:00.640
There's a ton of detail free, but guess what?
00:20:00.799 --> 00:20:03.759
There's a ton of technology on that side of it.
00:20:03.839 --> 00:20:04.319
Yeah.
00:20:04.640 --> 00:20:10.400
And if I and it's all there, available to be used, but no one's using it.
00:20:10.720 --> 00:20:23.119
And then if I look at what's actually put on a commercial invoice and what presented to a broker to clear it customs, it's like a three-word description and a value that who knows if it matches that transaction or not.
00:20:23.279 --> 00:20:23.440
Yeah.
00:20:23.680 --> 00:20:25.599
And so that's so this is drift, right?
00:20:25.680 --> 00:20:30.640
That occurs from the time of order to the to the time of declaration, right?
00:20:30.720 --> 00:20:31.599
When they create the shipment.
00:20:31.680 --> 00:20:31.920
Yep.
00:20:32.079 --> 00:20:40.880
And so what the broker sees, they're blind to what happens on the order, and they don't even consider the fact that maybe I should know, but this the the this is basically forcing it.
00:20:40.960 --> 00:20:43.920
You need to know who that foreign seller is.
00:20:44.160 --> 00:20:52.720
So when you sign up a business, you should let let's say that you're a broker in the US and you sign up, you know, you're doing shipments for this, you know, kind of it's not a brand, right?
00:20:52.799 --> 00:20:56.000
Let's say it's for a shipping company or something, a consolidator.
00:20:57.680 --> 00:21:15.279
If you don't have a connection to that consolidator's customer base in any way or a knowledge of them, or being able to do, or they're not doing a certain amount of vetting, and you can't prove, right, what you need, because you are now you're acting up when you're the importer of record, you're acting as if this is your what something you sold, right?
00:21:15.440 --> 00:21:17.119
You're taking that level of responsibility.
00:21:17.200 --> 00:21:18.400
I want to freaking know what's sold.
00:21:18.480 --> 00:21:20.640
So that's the bar, anyways, that we're setting, right?
00:21:20.720 --> 00:21:24.880
That we see is we want to know what you just said.
00:21:25.039 --> 00:21:27.359
I want what did this sell on Shopify?
00:21:27.440 --> 00:21:28.400
Did it sell on eBay?
00:21:28.640 --> 00:21:30.160
How much did it sell for?
00:21:30.640 --> 00:21:33.200
Did are you are you being honest?
00:21:33.519 --> 00:21:36.880
Because the majority of people are when they do, guess what?
00:21:37.200 --> 00:21:39.599
We're CBP will know that they're good.
00:21:40.000 --> 00:21:42.559
And then the ones that aren't, they're gonna know.
00:21:42.720 --> 00:21:50.880
Or we're gonna be able to fix the entry, do it and do reasonable care as a broker, properly classify it, and do all of those things.
00:21:51.200 --> 00:21:55.680
And the best benefit of it all is all of these good actors are gonna have a great experience.
00:21:55.759 --> 00:21:58.400
Yep, and everything's gonna clear, and their stuff's not gonna clear.
00:21:58.640 --> 00:21:59.599
Why is their experience great, right?
00:21:59.680 --> 00:22:08.160
So So what what are now the things you could that that could be provided to a foreign seller that was super hard before that's going to make their lives easier?
00:22:08.319 --> 00:22:10.319
Well, if you don't in an environment like this.
00:22:10.559 --> 00:22:11.839
Um, I can't even tell you.
00:22:12.000 --> 00:22:15.920
So before I came to Zonas, I was I was a work for a retailer, right?
00:22:16.000 --> 00:22:18.960
And my international was my baby.
00:22:19.279 --> 00:22:28.880
And compliance and all the right information to to be able to transmit to I'm working directly with the commercial carriers that I'm working with.
00:22:29.359 --> 00:22:30.880
That's a pain in the butt.
00:22:31.039 --> 00:22:34.720
And it's a lot of manual back and forth and getting the right data together, working.
00:22:34.799 --> 00:22:36.559
I mean, it was a lot of work.
00:22:37.359 --> 00:22:46.480
And there's a ton of technology out there now that we can leverage to be able to make my life a whole lot easier than what it than what it was 10 years ago.
00:22:46.880 --> 00:22:53.519
And I can connect my store, understand what's, you know, get questions and update information ahead of time before I ship.
00:22:53.680 --> 00:22:55.200
And then my stuff just moves.
00:22:55.279 --> 00:22:55.519
Yeah.
00:22:55.759 --> 00:22:58.480
My stuff clears and it delivers and it's super simple and it's seamless.
00:22:58.720 --> 00:23:01.759
If you have something that's PGA, what's your experience going to be like, right?
00:23:01.920 --> 00:23:02.960
Part and government authority.
00:23:03.039 --> 00:23:07.920
It's going to go through a uh what could what could your experience be like in a in a yeah?
00:23:08.000 --> 00:23:15.119
So let's say I have, you know, I have a store or a marketplace account or whatever, I can connect it, pull down my listings or my catalog.
00:23:15.440 --> 00:23:19.759
Anything that needs extra information, I get asked real quick, stores it against my catalog.
00:23:19.920 --> 00:23:23.599
And now when that good ships, it all clears, all the information's there.
00:23:23.839 --> 00:23:27.519
Yeah, because now us as a broker, it's like they didn't have to do anything.
00:23:27.759 --> 00:23:31.519
Even if the data didn't get passed through the so here's why we're talking about this.
00:23:31.680 --> 00:23:39.200
And I think, you know, some of the audience might not know this, but if they don't, we do so much of the postal volume into the United States.
00:23:39.279 --> 00:24:02.799
And so we're, we're, we're, we're trying to find what you just said is like, how do we help those businesses that are doing this right continue to do it correctly and make it easier and better and even possibly save on tariffs if they can actually apply a foreign trade, a free trade agreement or get the benefit of things that sometimes brokers will say, I won't even touch it because they know they don't have the info.
00:24:02.960 --> 00:24:13.839
We're gonna be able to handle all sorts of customers with this type of technology at scale and feel comfortable because I'm the importer record.
00:24:13.920 --> 00:24:21.680
Again, I need to know these things if I'm the seller, and we're gonna find a lot of this out and just make everybody's lives a whole lot of things.
00:24:21.839 --> 00:24:25.680
Well, and this is where I think it's an important understand.
00:24:25.759 --> 00:24:30.880
We're coming at this that we need to keep as much volume moving as we can for all of our partners because we care.
00:24:31.359 --> 00:24:47.039
And we know it's coming because we're working with other partners to solve massive problems for with caging and other things that are happening on the commercial side of things that already have like a type 11 entry and and things happening, which is what's coming to postal.
00:24:47.279 --> 00:24:50.799
Um, we're already innovating with them to solve a lot of these problems.
00:24:50.880 --> 00:24:56.559
And you know what the number one number top couple problems are related to PGA data, bad descriptions.
00:24:56.720 --> 00:24:59.680
What kind of things are prevalent in postal street and postal?
00:25:00.000 --> 00:25:03.200
So it's like, okay, we can't just sit on our heels and just hope this works.
00:25:03.440 --> 00:25:03.839
No, no.
00:25:03.920 --> 00:25:08.559
It's like we need to innovate and make this make this work so things aren't just getting held up.
00:25:09.119 --> 00:25:22.079
The the reality is, and and it's and it's um I I am sensitive to how difficult this is for foreign postal operators because they haven't had to have something ever be entered into ACE.
00:25:22.480 --> 00:25:23.039
Right.
00:25:23.839 --> 00:25:25.119
Once it starts getting entered.
00:25:25.440 --> 00:25:26.160
What's ACE?
00:25:26.319 --> 00:25:37.759
Okay, for ACE is government is the government's um it's their system where you submit the entry where they track all the entries and how much they're gonna get paid, and then they get paid for all those entries from the broker.
00:25:37.920 --> 00:25:42.000
And so once it's in there, they have now visibility, right?
00:25:42.240 --> 00:25:45.039
That's what caused them to shut down all sorts of stuff.
00:25:45.200 --> 00:25:49.279
Yeah, to put this in perspective, like that broker that got shut down.
00:25:49.440 --> 00:25:51.839
I would say actually, I'll ask I'll ask you this question, Aaron.
00:25:52.000 --> 00:25:57.599
If they had to be doing type 13 entries with that data a year ago, oh yes, yes, they'd all be out of business.
00:25:57.680 --> 00:25:58.240
Yeah, yeah, yeah.
00:25:58.480 --> 00:26:09.759
Because they would either have to sh block and hold everything so no post office would work with them, or they'd do entries and say they could do it and they would get shut down.
00:26:10.000 --> 00:26:11.359
Yeah, so that's what we're starting to see.
00:26:11.680 --> 00:26:15.359
This this is yeah, so it's I I am sensitive to the post.
00:26:15.920 --> 00:26:26.720
Um, they've never seen this before, and yet we know that there's other carriers that have massive cage, like post office can't even contemplate what caging is, right?
00:26:26.880 --> 00:26:31.279
Even even possibly the United States Postal Service, they haven't had to deal with it, they don't hold packages.
00:26:31.440 --> 00:26:32.960
This stuff is going to get stopped.
00:26:33.119 --> 00:26:40.400
When and how CBP does certain levels of enforcement, it's not about a matter of if it's not, it's a matter of when.
00:26:40.640 --> 00:26:57.359
And so trying to just help hold the hand of anyone coming to the US, whether it's type 13, which is postal, or type 11, which is commercial, when we do both, our customers and helping hold their hands so they can be compliant.
00:26:57.519 --> 00:27:00.480
And then we're now setting a bar that anyone else can meet.
00:27:00.559 --> 00:27:01.920
It's not like you can't meet this bar.
00:27:02.079 --> 00:27:05.359
It's funny because right at first, I'm like, yeah, we'll be the import of record, right?
00:27:05.519 --> 00:27:07.839
We're yeah, we're totally gonna be able to do this.
00:27:08.079 --> 00:27:15.039
And every day for the past like three months, I think I walk in the office and I'm like, Aaron, I'm more nervous than I've ever been.
00:27:15.279 --> 00:27:17.200
And I should be, right?
00:27:17.440 --> 00:27:32.160
We built, you know, an amazing company here, and we are going to stay in business, and anyone that rides along and hitches the wagon to us as a broker can rest assured that we're still gonna be in business.
00:27:32.400 --> 00:27:44.000
And so we can't that means we can't bring on bad customers, but and it's not even a bad customer, can't bring bring on bad shipments, is kind of what I'm trying to say, right?
00:27:44.079 --> 00:27:48.000
Like we can't, it jeopardizes everyone.
00:27:49.359 --> 00:27:51.759
And so that's what this executive order is about.
00:27:51.920 --> 00:27:52.720
And it guess what?
00:27:52.799 --> 00:27:53.839
It worked, right?
00:27:54.160 --> 00:28:00.559
Because CBP is saying if you're gonna do a type 13 entry, you have to be the import of record if you're the broker.
00:28:01.440 --> 00:28:10.720
So they're not forcing a business like me, but I started the company in 2009, to say, all right, now that I have to act like I sold it, what do I need to know?
00:28:10.880 --> 00:28:23.200
And how do I need to make sure that I feel comfortable and basically do this better than anyone else so that every day I know that we're going to be in hopefully the good graces, right, of CVP.
00:28:23.359 --> 00:28:40.319
And look, nobody's perfect, we're not gonna be perfect, but we're going to strive for this and and and and try to balance the line of um extra effort that we know this is gonna be for postal operators and for shippers and individuals, right?
00:28:40.480 --> 00:28:43.279
We just know this is going to be more difficult.
00:28:43.599 --> 00:28:53.279
Um, balance the line of like extra work and also not creating a massive liability because you're you know, you lower your bar and you're like, yeah, sure, I could do it.
00:28:53.359 --> 00:28:54.240
Anyone can say that.
00:28:54.400 --> 00:28:56.720
Anyone can say I'll clear a shipment.
00:28:57.200 --> 00:29:04.640
But what happens when CBP actually the day comes and they're like, no, you're actually this is actually going to be held, right?
00:29:04.799 --> 00:29:07.519
And then the your broker's like, sorry, this has to be held.
00:29:07.599 --> 00:29:13.680
And by the way, I don't have how many of the the shipments, Aaron, are subject to some type of PGA in postal?
00:29:14.160 --> 00:29:16.000
It's close close to half that could.
00:29:16.240 --> 00:29:18.319
Okay, close to half that could be that you need some sort of information.
00:29:18.720 --> 00:29:20.160
50%, you're a post office.
00:29:20.319 --> 00:29:25.359
50, maybe, let's say it's 40% of your shipments could be subject to that.
00:29:25.599 --> 00:29:28.240
What if your broker can't answer the questions?
00:29:28.559 --> 00:29:28.880
Right.
00:29:29.119 --> 00:29:34.240
You need brokers, a lot of times, we were talking to one yesterday, they're like, oh yeah, we just don't do PGA.
00:29:34.319 --> 00:29:34.799
Oh, yeah, yeah.
00:29:34.960 --> 00:29:38.319
That that's actually that's a that's how things they're like, we won't even do it.
00:29:38.720 --> 00:29:45.440
And honestly, this is where we're trying to tackle an extremely difficult problem that hasn't been faced before.
00:29:45.680 --> 00:29:49.200
And it's it's because it's unique within this environment.
00:29:49.359 --> 00:30:00.400
Um, because the typical MO of commercial brokers, commercial carriers, is they're very selective on who they ship with and the type of commodities they they clear and they they move.
00:30:00.880 --> 00:30:02.799
Because they don't want to deal with some of the crap.
00:30:02.960 --> 00:30:03.279
Yep.
00:30:03.519 --> 00:30:12.880
The problem is now in this postal environment, is you've just got so many parties that obscure the broker from who the shipper is.
00:30:13.119 --> 00:30:18.319
And even the the postal operator that's picking up isn't the same postal operator that's delivering.
00:30:18.640 --> 00:30:23.039
And um, there's just a lot less visibility and connection within that.
00:30:23.200 --> 00:30:27.200
And there's a lot of different types of commodities coming through.
00:30:27.359 --> 00:30:35.119
So you have to, you have, you don't have as much of an intimate connection and relationship with the transaction as the commercial carriers and providers do.
00:30:35.440 --> 00:30:41.599
And you don't have the same kind of controls on the type of commodities that come through either.
00:30:41.759 --> 00:30:52.000
Um, and so that's where it's just it's a massive partnership that we are building together with with postal operators that is leveraging technology at the forefront to solve it.
00:30:52.240 --> 00:30:58.720
And I don't, and I I think it's important to point out that the status quo is great, you know, wonderful.
00:30:58.799 --> 00:31:06.160
Like we can we can point to the past, but there's actually lessons in history to show that we can actually move into a better world.
00:31:06.480 --> 00:31:13.119
And you talk about one of those examples of how like it things can change, and it actually turns out to be a really good thing in the long run.
00:31:13.279 --> 00:31:19.279
Maybe it felt painful when that transition was happening, but now we look at it and we're like, no, this is the way it's just gotta be.
00:31:19.440 --> 00:31:20.960
And that's going back to the banking.
00:31:21.119 --> 00:31:21.680
Yeah, the banking.
00:31:22.319 --> 00:31:24.079
You want to talk a little bit about that and how that parallels.
00:31:24.400 --> 00:31:25.839
Yeah, no, no, know your business, right?
00:31:25.920 --> 00:31:33.200
So banks, they used to not have to you could bring on a bad customer, maybe there's some wire fraud going on, things like that, right?
00:31:33.359 --> 00:31:40.400
But knowing your customer and the banking industry went through this whole transition, and I'm sure they went through the phases of grief, right?
00:31:40.480 --> 00:31:42.559
Because it's going to impact their revenue and everything else.
00:31:42.720 --> 00:31:44.400
We've all been the better for it.
00:31:44.559 --> 00:31:49.200
And so, um, because it weeded out bad behaviors.
00:31:49.440 --> 00:31:50.079
Absolutely.
00:31:50.240 --> 00:31:52.079
And protects everyone.
00:31:52.319 --> 00:31:56.319
And so in the supply chain and to the other countries that are doing this, right?
00:31:56.400 --> 00:31:58.240
There's there are right ways to do this.
00:31:58.400 --> 00:32:03.039
And I think there's, you know, there's always some things that I the US for sure could do better, I would think.
00:32:03.119 --> 00:32:16.799
And um uh, but I think that this, there's we're seeing most, every I think country kind of agree on the general principle of I want to hold someone accountable, a declarant, let's say in the EU, right?
00:32:17.119 --> 00:32:22.079
Um, I'm going to remove the de minimis so people can't skirt duties, the EU, right?
00:32:22.319 --> 00:32:24.960
So it's it's not this is not just a US thing.
00:32:25.039 --> 00:32:27.680
This is a this is there's a global tide coming.
00:32:28.160 --> 00:32:36.240
And you're gonna want to be on the right side of history here if you're a broker and if you're also a shipper, right?
00:32:36.400 --> 00:32:37.519
Doing type 11s.
00:32:37.680 --> 00:32:39.680
This is not a type 13 thing.
00:32:39.839 --> 00:32:46.640
This is so I even think that uh, you know, we didn't talk a lot about it, but I think a lot of these brokers that are doing type 11s today have no idea.
00:32:46.799 --> 00:32:47.119
Oh, yeah.
00:32:47.599 --> 00:32:48.240
Oh, it's coming either.
00:32:48.480 --> 00:32:50.799
They think they haven't needed to know this crap.
00:32:50.960 --> 00:32:51.440
Yep.
00:32:51.839 --> 00:32:52.240
Right?
00:32:52.480 --> 00:32:59.440
When when something comes in and it's valued and I've seen it, somebody values something at a buck and they clear it anyway.
00:32:59.680 --> 00:33:01.440
That like that's not reasonable care.
00:33:01.759 --> 00:33:12.720
In fact, um, I've heard it mentioned multiple times from CVP that the answer from a broker of, I don't know, that's just the data I got, so I processed it, isn't good enough.
00:33:12.960 --> 00:33:16.640
No, no, they that they and they they've also said like the race to the bottom's over.
00:33:16.799 --> 00:33:18.480
Because that's been the complaint from the good brokers.
00:33:18.559 --> 00:33:20.559
There's good brokers out, there's really good brokers.
00:33:20.640 --> 00:33:20.960
Yep.
00:33:21.200 --> 00:33:25.279
And they're honest, and they might not be the cheapest.
00:33:25.519 --> 00:33:34.799
And their complaint for years, I mean, when we haven't been a broker, their complaint for years is like I can't compete with this because I'm not going to do it wrong.
00:33:35.680 --> 00:33:37.839
Best news in a thousand years for them, too, right?
00:33:38.160 --> 00:33:47.200
So, hey, if if uh if if you're gonna be honest and take the extra work to do it right, it's gonna be great news.
00:33:47.279 --> 00:33:48.240
It's gonna be good.
00:33:48.480 --> 00:33:56.240
And then we we you know the uh we no country wants bad stuff coming in or bad actors.
00:33:56.400 --> 00:34:02.480
Uh and so they'll get squosen and they'll that'll the light will be shown right on them because it's gonna be very clear the ones that are good.
00:34:02.720 --> 00:34:04.000
Yeah, I think I think it's great.
00:34:04.079 --> 00:34:14.880
This is this is an opportunity for um all of the compliant, all of the good traders, which I I do believe is the majority, to be able to shine a spotlight on them and let them stand out.
00:34:15.360 --> 00:34:17.199
It is the majority, for sure, for sure.
00:34:17.360 --> 00:34:18.639
And some don't know, right?
00:34:18.719 --> 00:34:20.559
You're just shipping a pharmaceutical thing to the U.S.
00:34:20.639 --> 00:34:24.719
You might not even be a you're you might not be think you're doing anything wrong.
00:34:24.880 --> 00:34:28.639
And yet you list on your shot your website that it's free shipping for farm.
00:34:28.960 --> 00:34:31.920
Okay, you can't do that for whatever, whatever reason, right?
00:34:32.000 --> 00:34:39.280
And so there's these rules like how do you help them, the good actors, do it right, and then when there's the bad ones, those are the ones we'll that will get.
00:34:39.840 --> 00:34:41.039
They'll stick out like a sore thumb.
00:34:41.119 --> 00:34:41.679
They will, they will.
00:34:41.920 --> 00:34:43.679
So now this is fantastic.
00:34:43.840 --> 00:34:44.960
Uh thank you very much.
00:34:45.119 --> 00:34:46.880
Anything else you want to touch on before we wrap up?
00:34:47.119 --> 00:34:47.599
I don't think so.
00:34:47.679 --> 00:34:52.159
I just say uh um it's titled The Reckoning is Coming for a Reason.
00:34:52.480 --> 00:35:11.519
And it will it it might, it's um it might be a little bit painful, but the end result is going to be better for almost everyone, and it's gonna be global at some point, and it's already the ball's already rolling.
00:35:11.599 --> 00:35:14.800
So anyway, I'm I'm looking forward to actually having more deeper conversations.
00:35:14.960 --> 00:35:17.280
We used to do these podcasts all the time.
00:35:17.440 --> 00:35:19.760
So hey, a little teaser, what's coming, right?
00:35:19.840 --> 00:35:21.679
So Aaron and I will be doing a little bit more.
00:35:21.840 --> 00:35:24.320
Oh, we say that every time, and then I guess we'll see us in three months.
00:35:24.400 --> 00:35:29.280
No, but we like to go into the details, whether it's you know, around just what is a PGA, right?
00:35:29.440 --> 00:35:30.320
Like what is that?
00:35:30.480 --> 00:35:32.559
What is type 11 versus type 13?
00:35:32.639 --> 00:35:40.320
Or, you know, or you know, for we used to do we have a lot of great podcasts on, you know, brokerage fees that carriers charge and things like that.
00:35:40.400 --> 00:35:42.400
And so there's I think just more education.
00:35:42.480 --> 00:35:45.679
I think it's time to uh um jump back in the seat, Aaron.
00:35:45.760 --> 00:35:48.960
Uh so I'm committing you to, you know, to some more podcasts.
00:35:49.199 --> 00:35:53.599
And uh looking forward to to the next time uh on on the podcast with you.
00:35:53.840 --> 00:35:54.320
Sign me up.
00:35:54.400 --> 00:35:54.800
Let's do it.
00:35:54.960 --> 00:35:56.000
Okay, see ya
00:00:04.639 --> 00:00:09.679
Welcome to another episode of the Decoding Cross Border E-Commerce Podcast.
00:00:09.839 --> 00:00:11.119
Aaron, welcome back.
00:00:11.359 --> 00:00:11.759
We're here.
00:00:11.919 --> 00:00:12.240
We're here.
00:00:12.320 --> 00:00:19.280
We're here to basically for round two of the executive order around strengthening customs enforcement.
00:00:19.440 --> 00:00:23.600
But um uh I know you have a lot of thoughts on this, and so I'm gonna let you kick it off.
00:00:23.679 --> 00:00:27.280
You're gonna do be a little bit more of the uh the host with the questions, I think, today.
00:00:27.600 --> 00:00:28.399
Yeah, absolutely.
00:00:28.559 --> 00:00:33.520
This is where um Clint, I actually know you have the most thoughts on this, which is why I'm gonna ask the questions.
00:00:33.679 --> 00:00:37.280
In fact, you had so many thoughts that you decided to write an article about it.
00:00:37.520 --> 00:00:41.200
Um so I I'd love to kind of dive into that and unpack it.
00:00:41.280 --> 00:00:43.920
And it's crazy where we're going.
00:00:44.000 --> 00:00:46.159
Like this has been this has been out a couple months already.
00:00:46.240 --> 00:00:47.600
I think it was back in June.
00:00:47.840 --> 00:00:50.399
Um and things are moving fast.
00:00:50.479 --> 00:01:00.479
I know CBP had some mandates in there uh on on things they had to do, and they're starting to to to take steps to um you know enforce the border.
00:01:00.560 --> 00:01:05.680
And I look at it, I'm like, holy cow, it's almost like it's almost Halloween season, right?
00:01:05.840 --> 00:01:06.719
Yeah, it's close.
00:01:06.879 --> 00:01:12.159
Um, and in fact, uh I often like to throw a party at a haunted house.
00:01:12.239 --> 00:01:13.359
Do you know why?
00:01:13.680 --> 00:01:14.480
Uh why?
00:01:14.719 --> 00:01:17.280
Because the ghosts bring all the booze.
00:01:21.120 --> 00:01:21.439
Okay.
00:01:21.760 --> 00:01:24.560
All right, and on that bad joke, let's let's pivot then.
00:01:24.719 --> 00:01:33.280
Um so Clint, you wrote um an open letter, really and it's titled A Reckoning is Coming.
00:01:34.640 --> 00:01:40.239
And that's tied back to that executive order and really a response or reaction to that, correct?
00:01:40.400 --> 00:01:40.879
Yep.
00:01:41.120 --> 00:01:47.120
And what I found interesting as I read this is uh lots of really interesting things in here.
00:01:47.200 --> 00:02:01.359
But as I get down to the bottom of it, um, towards the end, I there's a quote in here that I find a little different than what you'd expect from a customs enforcement executive order to a titled article that says a reckoning is coming.
00:02:01.599 --> 00:02:07.280
And this quote is for the honest, this is the best news in a thousand years.
00:02:08.159 --> 00:02:09.199
What do you mean by that?
00:02:09.439 --> 00:02:26.879
So, so think about how long this has been a problem for customs, just to deal with um, you know, from the days of the Silk Road, trying to enforce what's coming through the border and the amount of fraud and bad actors and everything that's going in through there.
00:02:27.039 --> 00:02:29.680
But you also have good actors.
00:02:30.400 --> 00:02:31.680
But how do you know, right?
00:02:31.759 --> 00:02:39.199
So you're doing inspections even on the good actors, and how do you and then trying to find ways to solve this problem?
00:02:39.360 --> 00:02:42.879
It's always been difficult for CVP, and we hear this from them directly.
00:02:43.520 --> 00:02:48.479
They they they want to know who's good so they can focus on who's bad.
00:02:49.759 --> 00:02:52.639
The vast majority of the trade is good.
00:02:53.360 --> 00:02:55.360
What do they I completely agree?
00:02:55.520 --> 00:02:57.520
What do they have to work with to know who's good?
00:02:57.840 --> 00:02:58.560
Not a lot.
00:02:58.879 --> 00:02:59.919
I mean, some things, right?
00:03:00.000 --> 00:03:00.960
There's some signals, right?
00:03:01.039 --> 00:03:14.560
It could be they are familiar with um uh it could be the the shipper on that, it could be the importer of record, it could be um uh the broker, right?
00:03:14.800 --> 00:03:18.000
They they they have signals that they can look for for sure.
00:03:18.240 --> 00:03:21.680
Um, and then there's some things that are kind of missing.
00:03:21.840 --> 00:03:31.199
And so what's been hard is, and this is why the executive order came out, is when it is a bad actor, how do you hold them accountable?
00:03:31.439 --> 00:03:32.560
And so what was going on?
00:03:32.639 --> 00:03:34.560
What were the bad actors doing, Aaron?
00:03:35.439 --> 00:03:41.759
Well, if you think specifically about the executive order, it was targeting importer of record.
00:03:41.919 --> 00:03:42.479
Right.
00:03:42.719 --> 00:03:49.360
In the US, a lot of people could be imported record without much substance here in the in the U.S.
00:03:49.680 --> 00:03:51.280
What kind of people could be imported record?
00:03:51.520 --> 00:03:53.120
Uh anybody, any foreign entity.
00:03:53.360 --> 00:03:53.919
Foreign entity.
00:03:54.080 --> 00:04:03.599
Uh there could be it'd be really easy for someone to kind of spin up a shell company of sorts, act as the importer record, and then when CVP comes calling to enforce, they disappear.
00:04:03.680 --> 00:04:06.400
They become like those ghosts that are bringing all the booze to the party.
00:04:06.719 --> 00:04:09.599
Um, so the I even brought that to you.
00:04:09.759 --> 00:04:09.919
You did.
00:04:10.000 --> 00:04:10.400
I was cute.
00:04:10.639 --> 00:04:11.599
Isn't that amazing?
00:04:11.840 --> 00:04:18.319
Um yeah, and so look, the the rules of the game are changing, but honestly, the environment's been changing.
00:04:18.639 --> 00:04:25.120
Uh uh, and it it has I kind of go back to your quote uh that I that I quoted earlier of best news in a thousand years.
00:04:25.279 --> 00:04:30.879
I actually think this is all really important to even go back to the history of trade.
00:04:30.959 --> 00:04:37.600
And you touched on it a little bit, but um you know, specifically, we live in the low-value e-commerce world.
00:04:38.639 --> 00:04:47.759
And let's can you just give us a little history lesson here and kind of like what led us up to this point, and maybe even tie in some specifics around low value e-commerce.
00:04:48.000 --> 00:04:53.120
So so think you know, late 2000s and e-commerce starts booming, right?
00:04:53.680 --> 00:04:56.319
And there's all this volume.
00:04:57.040 --> 00:05:03.759
And customs hasn't had a great way to deal with small parcels, and so some countries has had like de minimis in place, even the U.S.
00:05:03.839 --> 00:05:11.279
had a de minimis, it was$250, but that that was still there was way too much volume for customs to deal with at$250.
00:05:11.439 --> 00:05:13.439
So, in I think it was 2016, right?
00:05:13.600 --> 00:05:19.360
Is when the um uh Barack Obama changed it to$800 on the de minimis.
00:05:19.680 --> 00:05:22.399
In fact, you wrote a letter at that point in time, too.
00:05:22.639 --> 00:05:22.879
I did.
00:05:22.959 --> 00:05:23.120
I did.
00:05:23.680 --> 00:05:24.560
What was your opinion then?
00:05:24.800 --> 00:05:25.839
Um Do you remember?
00:05:26.079 --> 00:05:26.639
I do.
00:05:26.879 --> 00:05:31.920
I I thought it was a mistake for a lot of different reasons.
00:05:32.079 --> 00:05:37.360
Mostly I understand that I definitely understand the overwhelming side for the government to deal with the packages.
00:05:37.759 --> 00:05:42.800
Where where it was a mistake is neighbors, right, uh, to the U.S.
00:05:43.120 --> 00:05:47.759
didn't have a de minimis that high, and the vast majority of the world didn't have a de minimis that high.
00:05:48.000 --> 00:05:54.160
And it made it very difficult for US businesses to compete with foreign entities.
00:05:54.399 --> 00:06:09.439
And then we saw, well, I'm you know, I won't say I was right, but you know, we saw how a lot of this played out over the coming years for US companies is uh you could just park your warehouse on the border in Canada or in Mexico.
00:06:10.560 --> 00:06:17.040
And so instead of let's say let's say you warehouse in Texas versus warehouse in Mexico, just like miles apart.
00:06:17.519 --> 00:06:22.319
The difference is if you what happened, how much are the tariffs if you warehouse in Texas?
00:06:23.120 --> 00:06:26.399
Um whatever the tariffs are on all of your goods.
00:06:26.959 --> 00:06:27.279
Why?
00:06:27.439 --> 00:06:32.639
Because you're bringing in larger, more expensive over the$800 to minimis.
00:06:33.279 --> 00:06:39.600
If you bring in that same container but house it in Mexico, and then you only ship individual orders across individuals.
00:06:40.639 --> 00:06:42.480
What's the value of each one of those shipments?
00:06:42.639 --> 00:06:43.439
Uh less than$800.
00:06:43.680 --> 00:06:44.319
Less than$800.
00:06:44.560 --> 00:06:45.439
What's the duty on that?
00:06:45.680 --> 00:06:46.000
Zero.
00:06:46.160 --> 00:06:46.480
Zero.
00:06:46.639 --> 00:06:49.839
And so this caused there, it just that's one type of problem.
00:06:50.000 --> 00:06:55.439
The other thing is China could then just bring in a plane load of goods and kind of get the same effect by keeping a warehouse in China, right?
00:06:55.519 --> 00:06:57.120
The TMU's in the Sheen.
00:06:57.680 --> 00:06:59.920
And it wasn't just about the tariffs.
00:07:00.000 --> 00:07:01.439
That's not what this is about, all about.
00:07:01.519 --> 00:07:05.120
It was about being able to know what's in the package, right?
00:07:05.279 --> 00:07:06.720
Like they don't have visibility.
00:07:06.959 --> 00:07:10.079
So I I think all this problem, this explode, right?
00:07:10.160 --> 00:07:17.920
This goes back to what you were you were asking earlier is the the the reason that this came into play is there was so much volume you couldn't see it.
00:07:18.160 --> 00:07:25.839
And then they had to figure out, okay, crap, we um this is causing all sorts of problems because now I have foreign entities that I don't know who they are.
00:07:26.079 --> 00:07:39.120
And let's say they're they're skirting tariffs or other bad behavior, and then customs wants to go after this imported record, and it's like ABC company, you know, with a bad phone number, and they're not getting any money.
00:07:39.199 --> 00:07:44.240
And they, yeah, sure, they're they're bond, you know, they have the smallest bond possible.
00:07:44.480 --> 00:07:51.199
Uh, but CBP would be left holding the bag, and a bad actor could they spin up another shell company.
00:07:51.439 --> 00:07:51.839
Yeah.
00:07:52.399 --> 00:07:55.600
This is not just the US, Europe is trying to solve the same problem.
00:07:55.680 --> 00:07:57.600
Everywhere around the world wants to solve this problem.
00:07:57.759 --> 00:08:12.560
How this was solved, though, is when you, and this was the executive order, they wanted to put this on an actual person inside the United States that's a citizen or a real business with assets in the US, right?
00:08:12.720 --> 00:08:17.120
So they're they need somebody to go after and hold accountable.
00:08:17.279 --> 00:08:26.959
And this is causing now has all sorts of consequences, uh in and how the executive order and what it talks about and what it's going to punish and all this.
00:08:27.040 --> 00:08:36.159
But back to why is this good for the the uh the good actors out there is it's going to create clarity.
00:08:36.320 --> 00:08:40.960
If you were, if you were, um, let's say you're let's let's talk about a good actor.
00:08:41.039 --> 00:08:44.000
Yeah, let's go at non-e-commerce, then we can kind of go to e-commerce.
00:08:44.320 --> 00:08:45.600
You're bringing a container.
00:08:45.759 --> 00:08:52.320
I was doing this not uh, you know, for just uh funny um Halloween costumes, actually.
00:08:52.559 --> 00:09:01.440
Um uh so we're bringing a shipment of Halloween costumes and some other things for a small family business, um, and add some pool pump stuff anyway.
00:09:02.080 --> 00:09:12.080
The broker I was working with, who will not be named because it's not the broker that we purchased, uh said this is what the new tariffs had new tariffs had come out.
00:09:12.159 --> 00:09:17.679
This was this was uh um a little over a year ago, and he was panicking and he called me, he's like, whoa, whoa, whoa, whoa.
00:09:17.840 --> 00:09:19.440
He's like, dude, you have all these new tariffs.
00:09:19.519 --> 00:09:23.679
He's like, so um what we we need to change the value on the shipment.
00:09:24.639 --> 00:09:26.480
And I'm like, we need to what?
00:09:26.879 --> 00:09:30.559
And he's like, yeah, so can we like if we just change the value, then we can save on your tariffs.
00:09:30.639 --> 00:09:31.679
And he's like, can we just change it?
00:09:31.840 --> 00:09:33.360
He's like, what do you want me to change it to?
00:09:33.440 --> 00:09:35.279
And I'm like, you don't change it.
00:09:35.440 --> 00:09:36.320
This is a broker.
00:09:38.080 --> 00:09:46.159
And then it's it's like, so he doesn't change it, and the guy changes the harmonized code anyway to try, he's thinking he's doing me a favor.
00:09:46.399 --> 00:09:51.360
Changes the harmonized code anyway on the freaking entry to save me on tariffs.
00:09:51.440 --> 00:09:52.799
And you know what ended up happening?
00:09:52.960 --> 00:09:57.200
Customs ended up changing it later, and then I ended up paying, of course, the difference.
00:09:57.279 --> 00:09:59.600
I'm just like, what are you doing?
00:10:00.480 --> 00:10:11.200
And so these are the type of situations when I'm a good actor, I'm paying my full tariff on the goods, and I know that competitors possibly are not, right?
00:10:11.360 --> 00:10:16.720
If they're working with, you know, this guy, they're I already know how he's been operating.
00:10:17.440 --> 00:10:34.720
And so now if I know the if people know you have to be an entity here, and in this case, I don't know if uh maybe, maybe they could have been, but if he had to be the import of record and his business was on the line, this might have been he might have he might have handled that situation a little differently if he had a little more skin in the game.
00:10:34.960 --> 00:10:36.399
Okay, but let's say he didn't, right?
00:10:36.559 --> 00:10:37.200
What happened this week?
00:10:37.279 --> 00:10:37.759
What do we hear?
00:10:37.840 --> 00:10:38.240
What's the rumor?
00:10:38.480 --> 00:10:39.840
Yeah, what's on the rumor mill, Aaron?
00:10:40.240 --> 00:10:45.840
We know we know of a broker just this week that got shut down doing that was doing type 11 entries, right?
00:10:46.480 --> 00:10:49.840
I don't want to say necessarily why, but I'll uh we could we could be general.
00:10:50.159 --> 00:11:06.159
It is in general, there's some weird patterns with tariffs that were no longer applying, those kind of things that uh and what happened was is there was a part of their book of business that was not very compliant, and another part of their business got affected.
00:11:06.240 --> 00:11:10.080
Yeah, and now is that other part of business that is compliant is now scrambling to find a new.
00:11:10.399 --> 00:11:14.559
So this is this puts um shippers in a big dilemma, right?
00:11:15.519 --> 00:11:20.399
Before, if you really probably didn't think that hard about who is brokering the shipments.
00:11:20.879 --> 00:11:34.639
You know, you're probably looking to save on price, and now all of a sudden you, you know, you're you're scrambling to get your shipments cleared because your broker wasn't really doing reasonable care.
00:11:34.799 --> 00:11:40.000
And it's hard to at scale in this low e-commerce environment.
00:11:40.240 --> 00:11:48.000
We have come at it with a very interesting perspective because we know and understand extremely well the what's happening on the other side of the pond, right?
00:11:48.080 --> 00:11:55.440
Like with um where they're selling on the platforms, what that what how e-commerce transactions work, what kind of data is accessible.
00:11:55.519 --> 00:11:59.200
So we we just have a different viewpoint on it, kind of coming into brokerage.
00:11:59.519 --> 00:12:19.120
Um but as things start to clamp down, you know, if your competitor is doing B2B to C, which by the way, is most of the time, I would say, um uh you know, BS, B2C, like it's just it's it's uh there's there's a few cases where you can can legitimately do B2B to C.
00:12:19.679 --> 00:12:30.320
One thing that they were doing on that is they would just tell, and this is how you know that it was all messed up, they would just tell the the foreign entity, let's just spin you up a little entity in Wyoming.
00:12:30.879 --> 00:12:31.519
Right?
00:12:32.080 --> 00:12:36.960
And that's going to be, we're we're just gonna, that's B2B, that's your B2B in the US.
00:12:37.120 --> 00:12:39.120
This executive order is going after people like that.
00:12:39.279 --> 00:12:51.039
So if you've been hearing, you know, things in your overseas about trying to save on terrorists, when you're trying to do that, it the US and other countries are going to try to find mechanisms.
00:12:51.200 --> 00:12:56.879
And and the the linchpin in this was putting the onus on a business or a person.
00:12:57.039 --> 00:12:59.840
And then it goes through and goes through all the punishments and things it's gonna punish you.
00:13:00.080 --> 00:13:10.639
When we actually have accountability, yep, and someone has um a reason to uh want to be compliant versus someone that says, Yeah, well, the I'm outside the law.
00:13:10.720 --> 00:13:14.240
I I'm a I'm a foreign importer of record, good luck coming after me.
00:13:14.399 --> 00:13:18.320
And they they can shut down and spin up another entity overnight.
00:13:18.559 --> 00:13:22.320
And and in fact, they uh from what I understand, uh there's a lot of them.
00:13:22.399 --> 00:13:27.840
They just have multiple entities all ready to go, and they just spin up, they just close down one, move to the next.
00:13:28.080 --> 00:13:42.960
Um, but I but I as I listen to the story, I also think about um the the why and how we got here and how it's actually, especially in e-commerce, this is this is a new world that we're entering globally, not just in the US.
00:13:43.200 --> 00:13:50.559
And there's there's a tendency to want to say, well, it's always been done this way, or this is how it so someone else is doing it, and it's always worked.
00:13:50.720 --> 00:13:52.639
I I the rules of the game are changing.
00:13:52.720 --> 00:13:57.600
And part of that is A, if you go back to the De Minimus across the world and the U.S.
00:13:57.759 --> 00:14:02.080
raising theirs, on low-value shipments, they just chose to ignore them.
00:14:02.320 --> 00:14:10.960
That's what the de minimis is like, yeah, I'm not gonna worry about it because there's a whole bunch of a whole bunch of operational problems and things like these aren't that big of a piece of the pie.
00:14:11.039 --> 00:14:12.240
Let's just let's just ignore them.
00:14:12.399 --> 00:14:21.919
Well, then all of a sudden, security and compliance uh you know issues started arising in that in that uh lane because it got exploited.
00:14:23.039 --> 00:14:26.000
Now they're saying, okay, how do we deal with that?
00:14:26.240 --> 00:14:30.399
And that's where I think it now Springboards and you know, Europe's getting rid of their de minimis.
00:14:30.480 --> 00:14:32.320
There's a ton of countries talking about it.
00:14:32.559 --> 00:14:32.799
U.S.
00:14:32.960 --> 00:14:34.320
got rid of their de minimis.
00:14:34.720 --> 00:14:41.200
And if you look at this, now they're saying who's gonna be responsible to make sure all of these low value shipments are compliant?
00:14:41.600 --> 00:14:45.519
They want someone, they want someone to hold accountable, which is the importer of record.
00:14:45.679 --> 00:14:49.039
The importer record, who is a US business most likely.
00:14:49.759 --> 00:14:52.879
Yeah, it's a company that has assets or it's a person.
00:14:53.120 --> 00:15:03.679
So let now now what's the I want I want to talk a little bit about the what this punishes, because like in the executive order, uh maybe you have something else you want to get to.
00:15:04.399 --> 00:15:08.159
I actually want to touch on why the this all sounds super negative.
00:15:09.200 --> 00:15:19.600
But why is that a good thing if you're a legitimate US business trying to run your your business above board, how the freaking luya?
00:15:19.759 --> 00:15:25.440
Yeah, because you've been competing against that against BS for sure for years.
00:15:25.679 --> 00:15:28.720
Yep, and now you can finally compete on a on a fair plane.
00:15:29.200 --> 00:15:37.840
And and there's a lot of honest foreign sellers, absolutely you know, and sometimes there's in different regions, right?
00:15:37.919 --> 00:15:42.240
There there's uh there's some behaviors sometimes that are different and not as honest.
00:15:42.399 --> 00:15:47.440
And in other regions, they're super honest, and they're competing against another region overseas too, shipping to the US.
00:15:47.519 --> 00:15:48.480
They have US customers.
00:15:48.639 --> 00:15:50.320
This is great for them, right?
00:15:50.399 --> 00:15:58.159
You're an Australian business or Canadian business, and you've been doing it right, like this this will in the end can end up really, really good for you.
00:15:58.399 --> 00:16:03.039
And the ones they're gonna scream the loudest are the ones that were not so honest.
00:16:03.200 --> 00:16:08.320
And so they're gonna try to find ways to change the tariff and whatever.
00:16:08.399 --> 00:16:11.279
And then CP's gonna notice they're gonna shut down the brokerage, right?
00:16:11.759 --> 00:16:13.039
Like which we've seen.
00:16:13.360 --> 00:16:19.200
And then that because that broker's the IOR, and eventually, right, this is going to weed things out.
00:16:19.360 --> 00:16:23.840
But it did, it started with yes, the having someone to hold accountable.
00:16:24.080 --> 00:16:28.799
Now, uh can we get to let's do it.
00:16:28.879 --> 00:16:31.200
Uh, all right, so some of what does this punish?
00:16:31.440 --> 00:16:37.039
Punishes misrepresentation, so that's undervaluation, especially, right?
00:16:37.279 --> 00:16:42.000
But changing again the description, anything like that, you're gonna get smacked, right?
00:16:42.080 --> 00:16:44.240
We talked about the shell companies, sellers.
00:16:44.320 --> 00:16:46.639
You need to be able to produce the export paperwork.
00:16:46.720 --> 00:16:55.440
Um, they're gonna build a registry of they're really trying to clean up the whole registry of importer of records, and so um it's going to build that up, but then there's gonna be penalty floors.
00:16:55.679 --> 00:16:59.039
So that these penalties, man, there's been some crazy stuff.
00:16:59.279 --> 00:17:08.799
So um, like negligence can be like 2x the duty cost, gross negligence, 4x, broker misconduct is like you know, 30k.
00:17:09.200 --> 00:17:19.839
Uh in 2013, there were pharmacy parcels like coming through with UPS, and there was a four is 40 million dollars was the fine.
00:17:20.319 --> 00:17:24.799
And then CBP went after FedEx in uh 2014 where they were criminally indicted.
00:17:24.880 --> 00:17:27.440
It's 1.6 billion dollars.
00:17:27.680 --> 00:17:30.000
Uh I think this one was also around pharmaceuticals.
00:17:30.240 --> 00:17:32.240
FedEx ended up winning and had to go to trial.
00:17:32.480 --> 00:17:40.720
And so it's not that they were actually like purposely, it doesn't even sometimes matter, even if you're saying you're doing your best isn't good enough.
00:17:40.880 --> 00:17:43.920
And this is now the broker, the situation the brokers are in.
00:17:44.319 --> 00:17:49.359
Well, and and what you can't do is say you're doing your best while you have your hands over your eyes, too.
00:17:49.680 --> 00:17:50.319
That doesn't work.
00:17:50.880 --> 00:17:52.880
No, I'm I'm I'm doing my best.
00:17:53.039 --> 00:17:58.400
And why should I have to know and prove that they sold it at this price on that platform?
00:17:59.279 --> 00:18:00.559
And here's why.
00:18:00.799 --> 00:18:02.480
This is a technology problem.
00:18:03.119 --> 00:18:04.880
This is not a clearance problem.
00:18:05.039 --> 00:18:08.720
Like I'm sorry, if it's a technology problem, then it can be solved, right?
00:18:08.960 --> 00:18:10.319
Go solve the problem.
00:18:10.480 --> 00:18:11.680
You need to know what happened.
00:18:11.759 --> 00:18:17.440
So this the executive order doesn't call out specifically what you need to do, it doesn't need to.
00:18:17.759 --> 00:18:24.720
So if you read what the punishments are, it's easy to conclude what then you have to do to meet that bar.
00:18:24.960 --> 00:18:32.400
Okay, Aaron, in order to avoid undervaluation, someone lying on the undervaluation, how can you try to avoid that?
00:18:32.480 --> 00:18:33.839
What are some ways?
00:18:34.160 --> 00:18:39.279
Well, um, I can tell you actually, yeah, how I've seen it work.
00:18:39.440 --> 00:18:40.480
How do they do it today?
00:18:40.720 --> 00:18:57.359
I've seen it because we we are involved in a lot of different international transactions over the years, but if there's a odd-looking valuation, I've seen a manual outreach from the broker to say, Hey, I need a receipt on this transaction.
00:18:57.440 --> 00:18:58.160
And they give it away.
00:18:58.240 --> 00:18:59.359
And who are they outreaching to?
00:18:59.519 --> 00:19:01.039
Uh, it's often the person that bought it.
00:19:01.119 --> 00:19:01.440
Uh-huh.
00:19:01.599 --> 00:19:04.799
Because they got a receipt from whoever they don't have a connection with the person that sold it.
00:19:05.039 --> 00:19:05.359
Exactly.
00:19:05.440 --> 00:19:05.759
Yep.
00:19:05.920 --> 00:19:07.519
And so it's a painful process.
00:19:07.680 --> 00:19:08.559
And then they'll get a receipt.
00:19:09.119 --> 00:19:13.359
If it doesn't match, then they actually update the the entry to what if they don't get the receipt?
00:19:13.440 --> 00:19:14.319
What do they do with that package?
00:19:14.400 --> 00:19:16.720
If it'll often, you know, it gets held.
00:19:16.880 --> 00:19:17.359
Yeah, yeah.
00:19:17.680 --> 00:19:18.880
It's called caging, right?
00:19:19.039 --> 00:19:21.759
So they'll cage things because it's missing information.
00:19:21.920 --> 00:19:30.240
And so uh that this is how okay, now now how could this be done at scale?
00:19:30.960 --> 00:19:32.880
Um, well, that's a great question.
00:19:33.039 --> 00:19:38.880
Let's let's think about in the and this is where I'm gonna narrow it down to the e-commerce space right now.
00:19:39.039 --> 00:19:39.759
Yes, yes.
00:19:40.000 --> 00:19:46.640
If I go to buy something online, uh there's a lot of information given to me when I buy, correct?
00:19:46.799 --> 00:19:47.119
Yeah.
00:19:47.359 --> 00:19:50.160
On the website when I buy, I know how much I bought it for.
00:19:50.319 --> 00:19:51.839
I have to put in my payment method.
00:19:52.000 --> 00:19:53.680
I get an invoice emailed to me.
00:19:53.759 --> 00:19:54.720
All this information is there.
00:19:54.960 --> 00:19:55.759
Did you have a coupon?
00:19:56.000 --> 00:19:56.799
Did you get a discount?
00:19:56.960 --> 00:19:58.240
There's all sorts of exactly.
00:19:58.319 --> 00:20:00.640
There's a ton of detail free, but guess what?
00:20:00.799 --> 00:20:03.759
There's a ton of technology on that side of it.
00:20:03.839 --> 00:20:04.319
Yeah.
00:20:04.640 --> 00:20:10.400
And if I and it's all there, available to be used, but no one's using it.
00:20:10.720 --> 00:20:23.119
And then if I look at what's actually put on a commercial invoice and what presented to a broker to clear it customs, it's like a three-word description and a value that who knows if it matches that transaction or not.
00:20:23.279 --> 00:20:23.440
Yeah.
00:20:23.680 --> 00:20:25.599
And so that's so this is drift, right?
00:20:25.680 --> 00:20:30.640
That occurs from the time of order to the to the time of declaration, right?
00:20:30.720 --> 00:20:31.599
When they create the shipment.
00:20:31.680 --> 00:20:31.920
Yep.
00:20:32.079 --> 00:20:40.880
And so what the broker sees, they're blind to what happens on the order, and they don't even consider the fact that maybe I should know, but this the the this is basically forcing it.
00:20:40.960 --> 00:20:43.920
You need to know who that foreign seller is.
00:20:44.160 --> 00:20:52.720
So when you sign up a business, you should let let's say that you're a broker in the US and you sign up, you know, you're doing shipments for this, you know, kind of it's not a brand, right?
00:20:52.799 --> 00:20:56.000
Let's say it's for a shipping company or something, a consolidator.
00:20:57.680 --> 00:21:15.279
If you don't have a connection to that consolidator's customer base in any way or a knowledge of them, or being able to do, or they're not doing a certain amount of vetting, and you can't prove, right, what you need, because you are now you're acting up when you're the importer of record, you're acting as if this is your what something you sold, right?
00:21:15.440 --> 00:21:17.119
You're taking that level of responsibility.
00:21:17.200 --> 00:21:18.400
I want to freaking know what's sold.
00:21:18.480 --> 00:21:20.640
So that's the bar, anyways, that we're setting, right?
00:21:20.720 --> 00:21:24.880
That we see is we want to know what you just said.
00:21:25.039 --> 00:21:27.359
I want what did this sell on Shopify?
00:21:27.440 --> 00:21:28.400
Did it sell on eBay?
00:21:28.640 --> 00:21:30.160
How much did it sell for?
00:21:30.640 --> 00:21:33.200
Did are you are you being honest?
00:21:33.519 --> 00:21:36.880
Because the majority of people are when they do, guess what?
00:21:37.200 --> 00:21:39.599
We're CBP will know that they're good.
00:21:40.000 --> 00:21:42.559
And then the ones that aren't, they're gonna know.
00:21:42.720 --> 00:21:50.880
Or we're gonna be able to fix the entry, do it and do reasonable care as a broker, properly classify it, and do all of those things.
00:21:51.200 --> 00:21:55.680
And the best benefit of it all is all of these good actors are gonna have a great experience.
00:21:55.759 --> 00:21:58.400
Yep, and everything's gonna clear, and their stuff's not gonna clear.
00:21:58.640 --> 00:21:59.599
Why is their experience great, right?
00:21:59.680 --> 00:22:08.160
So So what what are now the things you could that that could be provided to a foreign seller that was super hard before that's going to make their lives easier?
00:22:08.319 --> 00:22:10.319
Well, if you don't in an environment like this.
00:22:10.559 --> 00:22:11.839
Um, I can't even tell you.
00:22:12.000 --> 00:22:15.920
So before I came to Zonas, I was I was a work for a retailer, right?
00:22:16.000 --> 00:22:18.960
And my international was my baby.
00:22:19.279 --> 00:22:28.880
And compliance and all the right information to to be able to transmit to I'm working directly with the commercial carriers that I'm working with.
00:22:29.359 --> 00:22:30.880
That's a pain in the butt.
00:22:31.039 --> 00:22:34.720
And it's a lot of manual back and forth and getting the right data together, working.
00:22:34.799 --> 00:22:36.559
I mean, it was a lot of work.
00:22:37.359 --> 00:22:46.480
And there's a ton of technology out there now that we can leverage to be able to make my life a whole lot easier than what it than what it was 10 years ago.
00:22:46.880 --> 00:22:53.519
And I can connect my store, understand what's, you know, get questions and update information ahead of time before I ship.
00:22:53.680 --> 00:22:55.200
And then my stuff just moves.
00:22:55.279 --> 00:22:55.519
Yeah.
00:22:55.759 --> 00:22:58.480
My stuff clears and it delivers and it's super simple and it's seamless.
00:22:58.720 --> 00:23:01.759
If you have something that's PGA, what's your experience going to be like, right?
00:23:01.920 --> 00:23:02.960
Part and government authority.
00:23:03.039 --> 00:23:07.920
It's going to go through a uh what could what could your experience be like in a in a yeah?
00:23:08.000 --> 00:23:15.119
So let's say I have, you know, I have a store or a marketplace account or whatever, I can connect it, pull down my listings or my catalog.
00:23:15.440 --> 00:23:19.759
Anything that needs extra information, I get asked real quick, stores it against my catalog.
00:23:19.920 --> 00:23:23.599
And now when that good ships, it all clears, all the information's there.
00:23:23.839 --> 00:23:27.519
Yeah, because now us as a broker, it's like they didn't have to do anything.
00:23:27.759 --> 00:23:31.519
Even if the data didn't get passed through the so here's why we're talking about this.
00:23:31.680 --> 00:23:39.200
And I think, you know, some of the audience might not know this, but if they don't, we do so much of the postal volume into the United States.
00:23:39.279 --> 00:24:02.799
And so we're, we're, we're, we're trying to find what you just said is like, how do we help those businesses that are doing this right continue to do it correctly and make it easier and better and even possibly save on tariffs if they can actually apply a foreign trade, a free trade agreement or get the benefit of things that sometimes brokers will say, I won't even touch it because they know they don't have the info.
00:24:02.960 --> 00:24:13.839
We're gonna be able to handle all sorts of customers with this type of technology at scale and feel comfortable because I'm the importer record.
00:24:13.920 --> 00:24:21.680
Again, I need to know these things if I'm the seller, and we're gonna find a lot of this out and just make everybody's lives a whole lot of things.
00:24:21.839 --> 00:24:25.680
Well, and this is where I think it's an important understand.
00:24:25.759 --> 00:24:30.880
We're coming at this that we need to keep as much volume moving as we can for all of our partners because we care.
00:24:31.359 --> 00:24:47.039
And we know it's coming because we're working with other partners to solve massive problems for with caging and other things that are happening on the commercial side of things that already have like a type 11 entry and and things happening, which is what's coming to postal.
00:24:47.279 --> 00:24:50.799
Um, we're already innovating with them to solve a lot of these problems.
00:24:50.880 --> 00:24:56.559
And you know what the number one number top couple problems are related to PGA data, bad descriptions.
00:24:56.720 --> 00:24:59.680
What kind of things are prevalent in postal street and postal?
00:25:00.000 --> 00:25:03.200
So it's like, okay, we can't just sit on our heels and just hope this works.
00:25:03.440 --> 00:25:03.839
No, no.
00:25:03.920 --> 00:25:08.559
It's like we need to innovate and make this make this work so things aren't just getting held up.
00:25:09.119 --> 00:25:22.079
The the reality is, and and it's and it's um I I am sensitive to how difficult this is for foreign postal operators because they haven't had to have something ever be entered into ACE.
00:25:22.480 --> 00:25:23.039
Right.
00:25:23.839 --> 00:25:25.119
Once it starts getting entered.
00:25:25.440 --> 00:25:26.160
What's ACE?
00:25:26.319 --> 00:25:37.759
Okay, for ACE is government is the government's um it's their system where you submit the entry where they track all the entries and how much they're gonna get paid, and then they get paid for all those entries from the broker.
00:25:37.920 --> 00:25:42.000
And so once it's in there, they have now visibility, right?
00:25:42.240 --> 00:25:45.039
That's what caused them to shut down all sorts of stuff.
00:25:45.200 --> 00:25:49.279
Yeah, to put this in perspective, like that broker that got shut down.
00:25:49.440 --> 00:25:51.839
I would say actually, I'll ask I'll ask you this question, Aaron.
00:25:52.000 --> 00:25:57.599
If they had to be doing type 13 entries with that data a year ago, oh yes, yes, they'd all be out of business.
00:25:57.680 --> 00:25:58.240
Yeah, yeah, yeah.
00:25:58.480 --> 00:26:09.759
Because they would either have to sh block and hold everything so no post office would work with them, or they'd do entries and say they could do it and they would get shut down.
00:26:10.000 --> 00:26:11.359
Yeah, so that's what we're starting to see.
00:26:11.680 --> 00:26:15.359
This this is yeah, so it's I I am sensitive to the post.
00:26:15.920 --> 00:26:26.720
Um, they've never seen this before, and yet we know that there's other carriers that have massive cage, like post office can't even contemplate what caging is, right?
00:26:26.880 --> 00:26:31.279
Even even possibly the United States Postal Service, they haven't had to deal with it, they don't hold packages.
00:26:31.440 --> 00:26:32.960
This stuff is going to get stopped.
00:26:33.119 --> 00:26:40.400
When and how CBP does certain levels of enforcement, it's not about a matter of if it's not, it's a matter of when.
00:26:40.640 --> 00:26:57.359
And so trying to just help hold the hand of anyone coming to the US, whether it's type 13, which is postal, or type 11, which is commercial, when we do both, our customers and helping hold their hands so they can be compliant.
00:26:57.519 --> 00:27:00.480
And then we're now setting a bar that anyone else can meet.
00:27:00.559 --> 00:27:01.920
It's not like you can't meet this bar.
00:27:02.079 --> 00:27:05.359
It's funny because right at first, I'm like, yeah, we'll be the import of record, right?
00:27:05.519 --> 00:27:07.839
We're yeah, we're totally gonna be able to do this.
00:27:08.079 --> 00:27:15.039
And every day for the past like three months, I think I walk in the office and I'm like, Aaron, I'm more nervous than I've ever been.
00:27:15.279 --> 00:27:17.200
And I should be, right?
00:27:17.440 --> 00:27:32.160
We built, you know, an amazing company here, and we are going to stay in business, and anyone that rides along and hitches the wagon to us as a broker can rest assured that we're still gonna be in business.
00:27:32.400 --> 00:27:44.000
And so we can't that means we can't bring on bad customers, but and it's not even a bad customer, can't bring bring on bad shipments, is kind of what I'm trying to say, right?
00:27:44.079 --> 00:27:48.000
Like we can't, it jeopardizes everyone.
00:27:49.359 --> 00:27:51.759
And so that's what this executive order is about.
00:27:51.920 --> 00:27:52.720
And it guess what?
00:27:52.799 --> 00:27:53.839
It worked, right?
00:27:54.160 --> 00:28:00.559
Because CBP is saying if you're gonna do a type 13 entry, you have to be the import of record if you're the broker.
00:28:01.440 --> 00:28:10.720
So they're not forcing a business like me, but I started the company in 2009, to say, all right, now that I have to act like I sold it, what do I need to know?
00:28:10.880 --> 00:28:23.200
And how do I need to make sure that I feel comfortable and basically do this better than anyone else so that every day I know that we're going to be in hopefully the good graces, right, of CVP.
00:28:23.359 --> 00:28:40.319
And look, nobody's perfect, we're not gonna be perfect, but we're going to strive for this and and and and try to balance the line of um extra effort that we know this is gonna be for postal operators and for shippers and individuals, right?
00:28:40.480 --> 00:28:43.279
We just know this is going to be more difficult.
00:28:43.599 --> 00:28:53.279
Um, balance the line of like extra work and also not creating a massive liability because you're you know, you lower your bar and you're like, yeah, sure, I could do it.
00:28:53.359 --> 00:28:54.240
Anyone can say that.
00:28:54.400 --> 00:28:56.720
Anyone can say I'll clear a shipment.
00:28:57.200 --> 00:29:04.640
But what happens when CBP actually the day comes and they're like, no, you're actually this is actually going to be held, right?
00:29:04.799 --> 00:29:07.519
And then the your broker's like, sorry, this has to be held.
00:29:07.599 --> 00:29:13.680
And by the way, I don't have how many of the the shipments, Aaron, are subject to some type of PGA in postal?
00:29:14.160 --> 00:29:16.000
It's close close to half that could.
00:29:16.240 --> 00:29:18.319
Okay, close to half that could be that you need some sort of information.
00:29:18.720 --> 00:29:20.160
50%, you're a post office.
00:29:20.319 --> 00:29:25.359
50, maybe, let's say it's 40% of your shipments could be subject to that.
00:29:25.599 --> 00:29:28.240
What if your broker can't answer the questions?
00:29:28.559 --> 00:29:28.880
Right.
00:29:29.119 --> 00:29:34.240
You need brokers, a lot of times, we were talking to one yesterday, they're like, oh yeah, we just don't do PGA.
00:29:34.319 --> 00:29:34.799
Oh, yeah, yeah.
00:29:34.960 --> 00:29:38.319
That that's actually that's a that's how things they're like, we won't even do it.
00:29:38.720 --> 00:29:45.440
And honestly, this is where we're trying to tackle an extremely difficult problem that hasn't been faced before.
00:29:45.680 --> 00:29:49.200
And it's it's because it's unique within this environment.
00:29:49.359 --> 00:30:00.400
Um, because the typical MO of commercial brokers, commercial carriers, is they're very selective on who they ship with and the type of commodities they they clear and they they move.
00:30:00.880 --> 00:30:02.799
Because they don't want to deal with some of the crap.
00:30:02.960 --> 00:30:03.279
Yep.
00:30:03.519 --> 00:30:12.880
The problem is now in this postal environment, is you've just got so many parties that obscure the broker from who the shipper is.
00:30:13.119 --> 00:30:18.319
And even the the postal operator that's picking up isn't the same postal operator that's delivering.
00:30:18.640 --> 00:30:23.039
And um, there's just a lot less visibility and connection within that.
00:30:23.200 --> 00:30:27.200
And there's a lot of different types of commodities coming through.
00:30:27.359 --> 00:30:35.119
So you have to, you have, you don't have as much of an intimate connection and relationship with the transaction as the commercial carriers and providers do.
00:30:35.440 --> 00:30:41.599
And you don't have the same kind of controls on the type of commodities that come through either.
00:30:41.759 --> 00:30:52.000
Um, and so that's where it's just it's a massive partnership that we are building together with with postal operators that is leveraging technology at the forefront to solve it.
00:30:52.240 --> 00:30:58.720
And I don't, and I I think it's important to point out that the status quo is great, you know, wonderful.
00:30:58.799 --> 00:31:06.160
Like we can we can point to the past, but there's actually lessons in history to show that we can actually move into a better world.
00:31:06.480 --> 00:31:13.119
And you talk about one of those examples of how like it things can change, and it actually turns out to be a really good thing in the long run.
00:31:13.279 --> 00:31:19.279
Maybe it felt painful when that transition was happening, but now we look at it and we're like, no, this is the way it's just gotta be.
00:31:19.440 --> 00:31:20.960
And that's going back to the banking.
00:31:21.119 --> 00:31:21.680
Yeah, the banking.
00:31:22.319 --> 00:31:24.079
You want to talk a little bit about that and how that parallels.
00:31:24.400 --> 00:31:25.839
Yeah, no, no, know your business, right?
00:31:25.920 --> 00:31:33.200
So banks, they used to not have to you could bring on a bad customer, maybe there's some wire fraud going on, things like that, right?
00:31:33.359 --> 00:31:40.400
But knowing your customer and the banking industry went through this whole transition, and I'm sure they went through the phases of grief, right?
00:31:40.480 --> 00:31:42.559
Because it's going to impact their revenue and everything else.
00:31:42.720 --> 00:31:44.400
We've all been the better for it.
00:31:44.559 --> 00:31:49.200
And so, um, because it weeded out bad behaviors.
00:31:49.440 --> 00:31:50.079
Absolutely.
00:31:50.240 --> 00:31:52.079
And protects everyone.
00:31:52.319 --> 00:31:56.319
And so in the supply chain and to the other countries that are doing this, right?
00:31:56.400 --> 00:31:58.240
There's there are right ways to do this.
00:31:58.400 --> 00:32:03.039
And I think there's, you know, there's always some things that I the US for sure could do better, I would think.
00:32:03.119 --> 00:32:16.799
And um uh, but I think that this, there's we're seeing most, every I think country kind of agree on the general principle of I want to hold someone accountable, a declarant, let's say in the EU, right?
00:32:17.119 --> 00:32:22.079
Um, I'm going to remove the de minimis so people can't skirt duties, the EU, right?
00:32:22.319 --> 00:32:24.960
So it's it's not this is not just a US thing.
00:32:25.039 --> 00:32:27.680
This is a this is there's a global tide coming.
00:32:28.160 --> 00:32:36.240
And you're gonna want to be on the right side of history here if you're a broker and if you're also a shipper, right?
00:32:36.400 --> 00:32:37.519
Doing type 11s.
00:32:37.680 --> 00:32:39.680
This is not a type 13 thing.
00:32:39.839 --> 00:32:46.640
This is so I even think that uh, you know, we didn't talk a lot about it, but I think a lot of these brokers that are doing type 11s today have no idea.
00:32:46.799 --> 00:32:47.119
Oh, yeah.
00:32:47.599 --> 00:32:48.240
Oh, it's coming either.
00:32:48.480 --> 00:32:50.799
They think they haven't needed to know this crap.
00:32:50.960 --> 00:32:51.440
Yep.
00:32:51.839 --> 00:32:52.240
Right?
00:32:52.480 --> 00:32:59.440
When when something comes in and it's valued and I've seen it, somebody values something at a buck and they clear it anyway.
00:32:59.680 --> 00:33:01.440
That like that's not reasonable care.
00:33:01.759 --> 00:33:12.720
In fact, um, I've heard it mentioned multiple times from CVP that the answer from a broker of, I don't know, that's just the data I got, so I processed it, isn't good enough.
00:33:12.960 --> 00:33:16.640
No, no, they that they and they they've also said like the race to the bottom's over.
00:33:16.799 --> 00:33:18.480
Because that's been the complaint from the good brokers.
00:33:18.559 --> 00:33:20.559
There's good brokers out, there's really good brokers.
00:33:20.640 --> 00:33:20.960
Yep.
00:33:21.200 --> 00:33:25.279
And they're honest, and they might not be the cheapest.
00:33:25.519 --> 00:33:34.799
And their complaint for years, I mean, when we haven't been a broker, their complaint for years is like I can't compete with this because I'm not going to do it wrong.
00:33:35.680 --> 00:33:37.839
Best news in a thousand years for them, too, right?
00:33:38.160 --> 00:33:47.200
So, hey, if if uh if if you're gonna be honest and take the extra work to do it right, it's gonna be great news.
00:33:47.279 --> 00:33:48.240
It's gonna be good.
00:33:48.480 --> 00:33:56.240
And then we we you know the uh we no country wants bad stuff coming in or bad actors.
00:33:56.400 --> 00:34:02.480
Uh and so they'll get squosen and they'll that'll the light will be shown right on them because it's gonna be very clear the ones that are good.
00:34:02.720 --> 00:34:04.000
Yeah, I think I think it's great.
00:34:04.079 --> 00:34:14.880
This is this is an opportunity for um all of the compliant, all of the good traders, which I I do believe is the majority, to be able to shine a spotlight on them and let them stand out.
00:34:15.360 --> 00:34:17.199
It is the majority, for sure, for sure.
00:34:17.360 --> 00:34:18.639
And some don't know, right?
00:34:18.719 --> 00:34:20.559
You're just shipping a pharmaceutical thing to the U.S.
00:34:20.639 --> 00:34:24.719
You might not even be a you're you might not be think you're doing anything wrong.
00:34:24.880 --> 00:34:28.639
And yet you list on your shot your website that it's free shipping for farm.
00:34:28.960 --> 00:34:31.920
Okay, you can't do that for whatever, whatever reason, right?
00:34:32.000 --> 00:34:39.280
And so there's these rules like how do you help them, the good actors, do it right, and then when there's the bad ones, those are the ones we'll that will get.
00:34:39.840 --> 00:34:41.039
They'll stick out like a sore thumb.
00:34:41.119 --> 00:34:41.679
They will, they will.
00:34:41.920 --> 00:34:43.679
So now this is fantastic.
00:34:43.840 --> 00:34:44.960
Uh thank you very much.
00:34:45.119 --> 00:34:46.880
Anything else you want to touch on before we wrap up?
00:34:47.119 --> 00:34:47.599
I don't think so.
00:34:47.679 --> 00:34:52.159
I just say uh um it's titled The Reckoning is Coming for a Reason.
00:34:52.480 --> 00:35:11.519
And it will it it might, it's um it might be a little bit painful, but the end result is going to be better for almost everyone, and it's gonna be global at some point, and it's already the ball's already rolling.
00:35:11.599 --> 00:35:14.800
So anyway, I'm I'm looking forward to actually having more deeper conversations.
00:35:14.960 --> 00:35:17.280
We used to do these podcasts all the time.
00:35:17.440 --> 00:35:19.760
So hey, a little teaser, what's coming, right?
00:35:19.840 --> 00:35:21.679
So Aaron and I will be doing a little bit more.
00:35:21.840 --> 00:35:24.320
Oh, we say that every time, and then I guess we'll see us in three months.
00:35:24.400 --> 00:35:29.280
No, but we like to go into the details, whether it's you know, around just what is a PGA, right?
00:35:29.440 --> 00:35:30.320
Like what is that?
00:35:30.480 --> 00:35:32.559
What is type 11 versus type 13?
00:35:32.639 --> 00:35:40.320
Or, you know, or you know, for we used to do we have a lot of great podcasts on, you know, brokerage fees that carriers charge and things like that.
00:35:40.400 --> 00:35:42.400
And so there's I think just more education.
00:35:42.480 --> 00:35:45.679
I think it's time to uh um jump back in the seat, Aaron.
00:35:45.760 --> 00:35:48.960
Uh so I'm committing you to, you know, to some more podcasts.
00:35:49.199 --> 00:35:53.599
And uh looking forward to to the next time uh on on the podcast with you.
00:35:53.840 --> 00:35:54.320
Sign me up.
00:35:54.400 --> 00:35:54.800
Let's do it.
00:35:54.960 --> 00:35:56.000
Okay, see ya
