WEBVTT
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Welcome to another episode of uh decoding cross-border e-commerce podcast.
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And I'm here with Aaron as the ush and with uh Jonathan Sullivan, our chief data scientist, who also oversaw um our acquisition of Evolve um Customs Brokerage.
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And so to talk about the new entry, well, the upcoming new entry process, which is uh going to evolve into a evolve, oh wow, a type 13 entry.
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But there's a little interim process here.
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So we had some guidance, an IFR, right?
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Which uh acronym means interim final rule.
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Interim.
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Interim.
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Interim final rule.
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Which I've never understood how you can have an interim final rule.
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It feels like an oxymoron to me, but I'm no I'm okay.
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So we got two of those, right, from customs today.
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And a what was the third thing they dropped?
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Here's a general notice as well.
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All right, so let's let's talk about this because this is massively impactful, even in the short term, in 30 days for foreign postal operators, right?
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It's gonna impact all these posts around the world coming in for their shipments into the U.S.
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And then it's gonna be even more impactful when the actual type 13 process comes in.
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So what happened today and what's going on?
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Would you want to take it?
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Yeah, sure.
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I'd be happy to.
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Um, so today there's uh it was three things announced the two IFRs um and one general notice.
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Uh the first one, which we'll touch on, is largely I'd say procedural.
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Um, it it continues the suspension of de minimis officially through an interim final ruling um for all non-postal um streams into the U.S.
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Which which really this is executive order came out, got rid of the de minimis last year.
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The big beautiful bill is putting into law starting next year.
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Correct.
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This this is really just like rubber stamping it again, just like oh hang on the really it's really, really gone.
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De minimis is gone.
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Okay, they're just like restating themselves.
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Okay.
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Yeah.
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So so I think that one we can just say that's understood.
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Business as usual.
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Nothing's changing.
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Yep, yep.
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Okay.
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Um, the second one um is the uh suspension of the qualified party process in its current form and the replacement with a new entry type 13 that's been announced, um, and and uh a deferred compliance window for the next 90 to 120 days that largely keeps most everything the same.
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There's a few new requirements that are introduced.
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Um, one, it does require uh full 10-digit HS codes.
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Um this uh puts um the qualified party process for postal entries into actual customs business very clearly, which means you need a broker when you're talking about customs business.
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Absolutely need a broker.
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Yeah, so I mean qualified parties up to this point didn't have to be brokers, which we weren't for a long time.
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Now we're moving from a basic spreadsheet to a fancier spreadsheet for a few months that will require a broker.
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Yeah.
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And um, but there's there's some advantages and disadvantages of this new process, but it's gonna be much more calculated and granular in the way it's uh um approaching everything.
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And it's really a uh a phased approach to get prepared for the type 13 entry that's coming in this fall.
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Yeah, and and that type 13 entry is gonna be a big change, right?
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It's gonna require um all the same PGA message set.
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So all the PGA?
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The partner government agencies.
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These are things like the Food and Drug Administration, the USDA, the EPA.
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They all have different requirements that you have to comply by, uh, different um information you have to disclose, um, and they have the ability to um to to pause entries um to prevent that entry from proceeding.
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But but what's but what's gonna happen over the next like until the new type 13 process comes in?
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We have a spreadsheet, what's happening with PGAs in this interim period?
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Yep, yep.
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So that'll happen in um like likely October, September, October, around that time frame.
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In this interim time period, business as usual there.
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No no pain.
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There's no pain immediately.
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Well no pain related to the extra.
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To the partner government authorities, but there are a few goods, right, that are going to be painful, and maybe we'll get to that.
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Um, I mean, it's some outliers, right?
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Correct.
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Well, let's talk about the current state, okay, future state.
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Let's talk about money.
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You know, let's let's all take this to the bank.
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In fact, do you know why banks have drive-throughs?
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I do you know why they have drive-throughs?
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I I don't know, Aaron.
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So the cars can meet their real owners.
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Come on.
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That was come on.
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So the cars can meet their real owners.
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Yeah, the bank.
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The bank owns the cars.
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Oh.
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All right.
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Let's talk money.
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That was good.
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That was let's talk money.
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All right.
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Um so today.
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Usually when you surprise me through jokes, I laugh.
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But if it takes me too long to get it, then I'm embarrassed.
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So I'm on the embarrassed side.
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Uh all right.
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So the spreadsheet today, very basic.
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Very basic.
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This started last summer.
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It started with, hey, in postal, the only calculation is IPA tariffs.
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Then those turned into the 122 tariffs.
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Yep.
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And that's it.
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There's none of your standard duty calculations.
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There's no 301 tariffs, 232, all the stacking stuff that's complicated for the commercial lane.
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Postal hasn't had that.
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It's been very easy to calculate.
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That's changing in 30 days.
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The new spreadsheet is going to move to a standard calculation, stacking tariffs, all of the, all of the goodness that comes from that, which actually is gonna uh CPP actually did a whole analysis on this.
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It's like uh it's gonna result in about uh on average an 8.
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I think 6.7% increase in 8.62% uh increase in uh the average tariff based on their analysis.
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Do you think they took into account for uh free trade agreements?
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Which have not been allowed inside of I don't know that they did.
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I know.
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Well, because we have not been able to offer free trade agreements inside the qualified party process.
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They may have.
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They did say their methodology was looking at type 11 entries on the commercial side, so maybe, maybe I'll give them credit and say yes.
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However, for certain posts, this actually might be a net decrease.
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It could this is gonna be.
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Let's say Canada, right?
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That's a that's a good example of the so much volume coming in from Canada to the US, and they've not been able to get any treatment for USMCA Kuzma.
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Exactly, exactly.
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Well, and that's where the the uh the postal up to this point has had some advantages and disadvantages in the calculation.
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Yeah, free trade agreements is one of those disadvantages.
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Right now we're moving it into parity in the calculation, and so uh is it's no longer hey, is postal better or worse?
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It's like, no, it's gonna be the same calculation.
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Yes, it's just and you're gonna have some of the same advantages like free trade agreements.
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Okay, well, there is actually an advantage that postal has and retains.
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Um so postal today doesn't have a what they call merchandise processing fee.
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Uh that merchandise processing fee for informal entries, so these are things less than$2,500, is typically$2.69.
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Um, that um is confirmed to not be applicable both with this uh upgraded spreadsheet, but also with the entry type 13.
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That continues to be the case even there.
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So there is uh uh an advantage for postal in that sense, but it is relatively small small.
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Yeah, well, okay, when you look at it in terms of maybe a duty percentage, right?
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Average order value probably in postal is item value is probably less than 100.
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So that's sure.
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So as a percentage impact, it's going to be pretty high by comparing postal to a different entry process, a commercial pro commercial entry.
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Yep, yep.
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That'll that'll definitely be a win uh for the postal community.
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Um but in the but the uh the commercial entries, they're are they're still able to consolidate and get that um that merchandise processing fee down per parcel if they do a consolidation, which happens with some usually not with the express carriers, but with some consolidators.
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Yep.
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So typically what happens is they'll they'll group a whole bunch of consignments as long as it's under that uh$2,500 threshold into one entry, and that$2.69 can be spread across all the all the consignments in that entry.
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All right, so it's the broker now needs to do a calculation.
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Do brokers this is pop quiz, do brokers do calculations for duties typically?
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Typically it's done in ACE.
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ACE.
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They're actually not so this is this is not as easy as it sounds.
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Spreadsheet is easy, but properly calculating duties is not.
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How is CBP gonna audit and deal with this?
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Just do their best, I guess, to try to you know determine how I we'll see, I guess.
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Remains to be seen.
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But there there's gonna have to be some type of audit process, I'm sure, because um we calculate duties for a living.
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We've been doing this for, you know, geez, 17 years almost.
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Uh a lot of brokers have not.
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And so as you look at, you know, your foreign postal operator, these are what are okay.
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If you're a foreign postal operator, what are some questions you're asking now, your broker um that that uh might become doing this in T US?
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You mean your qualified party?
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Yeah, you're qualified.
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Okay, yeah.
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What questions should you be asking your current qualified party?
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I I think it's I think it's worth talking to any postal operators working with us.
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It's status quo for the next few months.
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Uh because we're a broker.
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We're a broker, we've got the technology.
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We know how to do all of this.
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And we have tools for your if you have been utilizing our um dashboard for your customers, they're gonna have a much more complex calculation.
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It's gonna be a lot more valuable for merchants to figure out what is my actual total landed cost of my my goods.
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Yep.
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And that's that's actually a key point here when we're talking about calculations.
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Uh, I know some postal operators have just been like, all right, well, 122 tariffs, 10%.
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I'm just gonna I'm just gonna calculate it my myself.
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And then we're processing it, it's working great.
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No, no big deal.
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But the calculations are much more complex.
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It's you know, a sp a different duty rate by HTS code plus the stacking rules.
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It's extremely complex.
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And and those stackings can get very complicated.
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If something is an automotive part but made out of steel or aluminum, and uh, you know, there's certain rules about how those stack and certain thresholds for if the steel content's below a certain amount, then it's an exemption.
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And are you collecting that information from the from the actual shipper?
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And so there's a lot of these things that that make it even much more than just one rate per HCS code.
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And and that that's part of the beauty of us being a technology provider first, is we've got the tools to help with all of that.
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So I look, I and I'm super biased, we have the best, most comprehensive land and cost calculator.
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Oh duties and taxes, bar none, it's not even close.
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And this is hard for us, right?
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Like we spend a lot of time getting this right, and so uh it's gonna be rough, I think, until this can start getting processed in ACE to get this correct.
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No, absolutely, absolutely.
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And and so um if we look at this transition, you might look to yourself like, oh, good.
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Uh I need to deal with the calculation and I'm I'm good to go.
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I'm gonna go focus on something else now.
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But the reality is what's coming in a few months with the PGAs, that's where you need to also start planning now.
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So probably for these foreign postal operators, two messages.
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One, you better let your merk your customers know this is changing, right?
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This is one of the first things.
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Start getting your well, we can help get your message together, right?
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What's changing, how it's gonna impact them, because they're gonna be surprised when the duty bill is different than what they've been getting, right?
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So you need to communicate that.
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But second is the upcoming changes.
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Let's should we dive a little bit deeper into those changes?
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And I I think if you're not working with a qualified party that's also a broker, you need to be rethinking.
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And and CVP actually talks specifically about that in this of like they understand it might be a little disruptive that you need to be, you know, looking at your qualified party, making sure they're ready for this and actually have a broker involved.
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Um, but yeah, let's let's start talking about now.
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You let's say you get that locked down.
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This is a very short window of time that this this interim spreadsheet process is going to be applicable.
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Um three to four months from now.
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So we're talking about.
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So probably before peak.
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Uh-huh.
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Oh no, actually, they'll probably do it like on right before Thanksgiving, right?
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Like right before peak.
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Because why wouldn't they?
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It's like let's just throw it out right before Black Friday.
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Yeah, like the day before.
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Yes, we do.
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So we do know there's there's actually a little bit of ambiguity here about how long this uh upgraded spreadsheet process can last, but um, it's either 120 days or 90 days.
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Uh-huh.
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Uh within 90 days, that's when we expect the entry type 13 test to um to be available.
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And within 120 days, we expect that to end.
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But there's also language that says that within 120 days that spreadsheet process ends, or potentially when the entry type 13 process begins.
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And so uh it's either end of September, end of October, both of those are and that's where we're we're trying to get a little clarification.
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But the reality is I would I would start planning for end of September.
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Okay.
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September 22nd-ish, right, is 90 days from when this is going to be announced tomorrow officially.
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This is like a pre-notice, but it'll actually be a the initial kind of no message to your customers is look, we've got you covered, still gonna be a billion for duties and taxes.
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The duties are changing, not a lot is changing for you.
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However, in 90 to 100 days, a lot of things are changing for you.
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What are those things that are that they I do want to carve out one one thing that's I I think we missed on this interim spreadsheet process.
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If you have anybody selling alcohol or tobacco, yes, yeah, that's not gonna that's not gonna be going on this this response.
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Okay, so there's gonna be the uh the exceptions at the bottom of that you know notice that says, hey, there's a few things you need to worry about.
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Alcohol tobacco needs to go through a formal entry.
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Formal entry, which means type one.
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Correct.
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All right.
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What else besides alcohol tobacco is impacted?
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There's some anti-dumping, countervailing quota is the last one.
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Okay, give me examples of what that could fall under that.
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Yeah, so there's um limits to how many of a specific commodity type that can be imported in at a specific duty rate.
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Um and those are soft quotas, but there's also hard hard quotas as well.
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If there's any of those HTS codes on your on your filing that can't be processed through this, how many do you think of what would do you have any idea of how many of our shipments are would be impacted on it with those?
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No.
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Okay, interesting.
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All right, we'll get that answered.
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But I think overall it's gonna be very small.
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I mean, super small is a small percentage.
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Very small.
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So that okay, a few exceptions in this interim process, otherwise, otherwise more money, depending on country and if FTAs are apply or not.
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Yep.
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New process.
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What did should they be telling their customers, these postal operators, that they need to get ready for?
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PGAs is a big one because a large percentage and the posts need to get ready for this at the retail counters.
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What does that mean with these partner government authorities?
00:15:45.840 --> 00:15:46.480
What do they need to get?
00:15:46.799 --> 00:15:53.600
Just to put it in perspective, how many how many shipments or what percentage of shipments would you say are subject to a PGA?
00:15:53.840 --> 00:15:54.879
Or potentially subject.
00:15:55.039 --> 00:15:57.519
Or I guess if we include CPSD, potentially subject.
00:15:57.679 --> 00:16:01.360
I get a cheat because I kind of remember if it's around 50%, I believe you said that.
00:16:01.600 --> 00:16:02.480
That's correct, it's close to 50%.
00:16:02.879 --> 00:16:03.440
That's crazy.
00:16:03.759 --> 00:16:07.360
So about half of all shipments, uh parcels that you process today.
00:16:07.679 --> 00:16:08.399
In postal.
00:16:08.559 --> 00:16:14.399
In postal, we would expect to need additional data elements to be able to satisfy those partner government agency needs.
00:16:14.639 --> 00:16:24.240
So these additional data elements need to come in with the shipment, or we need to have gathered it indirectly on the post office's behalf with that customer, which we have solutions to do.
00:16:24.320 --> 00:16:27.840
So you need a what are some examples of this additional data elements you're gonna need.
00:16:28.159 --> 00:16:36.639
Yeah, so the Food and Drug Administration, they require anything that that is uh FDA eligible um to have a product code in addition to the HTS code.
00:16:36.720 --> 00:16:39.440
So this will specify exactly to their taxonomy.
00:16:39.519 --> 00:16:41.919
It's generally five or uh five or seven digits.
00:16:42.080 --> 00:16:45.519
What um what is that is that product code anchored in anything?
00:16:45.759 --> 00:16:51.840
Or is it like Yep, so they have a uh um a wizard that you can use to build this yourself on their site.
00:16:51.919 --> 00:16:54.320
It's so you kind of classify it to this product code.
00:16:55.120 --> 00:16:56.399
You have to do that for everyone.
00:16:56.559 --> 00:16:58.080
Um, it's not super friendly.
00:16:58.159 --> 00:17:03.919
Their site is, I'd say, um, it was it's not the most easily accessible.
00:17:04.079 --> 00:17:06.240
And there's a lot of information being left on the table.
00:17:06.319 --> 00:17:09.200
So uh we know what the HTS code of the product is.
00:17:09.359 --> 00:17:12.880
That eliminates a large portion of all FDA product codes.
00:17:13.039 --> 00:17:17.200
And so we're able to help you identify with really quickly what that what that code is.
00:17:17.279 --> 00:17:19.440
And many times it's it's known exactly.
00:17:19.680 --> 00:17:22.079
In some cases, it's narrowed down to a few.
00:17:22.160 --> 00:17:34.720
And we can uh we've built a lot of technology to help infer and make that process a lot easier where a user can attest and confirm that that's correct, and or they can say no, and we'll have very friendly questions to help them.
00:17:35.200 --> 00:17:38.880
When and who can get this product code at what point in the journey, right?
00:17:39.119 --> 00:17:44.880
Someone's showing up, they're they're about to ship a shipment, and let's say they're in Japan and they're using our mobile app, right?
00:17:44.960 --> 00:17:46.079
And they're taking photos.
00:17:46.319 --> 00:17:53.519
Or let's say someone's in you know Europe going to a post office and they're just going to the retail counter and the post office isn't using our app.
00:17:53.759 --> 00:17:57.680
What are um when when do they when and what needs to be gathered?
00:17:57.839 --> 00:17:59.279
Or it's a business, right?
00:17:59.680 --> 00:17:59.920
Yep.
00:18:00.079 --> 00:18:04.079
So we'll have a few solutions available for all of our customers.
00:18:04.240 --> 00:18:07.599
Um, the the first we'll we'll talk about is um and they're all actually.
00:18:07.920 --> 00:18:08.880
What if there isn't a solution?
00:18:08.960 --> 00:18:14.319
Just like what practically needs to happen and that needs to be gathered, and then let's talk about how to solve that problem.
00:18:14.640 --> 00:18:15.119
Sure, sure.
00:18:15.200 --> 00:18:21.440
So you'll need to gather, and it really depends on the commodity that you're shipping, uh, but you have to uh gather certain pieces of information.
00:18:21.519 --> 00:18:28.240
It could be the genus and species of the wood that you're uh uh makes up the product that you're shipping.
00:18:28.400 --> 00:18:35.839
It could be the FDA product code, it could be certain attestations of compliance um for the different partner government agencies.
00:18:35.920 --> 00:18:41.839
But there's a a number of these fields that you need to be collected, and it varies tremendously by the product type.
00:18:42.160 --> 00:18:54.720
And isn't there also um disclaim codes for like, hey, if it's personal use for certain situations that you could say, hey, this is this is just a personal use uh exemption from getting all of the other data?
00:18:54.960 --> 00:18:56.559
There's those kind of situations too, right?
00:18:56.720 --> 00:18:57.440
Yeah, that's correct.
00:18:57.519 --> 00:19:09.039
So it depends on the PGA and the partner government agency itself, but there are certain cases where if you meet certain criteria, and one of those might be end use or transaction type, then maybe that's disclaimable.
00:19:09.119 --> 00:19:12.000
Uh, but you'll have to know that and you have to attest to that.
00:19:12.319 --> 00:19:16.160
So this is like the uh a giant decision tree.
00:19:16.480 --> 00:19:16.559
Okay.
00:19:16.960 --> 00:19:22.319
So this decision tree is happening, and and let's say that just you're any, let's say we're not involved, right?
00:19:22.400 --> 00:19:24.720
So your former postal operator, you're working with your broker.
00:19:24.880 --> 00:19:29.680
This foreign postal operator needs to gather this type of information, give it to the broker, make the broker comfortable.
00:19:29.839 --> 00:19:31.839
We missed something super important about these brokers.
00:19:32.000 --> 00:19:33.440
Who's the importer of record on this?
00:19:33.599 --> 00:19:34.240
The broker.
00:19:34.480 --> 00:19:35.039
The broker.
00:19:35.359 --> 00:19:37.440
So no matter what, and it's mandated, correct?
00:19:37.920 --> 00:19:40.079
Yeah, that's very different from all other entry types.
00:19:40.240 --> 00:19:43.680
So now this broker's on the hook, right, for what's coming in.
00:19:43.839 --> 00:19:49.759
And so they're gonna be like pushing back on these foreign postal operators to gather this information themselves.
00:19:50.000 --> 00:19:56.799
Okay, now, Jonathan, to what you I think you were going is like we've had to think a lot about how we're gonna solve these problems.
00:19:57.039 --> 00:20:11.359
What are the solutions that either are in place today for a lot of foreign postal operators or they can start integrating with us um uh in order to, you know, and heck, look, if you're not working with us, you can go build something like this to go do it yourself if you want, right?
00:20:11.440 --> 00:20:15.599
But it just let's let's throw out some ideas of like how can you solve for this problem?
00:20:15.839 --> 00:20:17.680
Yeah, I think there's two ways to solve this problem.
00:20:17.839 --> 00:20:27.519
Um there's one which is uh I'd say prior to label creation, collect all the data elements you need for that shipment to to transit and be able to be cleared by it by a broker.
00:20:27.759 --> 00:20:41.039
So label gets created prior to that, sorry, prior to that, in an interface at the counter, sure, you're you're you're creating friction to get this information in some way or another in a UI.
00:20:41.279 --> 00:20:41.519
Yep.
00:20:41.759 --> 00:20:42.079
Got it.
00:20:42.240 --> 00:20:43.039
Okay, yep.
00:20:43.279 --> 00:20:55.440
Or the second way is to after the shipment's been created, maybe that's something that's happening via API or some other flow that's asynchronous, before it can clear, you have to get that information as well.
00:20:55.519 --> 00:21:07.680
Um, at that point, you risk if there's um uh uh delays in actually answering those questions, gathering that information, you risk the potential of holds at the border and delayed in uh processing times.
00:21:07.839 --> 00:21:14.559
Um so uh of those two, you know, the it could be the better customer experience might be that pre-collection of information.
00:21:14.799 --> 00:21:15.279
Could be.
00:21:15.519 --> 00:21:16.319
It'd be much more.
00:21:16.400 --> 00:21:19.039
Okay, so let's talk about how to how to pre-collect then.
00:21:19.119 --> 00:21:20.960
How that's because that just sounded super painful.
00:21:21.119 --> 00:21:22.799
How do you reduce the friction in the pre-collection?
00:21:23.119 --> 00:21:24.960
I'd like let's just put a pin in real quick.
00:21:25.200 --> 00:21:32.079
The post-collection would be we'd have tools to be able to send out messages, send out an email to somebody, email, WhatsApp, data collection, etc.
00:21:32.319 --> 00:21:32.480
Yep.
00:21:32.640 --> 00:21:34.559
Tell them, hey, we need some data, they go and attest to it.
00:21:34.720 --> 00:21:38.079
We we bring that in, marry that to the shipment, we're able to create the entry.
00:21:38.160 --> 00:21:38.400
Yep.
00:21:38.640 --> 00:21:38.960
Great.
00:21:39.119 --> 00:21:42.000
But if we already have that ahead of time, we don't have that step.
00:21:42.319 --> 00:21:43.759
Yeah, so if that's pre collected.
00:21:43.839 --> 00:21:59.759
So for example, if you had a catalog on file with your postal operator, or maybe it's in your e commerce platform that has the relevant information already attested to, then you can just look that up in the catalog when the shipment's created, and there's actually no additional questions, there's no uncertainty left.
00:22:00.400 --> 00:22:05.440
Okay, now then this goes to one of the like the solutions that we have built in order to manage this.
00:22:05.680 --> 00:22:19.200
Originally, when this rolled out, we gave a tool in our dashboard, we call it dashboard light, essentially, kind of a light version of our dashboard, to get your duty calculation to which was so at Etsy sent out an email to all their sellers and said, Hey, go use OnoSys calculator.
00:22:19.279 --> 00:22:23.519
Um, a lot of postal operators, um, like let's say in Australia, right?
00:22:23.599 --> 00:22:26.160
So all the retailers in Australia already have access to this dashboard.
00:22:26.240 --> 00:22:31.599
So one of the things they're gonna be able to do is I'm just gonna connect my my channels, right?
00:22:31.759 --> 00:22:32.160
Channels.
00:22:32.240 --> 00:22:38.720
Let's say a channel's Etsy, a channel is eBay, and now we're we're pre-gathering this information.
00:22:38.960 --> 00:22:47.359
And here's where this might become a superpower for some of these post postal operators is they can now have an experience that's super seamless pre-shipment, right?
00:22:47.519 --> 00:22:53.039
In order to attest for this information, including free trade agreements, right?
00:22:53.119 --> 00:22:55.599
Like that should be able to be on the table.
00:22:55.839 --> 00:22:57.200
So, what would that experience look like?
00:22:57.279 --> 00:22:59.839
Let's let's go for a business first, and then we'll get to an individual.
00:23:00.000 --> 00:23:03.680
Like, how can a business is now inside of our dashboard, right?
00:23:03.839 --> 00:23:06.960
Or you, hey, you can use our APIs to go create this kind of experience too.
00:23:07.039 --> 00:23:08.160
So we have the APIs.
00:23:08.319 --> 00:23:13.920
So as we talk about this interface, be thinking about how you could use this if you want it outside the interface as well.
00:23:14.160 --> 00:23:18.160
Because we're just going to provide this to your to your customers to go in and get this info.
00:23:18.400 --> 00:23:18.559
Yep.
00:23:18.640 --> 00:23:19.920
So the process is quite simple.
00:23:20.079 --> 00:23:25.759
Um, a verified account can log into their um dashboard, their their light account.
00:23:25.920 --> 00:23:29.599
They'll go ahead and they'll link their um e-commerce platform.
00:23:29.680 --> 00:23:40.799
It could be a Shopify store, eBay, Etsy, um, any of the supported uh e-commerce channels, they'll add uh authorize us uh to be able to pull order and catalog information.
00:23:40.960 --> 00:23:43.440
That'll get synced to us automatically.
00:23:43.599 --> 00:23:57.759
And then when there's a shipment created at the postal counter by that same tracking number, as long as that's in that e-commerce platform, which you generally do to be able to send out shipping notifications and the like, we'll be able to look up and say, okay, here's the exact catalog items that are in there.
00:23:57.920 --> 00:24:04.720
And all you have to do is you test one time, we store that information, and every single time you ship that item, that's already on file.
00:24:04.799 --> 00:24:06.240
You don't have to redeclare that same.
00:24:06.640 --> 00:24:11.119
But if I'm if I'm okay, so I sync my catalog as a as a merchant, we bring that in.
00:24:11.279 --> 00:24:12.480
How do I know how to test?
00:24:12.720 --> 00:24:13.920
Yeah, yeah, that's a great question.
00:24:14.000 --> 00:24:20.480
So we'll have we'll have uh uh and this can be triggered on shipment, or it could you could do it all at once in the catalog.
00:24:20.640 --> 00:24:25.519
Um, but you will ask you a series of questions, like a uh a question tree depending on the commodity.
00:24:25.839 --> 00:24:28.319
And we have an API that does this called we have an API.
00:24:28.400 --> 00:24:39.519
It we branded it as Zonos Clarify, which will just ask clarifying questions of what exactly this product is, uh any add it'll walk you through in a real user-friendly.
00:24:40.000 --> 00:24:43.279
The goal is that even my grandmother could be able to handle this, right?
00:24:43.519 --> 00:24:46.000
Um so it'll be she's pretty smart from what I hear.
00:24:46.319 --> 00:24:47.680
My my grandmother is.
00:24:47.759 --> 00:24:48.720
Um I believe it.
00:24:48.960 --> 00:24:54.319
But it will be it will be um very uh user-friendly to be able to walk through here's what we need.
00:24:54.400 --> 00:25:03.440
And in fact, what we do even before we ask all those questions is we actually infer what we think the answer to those questions might be, and we'll we'll give you a box at the top.
00:25:03.519 --> 00:25:09.519
Hey, it looks like you're shipping lipstick, it isn't it, it doesn't contain any pesticides and it meets this criteria.
00:25:09.759 --> 00:25:14.160
Click yes or no, and if they click yes, that they full stop, they're done.
00:25:14.319 --> 00:25:17.759
If they click no, then they can go ahead and answer those questions manually by themselves.
00:25:18.000 --> 00:25:46.799
So would the the tool then be really scrubbing my catalog and then just flagging the ones that I need I need to add more information so I could prepare everything ahead of time, and then as those goods are shipped, you're seeing the orders and linking that to the uh to tying all of that data to the entry, that's correct, supplementing with the the existing postal data that's like the IT mat and and other data elements, uh, that then create the full entry and all the data requirements needed.
00:25:47.119 --> 00:25:47.519
That's correct.
00:25:47.599 --> 00:25:55.440
And that way you can ensure you have full compliance of data and that um that that shipment is unlikely to be held by a PGA at the border.
00:25:55.759 --> 00:26:09.599
And then if as a business, if I uh was a little lazy and didn't stay on top of it, or I added a whole bunch of new stuff and didn't get uh do all the uh attestations, I would then be prompted to do that if I started shipping any of those goods.
00:26:09.839 --> 00:26:10.000
Correct.
00:26:10.240 --> 00:26:12.960
And then I but I would do it once for that that SKU and then it would be done.
00:26:13.200 --> 00:26:20.079
So the first time you ship a brand new product that maybe you haven't gone through this process for, we would be able to send you an email, a text, or WhatsApp, etc.
00:26:20.400 --> 00:26:21.440
Uh, with a link.
00:26:21.599 --> 00:26:28.640
You would click on that link, you'd be prompted with those same types of questions that would and that we would save that off on that catalog item.
00:26:28.720 --> 00:26:34.880
And now any future time you ship that item, we can just look up those attestations and handle it that way.
00:26:34.960 --> 00:26:39.039
There's no need to re-attest every single time you ship.
00:26:39.279 --> 00:26:52.079
So it'll be a really transparent experience, a really um you know user-friendly experience for for those that want to do everything ahead of time or those that would prefer to do it on the fly, uh, but we will minimize the the effort required at that point.
00:26:52.400 --> 00:26:52.720
All right.
00:26:52.799 --> 00:26:54.319
So there's some solutions.
00:26:54.480 --> 00:26:56.880
It is more complicated for these businesses, there's no doubt.
00:26:57.200 --> 00:27:01.119
And we're gonna be doing a lot more trainings and things on this stuff in the coming days.
00:27:02.079 --> 00:27:07.839
These businesses are gonna have and do have some of these same problems in the commercial stream, correct?
00:27:08.160 --> 00:27:10.559
They do, and it's actually quite unfortunate.
00:27:10.640 --> 00:27:13.359
A lot of these goods get held at the border.
00:27:13.440 --> 00:27:16.559
Um, while commercial is rough for these types of goods.
00:27:16.640 --> 00:27:19.440
There's that's there's a reason it's all going through postal right now.
00:27:19.680 --> 00:27:31.359
And so if it's it's a great way to keep your volume and know though that even though your your shippers are going to experience pain, it's a lot more painful for these PGAs, usually in the commercial stream.
00:27:31.680 --> 00:27:38.240
Yeah, the but the worst customer experience for both your shippers and their customers is to have that delay at the border while a broker.
00:27:38.640 --> 00:27:39.519
I see this as an opportunity.
00:27:39.599 --> 00:27:52.640
Honestly, like these postal operators, I see as an opportunity to like build out a better experience, right, than some other some of your um some of the other solutions that are out there to actually go and uh expand your volume.
00:27:53.039 --> 00:28:04.079
Like, don't look at this as like like necessarily like you can either take a crisis and turn it into an opportunity, or you can just sit on your hands and yeah, you'll get clobbered.
00:28:04.400 --> 00:28:07.839
And you will, like this, this stuff will clobber you if you don't if you don't get ahead of it.
00:28:10.000 --> 00:28:12.240
Individuals, right?
00:28:12.400 --> 00:28:13.200
The counter.
00:28:13.680 --> 00:28:15.440
How this is much different.
00:28:15.519 --> 00:28:29.039
Like I I I think probably the easiest way to illustrate this, and to to your point earlier, this is the experience we'll we're gonna walk through in our mobile app is the same kind of experience you could build into your your counter software with our APIs, right?
00:28:29.200 --> 00:28:29.440
Yep.
00:28:29.680 --> 00:28:39.359
Um But wouldn't you say that the prepay app, we have a mobile app that's deployed in a number of countries where someone creates their declaration, they can take a photo, create a declaration.
00:28:39.680 --> 00:28:42.480
What they need to be asked for today is pretty straightforward.
00:28:42.799 --> 00:28:50.400
But in the future state, if I'm your grandma or myself, this is probably not as smart as his grandma.
00:28:50.880 --> 00:28:59.200
When I when I go to create my my declaration on my shipment, is it true that I'll just start based on the what I'm trying to ship, I'll just get asked some questions?
00:28:59.440 --> 00:29:00.960
That's exactly very interactive, right?
00:29:01.279 --> 00:29:04.720
Super interactive and super uh easy to handle.
00:29:04.880 --> 00:29:07.920
And again, we'll we'll we'll front run everything with an inference.
00:29:08.000 --> 00:29:17.680
So we'll say, here's based off of the commodity description you provided, the image, uh, the HS code, um, here's what we think is the right answer to these questions.
00:29:17.759 --> 00:29:18.799
Please confirm that.
00:29:18.960 --> 00:29:22.240
And they can attest all in once with one click if if that's correct.
00:29:22.400 --> 00:29:29.359
Or if they say no, then they'll just go ahead and they'll they'll answer the relevant questions uh with with with what is what is correct.
00:29:29.599 --> 00:29:37.759
And so it's a very it balances that user experience uh with also the the full attestation that's needed for for compliance.
00:29:38.000 --> 00:29:51.440
So very similar to the businesses, but a business is pre-doing a lot of work with their catalog, whereas the the user might be you know shipping their you know one-time shipment and they just get get asked some questions for that shipment and the products are shipping and away they go.
00:29:51.680 --> 00:29:52.559
Correct.
00:29:53.599 --> 00:29:53.920
Okay.
00:29:54.240 --> 00:29:54.640
Wow.
00:29:54.880 --> 00:30:00.559
I and if you don't have this, you're gonna have to figure out a way to gather this kind of information from an individual.
00:30:00.720 --> 00:30:01.920
Well, in some way, one way or another.
00:30:02.240 --> 00:30:16.240
And this isn't this is such a complex dynamic set of information that you need that varies by commodity and government agency, that it it's not gonna be supported by the standard data that is is in postal.
00:30:16.319 --> 00:30:24.960
Yeah, and so this is a supplemental data stream that we're having to build out to complement um you know what what's existing today in uh in postal data.
00:30:25.359 --> 00:30:27.599
Yeah, none none of this is on an IT Matt.
00:30:27.839 --> 00:30:35.359
And I know we've talked about partner government agencies and the the need for that, but there's also a need for handle 232 and 301s as well.
00:30:35.519 --> 00:30:43.359
So these are the additional duties beyond uh the standard uh duty rates, uh called most favorable nation rates.
00:30:43.519 --> 00:30:50.160
Um there are many things that might be considered an automotive part or they might not be an automotive part based off of their HTS code.
00:30:50.240 --> 00:30:54.559
If you can if you can attest, hey, this is a non-auto part, then you get a different duty rate.
00:30:54.880 --> 00:30:58.480
Huge cost savings, or like the country of smelt and poor or test.
00:30:58.799 --> 00:31:03.279
Precisely the aluminum or steel content will influence the actual amount that's paid.
00:31:03.440 --> 00:31:09.920
And so if you if you don't collect that, your shippers will have to pay essentially the worst case scenario, right?
00:31:10.000 --> 00:31:22.400
They'll have to pay as though it was, you know, 100% steel or 100% aluminum, and um it was as though it was melted and and poured in in Russia, which has punitive uh duties on that.
00:31:22.480 --> 00:31:29.680
And so if you can collect this information ahead of time, you can offer that that uh differentiated experience on on cost as well.
00:31:30.000 --> 00:31:31.920
You brought up the IT, Matt.
00:31:33.279 --> 00:31:39.200
How how like how is this data or is this data, some of the like these elements, how is it going to come through?
00:31:39.279 --> 00:31:47.920
The is the UPU, IPC, are they doing some things to get enhanced data elements through the the data stream?
00:31:48.160 --> 00:31:51.279
They're working on some enhanced data elements for the EU, right?
00:31:51.680 --> 00:31:57.039
Product identifiers, but that's like three fields that's basically part numbers.
00:31:57.279 --> 00:31:58.960
So this is this is a whole nother bottle.
00:31:59.279 --> 00:32:00.160
So correct me if I'm wrong.
00:32:00.319 --> 00:32:08.240
I see in my mind, right, like these postal operators, they have their data stream with their um through the IT map, right?
00:32:08.319 --> 00:32:10.400
That's happening through the normal postal data stream.
00:32:10.640 --> 00:32:14.960
And they're probably gonna have a supplemental data stream that's connected directly to their broker.
00:32:15.200 --> 00:32:15.680
Correct.
00:32:15.920 --> 00:32:19.680
It really, I mean, realistically, like a dual integration.
00:32:19.839 --> 00:32:25.119
Whether, and actually honestly, the post, like if we're getting that data, the post office doesn't have to do the dual integration.
00:32:25.200 --> 00:32:26.480
We're like sidetracking with the post.
00:32:26.559 --> 00:32:30.319
Well, it's like, hey, we'll gather this data and enhance what's coming through in the IT mat.
00:32:30.640 --> 00:32:40.160
But otherwise, you got to gather both sets of data and give your broker that set of data for um for the broker to be able to actually get this entry done correctly.
00:32:41.839 --> 00:32:43.759
Yeah, and and just a quick trivia.
00:32:44.079 --> 00:32:56.640
Um if you um if you look at the the totality of goods that are affected by these 232, 301, and MFN um uh sorry um and PGA requirements.
00:32:56.880 --> 00:32:57.680
PGA requirements?
00:32:57.839 --> 00:32:58.079
Yep.
00:32:58.319 --> 00:33:00.319
That's that's close to 90%.
00:33:00.799 --> 00:33:02.799
Actually, a little over 90, wasn't it?
00:33:02.880 --> 00:33:04.160
Yeah, it's like 94%.
00:33:04.640 --> 00:33:08.400
If you look at the the force labor, that's with the 301 tariffs that are coming.
00:33:08.480 --> 00:33:09.119
Yep, yep.
00:33:09.359 --> 00:33:10.720
Okay, so oh geez.
00:33:10.799 --> 00:33:21.759
So the 301 tariffs that are coming, the 232s and the PGAs, the volume that we see, 91%, oh wow, will be impacted by something.
00:33:22.000 --> 00:33:23.440
By something in one of those categories.
00:33:23.599 --> 00:33:31.039
Yeah, so that could be your your uh that that that'll impact the calculations, that's why the the data needed, all of that.
00:33:31.200 --> 00:33:34.720
It's the new world is is very different than the old world.
00:33:34.960 --> 00:33:40.880
And and and I call this out specifically because there is a a decision point that you have to make, right?
00:33:41.359 --> 00:33:45.440
Um so after this 90 to 100 three to four months, right?
00:33:45.759 --> 00:33:50.720
Um you can decide to to participate in the entry type 13 test.
00:33:50.960 --> 00:33:53.359
And it is a test that they're calling, it's voluntary.
00:33:53.519 --> 00:34:06.480
You don't have to do it, but if you don't, then all of those things will be subject to formal entry, type one, which has a much higher MFN if you don't want to.
00:34:06.799 --> 00:34:08.079
What is the MFN fee in type one?
00:34:08.320 --> 00:34:15.280
The merchandise processing fee, it's three dollars and some change for the low end per entry.
00:34:15.519 --> 00:34:22.239
So alcohol tobacco tobacco comes through right now, somebody's getting a$33 fee just in clearance fees on the tobacco.
00:34:22.480 --> 00:34:23.119
That would be the fee.
00:34:25.760 --> 00:34:27.840
That'll start in 30 days, right?
00:34:28.239 --> 00:34:29.440
Yeah, yeah.
00:34:30.639 --> 00:34:30.960
Okay.
00:34:32.159 --> 00:34:42.079
There is their ability to do consolidation and maybe get tricky on or you know, at least you know, try to help out a little bit here if someone if there's a lot of volume coming through like that for a certain postal operator.
00:34:42.320 --> 00:34:45.280
Yeah, so consolidation informal is possible.
00:34:45.519 --> 00:34:54.960
You have to have the um you can have different ultimate consignees, so that you have to have it going to different people in the end in the US, but it has to have the same what they call nominal scale.
00:34:55.199 --> 00:34:57.360
Seems like a lot of work for just a few goods.
00:34:57.519 --> 00:34:58.159
Yeah, yeah.
00:34:58.320 --> 00:35:05.679
It it it will be, and especially if you look at the volume that's maybe coming on a given uh airplane or truck, right?
00:35:05.760 --> 00:35:08.480
Um, because that's kind of where you're saying it's gonna be tough to consolidate.
00:35:08.800 --> 00:35:10.400
You're not really gonna have those economies of scale.
00:35:10.480 --> 00:35:16.000
You need so some postal operators might just want to say no to a few goods.
00:35:16.480 --> 00:35:17.840
Alcohol and tobacco.
00:35:18.159 --> 00:35:18.719
Yeah, yep.
00:35:18.880 --> 00:35:21.519
That yep, that could that could be a reasonable approach for sure.
00:35:21.679 --> 00:35:26.559
So yeah, I I think in the end, uh this is this has been awesome.
00:35:26.719 --> 00:35:31.119
Um we just we've been digesting these just this morning.
00:35:31.280 --> 00:35:38.719
Uh there's there's a lot to unpack here, but I think we have a good handle on on kind of and we kind of saw a lot of this this coming and the way this is rolling out.
00:35:38.880 --> 00:35:44.960
Um but it's gonna be the disruption's not gonna be right out of the gate.
00:35:45.039 --> 00:35:48.239
Um, I I think the calculations are what's gonna land first.
00:35:48.320 --> 00:35:49.519
That's only gonna be a month from now.
00:35:49.679 --> 00:35:50.960
Calculations are gonna change.
00:35:51.199 --> 00:35:55.760
Broker will be required to be in the mix uh for for processing these new spreadsheets.
00:35:55.920 --> 00:36:03.760
But come this fall, that's that's what you really need to be gearing up for and and preparing for because that's where the the true disruption comes.
00:36:04.000 --> 00:36:06.719
And I think there's a danger to wait, right?
00:36:07.119 --> 00:36:09.840
So um don't be caught flat footed.
00:36:10.079 --> 00:36:12.719
These changes take time to collect these data elements.
00:36:12.800 --> 00:36:16.000
Um, and so that work should start immediately.
00:36:16.239 --> 00:36:16.639
Yeah.
00:36:16.880 --> 00:36:17.199
All right.
00:36:17.280 --> 00:36:20.320
Well, our team's gonna be ready to help for those that uh are working with us.
00:36:20.400 --> 00:36:26.880
We're also happy to answer any questions for postal operators, but uh uh all right, riveting.
00:36:27.199 --> 00:36:31.920
Um, I'm sure we'll have another episode soon on geez, everything EU, everything else going on.
00:36:32.000 --> 00:36:33.519
Uh we're we're we're definitely busy.
00:36:33.599 --> 00:36:36.239
So thanks for coming on today and uh looking forward to next time.
00:36:36.400 --> 00:36:37.199
All right, thanks, Clint.
00:36:37.440 --> 00:36:38.159
Thank you.
00:00:06.719 --> 00:00:11.279
Welcome to another episode of uh decoding cross-border e-commerce podcast.
00:00:11.839 --> 00:00:23.199
And I'm here with Aaron as the ush and with uh Jonathan Sullivan, our chief data scientist, who also oversaw um our acquisition of Evolve um Customs Brokerage.
00:00:23.440 --> 00:00:33.840
And so to talk about the new entry, well, the upcoming new entry process, which is uh going to evolve into a evolve, oh wow, a type 13 entry.
00:00:34.640 --> 00:00:36.880
But there's a little interim process here.
00:00:36.960 --> 00:00:40.719
So we had some guidance, an IFR, right?
00:00:40.799 --> 00:00:43.840
Which uh acronym means interim final rule.
00:00:44.000 --> 00:00:44.560
Interim.
00:00:44.960 --> 00:00:45.520
Interim.
00:00:45.920 --> 00:00:46.960
Interim final rule.
00:00:47.200 --> 00:00:50.320
Which I've never understood how you can have an interim final rule.
00:00:50.479 --> 00:00:53.439
It feels like an oxymoron to me, but I'm no I'm okay.
00:00:53.520 --> 00:00:56.399
So we got two of those, right, from customs today.
00:00:56.640 --> 00:00:58.640
And a what was the third thing they dropped?
00:00:58.880 --> 00:01:00.399
Here's a general notice as well.
00:01:00.640 --> 00:01:09.920
All right, so let's let's talk about this because this is massively impactful, even in the short term, in 30 days for foreign postal operators, right?
00:01:10.000 --> 00:01:14.000
It's gonna impact all these posts around the world coming in for their shipments into the U.S.
00:01:14.400 --> 00:01:18.719
And then it's gonna be even more impactful when the actual type 13 process comes in.
00:01:18.879 --> 00:01:22.319
So what happened today and what's going on?
00:01:22.719 --> 00:01:23.599
Would you want to take it?
00:01:23.760 --> 00:01:24.159
Yeah, sure.
00:01:24.239 --> 00:01:25.200
I'd be happy to.
00:01:25.439 --> 00:01:31.920
Um, so today there's uh it was three things announced the two IFRs um and one general notice.
00:01:32.000 --> 00:01:36.719
Uh the first one, which we'll touch on, is largely I'd say procedural.
00:01:36.799 --> 00:01:47.680
Um, it it continues the suspension of de minimis officially through an interim final ruling um for all non-postal um streams into the U.S.
00:01:48.079 --> 00:01:52.799
Which which really this is executive order came out, got rid of the de minimis last year.
00:01:52.959 --> 00:01:55.680
The big beautiful bill is putting into law starting next year.
00:01:55.920 --> 00:01:56.159
Correct.
00:01:56.319 --> 00:02:01.120
This this is really just like rubber stamping it again, just like oh hang on the really it's really, really gone.
00:02:01.359 --> 00:02:02.239
De minimis is gone.
00:02:02.400 --> 00:02:04.000
Okay, they're just like restating themselves.
00:02:04.159 --> 00:02:04.319
Okay.
00:02:04.400 --> 00:02:04.480
Yeah.
00:02:04.640 --> 00:02:07.680
So so I think that one we can just say that's understood.
00:02:08.080 --> 00:02:08.879
Business as usual.
00:02:09.280 --> 00:02:09.919
Nothing's changing.
00:02:10.080 --> 00:02:10.560
Yep, yep.
00:02:10.719 --> 00:02:10.960
Okay.
00:02:11.360 --> 00:02:36.800
Um, the second one um is the uh suspension of the qualified party process in its current form and the replacement with a new entry type 13 that's been announced, um, and and uh a deferred compliance window for the next 90 to 120 days that largely keeps most everything the same.
00:02:36.960 --> 00:02:39.120
There's a few new requirements that are introduced.
00:02:39.280 --> 00:02:43.280
Um, one, it does require uh full 10-digit HS codes.
00:02:43.439 --> 00:02:55.039
Um this uh puts um the qualified party process for postal entries into actual customs business very clearly, which means you need a broker when you're talking about customs business.
00:02:55.439 --> 00:02:56.400
Absolutely need a broker.
00:02:56.639 --> 00:03:02.560
Yeah, so I mean qualified parties up to this point didn't have to be brokers, which we weren't for a long time.
00:03:02.879 --> 00:03:10.159
Now we're moving from a basic spreadsheet to a fancier spreadsheet for a few months that will require a broker.
00:03:10.319 --> 00:03:10.800
Yeah.
00:03:11.039 --> 00:03:22.319
And um, but there's there's some advantages and disadvantages of this new process, but it's gonna be much more calculated and granular in the way it's uh um approaching everything.
00:03:22.560 --> 00:03:28.719
And it's really a uh a phased approach to get prepared for the type 13 entry that's coming in this fall.
00:03:29.039 --> 00:03:32.159
Yeah, and and that type 13 entry is gonna be a big change, right?
00:03:32.240 --> 00:03:35.680
It's gonna require um all the same PGA message set.
00:03:35.840 --> 00:03:37.360
So all the PGA?
00:03:37.680 --> 00:03:39.120
The partner government agencies.
00:03:39.199 --> 00:03:44.800
These are things like the Food and Drug Administration, the USDA, the EPA.
00:03:45.039 --> 00:03:58.960
They all have different requirements that you have to comply by, uh, different um information you have to disclose, um, and they have the ability to um to to pause entries um to prevent that entry from proceeding.
00:03:59.520 --> 00:04:03.840
But but what's but what's gonna happen over the next like until the new type 13 process comes in?
00:04:03.919 --> 00:04:06.639
We have a spreadsheet, what's happening with PGAs in this interim period?
00:04:06.879 --> 00:04:07.280
Yep, yep.
00:04:07.360 --> 00:04:12.400
So that'll happen in um like likely October, September, October, around that time frame.
00:04:12.479 --> 00:04:14.879
In this interim time period, business as usual there.
00:04:15.199 --> 00:04:15.759
No no pain.
00:04:15.919 --> 00:04:17.920
There's no pain immediately.
00:04:18.160 --> 00:04:21.040
Well no pain related to the extra.
00:04:22.639 --> 00:04:28.639
To the partner government authorities, but there are a few goods, right, that are going to be painful, and maybe we'll get to that.
00:04:28.720 --> 00:04:30.959
Um, I mean, it's some outliers, right?
00:04:31.199 --> 00:04:31.439
Correct.
00:04:31.680 --> 00:04:35.519
Well, let's talk about the current state, okay, future state.
00:04:35.680 --> 00:04:36.480
Let's talk about money.
00:04:36.639 --> 00:04:38.240
You know, let's let's all take this to the bank.
00:04:38.399 --> 00:04:40.720
In fact, do you know why banks have drive-throughs?
00:04:41.680 --> 00:04:44.480
I do you know why they have drive-throughs?
00:04:45.120 --> 00:04:46.959
I I don't know, Aaron.
00:04:47.360 --> 00:04:49.360
So the cars can meet their real owners.
00:04:52.639 --> 00:04:52.959
Come on.
00:04:53.040 --> 00:04:54.240
That was come on.
00:04:54.480 --> 00:04:56.319
So the cars can meet their real owners.
00:04:56.480 --> 00:04:57.040
Yeah, the bank.
00:04:57.360 --> 00:04:58.240
The bank owns the cars.
00:04:58.879 --> 00:04:59.199
Oh.
00:05:01.360 --> 00:05:01.759
All right.
00:05:01.839 --> 00:05:02.560
Let's talk money.
00:05:02.800 --> 00:05:03.120
That was good.
00:05:03.199 --> 00:05:04.720
That was let's talk money.
00:05:04.879 --> 00:05:05.519
All right.
00:05:05.759 --> 00:05:07.519
Um so today.
00:05:07.839 --> 00:05:10.160
Usually when you surprise me through jokes, I laugh.
00:05:10.319 --> 00:05:12.959
But if it takes me too long to get it, then I'm embarrassed.
00:05:13.120 --> 00:05:14.879
So I'm on the embarrassed side.
00:05:15.120 --> 00:05:16.240
Uh all right.
00:05:16.480 --> 00:05:19.680
So the spreadsheet today, very basic.
00:05:19.920 --> 00:05:20.319
Very basic.
00:05:20.480 --> 00:05:21.360
This started last summer.
00:05:21.439 --> 00:05:25.439
It started with, hey, in postal, the only calculation is IPA tariffs.
00:05:25.519 --> 00:05:27.360
Then those turned into the 122 tariffs.
00:05:27.439 --> 00:05:27.680
Yep.
00:05:27.839 --> 00:05:28.399
And that's it.
00:05:28.560 --> 00:05:30.560
There's none of your standard duty calculations.
00:05:30.639 --> 00:05:35.600
There's no 301 tariffs, 232, all the stacking stuff that's complicated for the commercial lane.
00:05:35.680 --> 00:05:36.560
Postal hasn't had that.
00:05:36.639 --> 00:05:39.680
It's been very easy to calculate.
00:05:40.560 --> 00:05:43.360
That's changing in 30 days.
00:05:43.839 --> 00:05:56.720
The new spreadsheet is going to move to a standard calculation, stacking tariffs, all of the, all of the goodness that comes from that, which actually is gonna uh CPP actually did a whole analysis on this.
00:05:56.800 --> 00:06:00.720
It's like uh it's gonna result in about uh on average an 8.
00:06:01.120 --> 00:06:09.759
I think 6.7% increase in 8.62% uh increase in uh the average tariff based on their analysis.
00:06:10.079 --> 00:06:13.360
Do you think they took into account for uh free trade agreements?
00:06:13.600 --> 00:06:16.480
Which have not been allowed inside of I don't know that they did.
00:06:16.639 --> 00:06:16.959
I know.
00:06:17.279 --> 00:06:21.680
Well, because we have not been able to offer free trade agreements inside the qualified party process.
00:06:21.920 --> 00:06:22.399
They may have.
00:06:22.480 --> 00:06:29.839
They did say their methodology was looking at type 11 entries on the commercial side, so maybe, maybe I'll give them credit and say yes.
00:06:30.079 --> 00:06:34.240
However, for certain posts, this actually might be a net decrease.
00:06:34.560 --> 00:06:35.600
It could this is gonna be.
00:06:36.000 --> 00:06:36.879
Let's say Canada, right?
00:06:36.959 --> 00:06:44.720
That's a that's a good example of the so much volume coming in from Canada to the US, and they've not been able to get any treatment for USMCA Kuzma.
00:06:45.040 --> 00:06:45.759
Exactly, exactly.
00:06:45.920 --> 00:06:54.480
Well, and that's where the the uh the postal up to this point has had some advantages and disadvantages in the calculation.
00:06:54.720 --> 00:06:57.360
Yeah, free trade agreements is one of those disadvantages.
00:06:57.519 --> 00:07:05.519
Right now we're moving it into parity in the calculation, and so uh is it's no longer hey, is postal better or worse?
00:07:05.600 --> 00:07:07.199
It's like, no, it's gonna be the same calculation.
00:07:07.360 --> 00:07:11.120
Yes, it's just and you're gonna have some of the same advantages like free trade agreements.
00:07:11.279 --> 00:07:14.639
Okay, well, there is actually an advantage that postal has and retains.
00:07:15.040 --> 00:07:20.319
Um so postal today doesn't have a what they call merchandise processing fee.
00:07:20.560 --> 00:07:28.160
Uh that merchandise processing fee for informal entries, so these are things less than$2,500, is typically$2.69.
00:07:29.040 --> 00:07:37.680
Um, that um is confirmed to not be applicable both with this uh upgraded spreadsheet, but also with the entry type 13.
00:07:37.759 --> 00:07:39.839
That continues to be the case even there.
00:07:40.079 --> 00:07:45.360
So there is uh uh an advantage for postal in that sense, but it is relatively small small.
00:07:45.680 --> 00:07:49.360
Yeah, well, okay, when you look at it in terms of maybe a duty percentage, right?
00:07:49.519 --> 00:07:53.040
Average order value probably in postal is item value is probably less than 100.
00:07:53.360 --> 00:07:53.759
So that's sure.
00:07:54.160 --> 00:08:02.879
So as a percentage impact, it's going to be pretty high by comparing postal to a different entry process, a commercial pro commercial entry.
00:08:03.120 --> 00:08:03.439
Yep, yep.
00:08:03.519 --> 00:08:07.439
That'll that'll definitely be a win uh for the postal community.
00:08:07.680 --> 00:08:22.959
Um but in the but the uh the commercial entries, they're are they're still able to consolidate and get that um that merchandise processing fee down per parcel if they do a consolidation, which happens with some usually not with the express carriers, but with some consolidators.
00:08:23.279 --> 00:08:23.360
Yep.
00:08:23.439 --> 00:08:38.480
So typically what happens is they'll they'll group a whole bunch of consignments as long as it's under that uh$2,500 threshold into one entry, and that$2.69 can be spread across all the all the consignments in that entry.
00:08:39.360 --> 00:08:44.159
All right, so it's the broker now needs to do a calculation.
00:08:44.559 --> 00:08:50.320
Do brokers this is pop quiz, do brokers do calculations for duties typically?
00:08:51.679 --> 00:08:52.960
Typically it's done in ACE.
00:08:53.279 --> 00:08:53.600
ACE.
00:08:53.759 --> 00:08:57.360
They're actually not so this is this is not as easy as it sounds.
00:08:57.600 --> 00:09:02.080
Spreadsheet is easy, but properly calculating duties is not.
00:09:02.480 --> 00:09:05.120
How is CBP gonna audit and deal with this?
00:09:05.279 --> 00:09:15.360
Just do their best, I guess, to try to you know determine how I we'll see, I guess.
00:09:15.679 --> 00:09:16.559
Remains to be seen.
00:09:16.879 --> 00:09:22.559
But there there's gonna have to be some type of audit process, I'm sure, because um we calculate duties for a living.
00:09:22.639 --> 00:09:26.159
We've been doing this for, you know, geez, 17 years almost.
00:09:26.639 --> 00:09:28.320
Uh a lot of brokers have not.
00:09:28.879 --> 00:09:33.759
And so as you look at, you know, your foreign postal operator, these are what are okay.
00:09:33.840 --> 00:09:40.960
If you're a foreign postal operator, what are some questions you're asking now, your broker um that that uh might become doing this in T US?
00:09:41.279 --> 00:09:42.159
You mean your qualified party?
00:09:42.399 --> 00:09:43.039
Yeah, you're qualified.
00:09:43.360 --> 00:09:43.679
Okay, yeah.
00:09:43.759 --> 00:09:46.159
What questions should you be asking your current qualified party?
00:09:46.480 --> 00:09:52.000
I I think it's I think it's worth talking to any postal operators working with us.
00:09:52.960 --> 00:09:55.679
It's status quo for the next few months.
00:09:55.840 --> 00:09:57.440
Uh because we're a broker.
00:09:57.759 --> 00:09:59.440
We're a broker, we've got the technology.
00:09:59.759 --> 00:10:01.279
We know how to do all of this.
00:10:01.440 --> 00:10:09.840
And we have tools for your if you have been utilizing our um dashboard for your customers, they're gonna have a much more complex calculation.
00:10:10.000 --> 00:10:16.720
It's gonna be a lot more valuable for merchants to figure out what is my actual total landed cost of my my goods.
00:10:16.960 --> 00:10:17.200
Yep.
00:10:17.360 --> 00:10:20.799
And that's that's actually a key point here when we're talking about calculations.
00:10:20.879 --> 00:10:25.600
Uh, I know some postal operators have just been like, all right, well, 122 tariffs, 10%.
00:10:26.000 --> 00:10:28.879
I'm just gonna I'm just gonna calculate it my myself.
00:10:28.960 --> 00:10:31.279
And then we're processing it, it's working great.
00:10:31.360 --> 00:10:32.799
No, no big deal.
00:10:33.120 --> 00:10:35.600
But the calculations are much more complex.
00:10:35.759 --> 00:10:40.639
It's you know, a sp a different duty rate by HTS code plus the stacking rules.
00:10:40.720 --> 00:10:42.159
It's extremely complex.
00:10:42.480 --> 00:10:44.960
And and those stackings can get very complicated.
00:10:45.039 --> 00:10:56.240
If something is an automotive part but made out of steel or aluminum, and uh, you know, there's certain rules about how those stack and certain thresholds for if the steel content's below a certain amount, then it's an exemption.
00:10:56.320 --> 00:10:59.759
And are you collecting that information from the from the actual shipper?
00:11:00.080 --> 00:11:06.399
And so there's a lot of these things that that make it even much more than just one rate per HCS code.
00:11:06.639 --> 00:11:14.080
And and that that's part of the beauty of us being a technology provider first, is we've got the tools to help with all of that.
00:11:14.320 --> 00:11:19.919
So I look, I and I'm super biased, we have the best, most comprehensive land and cost calculator.
00:11:20.480 --> 00:11:23.120
Oh duties and taxes, bar none, it's not even close.
00:11:23.360 --> 00:11:25.679
And this is hard for us, right?
00:11:26.000 --> 00:11:33.759
Like we spend a lot of time getting this right, and so uh it's gonna be rough, I think, until this can start getting processed in ACE to get this correct.
00:11:34.000 --> 00:11:35.360
No, absolutely, absolutely.
00:11:35.440 --> 00:11:42.159
And and so um if we look at this transition, you might look to yourself like, oh, good.
00:11:42.639 --> 00:11:46.080
Uh I need to deal with the calculation and I'm I'm good to go.
00:11:46.159 --> 00:11:47.919
I'm gonna go focus on something else now.
00:11:48.080 --> 00:11:55.919
But the reality is what's coming in a few months with the PGAs, that's where you need to also start planning now.
00:11:56.240 --> 00:11:59.679
So probably for these foreign postal operators, two messages.
00:11:59.840 --> 00:12:04.320
One, you better let your merk your customers know this is changing, right?
00:12:04.399 --> 00:12:05.279
This is one of the first things.
00:12:05.360 --> 00:12:08.399
Start getting your well, we can help get your message together, right?
00:12:08.639 --> 00:12:16.000
What's changing, how it's gonna impact them, because they're gonna be surprised when the duty bill is different than what they've been getting, right?
00:12:16.080 --> 00:12:17.360
So you need to communicate that.
00:12:17.519 --> 00:12:19.759
But second is the upcoming changes.
00:12:20.799 --> 00:12:22.879
Let's should we dive a little bit deeper into those changes?
00:12:23.120 --> 00:12:27.519
And I I think if you're not working with a qualified party that's also a broker, you need to be rethinking.
00:12:27.600 --> 00:12:39.600
And and CVP actually talks specifically about that in this of like they understand it might be a little disruptive that you need to be, you know, looking at your qualified party, making sure they're ready for this and actually have a broker involved.
00:12:39.759 --> 00:12:42.879
Um, but yeah, let's let's start talking about now.
00:12:43.440 --> 00:12:45.600
You let's say you get that locked down.
00:12:46.639 --> 00:12:52.799
This is a very short window of time that this this interim spreadsheet process is going to be applicable.
00:12:53.279 --> 00:12:56.320
Um three to four months from now.
00:12:56.399 --> 00:12:56.960
So we're talking about.
00:12:57.120 --> 00:12:58.080
So probably before peak.
00:12:58.159 --> 00:12:58.480
Uh-huh.
00:12:59.360 --> 00:13:05.440
Oh no, actually, they'll probably do it like on right before Thanksgiving, right?
00:13:05.759 --> 00:13:06.720
Like right before peak.
00:13:06.799 --> 00:13:07.600
Because why wouldn't they?
00:13:07.759 --> 00:13:11.039
It's like let's just throw it out right before Black Friday.
00:13:11.120 --> 00:13:11.919
Yeah, like the day before.
00:13:13.360 --> 00:13:13.759
Yes, we do.
00:13:13.919 --> 00:13:24.559
So we do know there's there's actually a little bit of ambiguity here about how long this uh upgraded spreadsheet process can last, but um, it's either 120 days or 90 days.
00:13:24.720 --> 00:13:25.039
Uh-huh.
00:13:25.279 --> 00:13:31.759
Uh within 90 days, that's when we expect the entry type 13 test to um to be available.
00:13:31.919 --> 00:13:35.360
And within 120 days, we expect that to end.
00:13:35.519 --> 00:13:45.519
But there's also language that says that within 120 days that spreadsheet process ends, or potentially when the entry type 13 process begins.
00:13:45.679 --> 00:13:51.519
And so uh it's either end of September, end of October, both of those are and that's where we're we're trying to get a little clarification.
00:13:51.600 --> 00:13:55.039
But the reality is I would I would start planning for end of September.
00:13:55.279 --> 00:13:55.440
Okay.
00:13:55.840 --> 00:14:01.120
September 22nd-ish, right, is 90 days from when this is going to be announced tomorrow officially.
00:14:01.200 --> 00:14:09.679
This is like a pre-notice, but it'll actually be a the initial kind of no message to your customers is look, we've got you covered, still gonna be a billion for duties and taxes.
00:14:09.759 --> 00:14:12.159
The duties are changing, not a lot is changing for you.
00:14:12.639 --> 00:14:17.039
However, in 90 to 100 days, a lot of things are changing for you.
00:14:17.600 --> 00:14:24.720
What are those things that are that they I do want to carve out one one thing that's I I think we missed on this interim spreadsheet process.
00:14:24.879 --> 00:14:30.320
If you have anybody selling alcohol or tobacco, yes, yeah, that's not gonna that's not gonna be going on this this response.
00:14:30.559 --> 00:14:37.600
Okay, so there's gonna be the uh the exceptions at the bottom of that you know notice that says, hey, there's a few things you need to worry about.
00:14:37.759 --> 00:14:40.480
Alcohol tobacco needs to go through a formal entry.
00:14:40.720 --> 00:14:42.320
Formal entry, which means type one.
00:14:42.559 --> 00:14:42.960
Correct.
00:14:43.120 --> 00:14:43.440
All right.
00:14:43.679 --> 00:14:45.919
What else besides alcohol tobacco is impacted?
00:14:46.240 --> 00:14:49.600
There's some anti-dumping, countervailing quota is the last one.
00:14:50.080 --> 00:14:52.879
Okay, give me examples of what that could fall under that.
00:14:53.279 --> 00:15:00.000
Yeah, so there's um limits to how many of a specific commodity type that can be imported in at a specific duty rate.
00:15:00.080 --> 00:15:03.360
Um and those are soft quotas, but there's also hard hard quotas as well.
00:15:03.519 --> 00:15:15.679
If there's any of those HTS codes on your on your filing that can't be processed through this, how many do you think of what would do you have any idea of how many of our shipments are would be impacted on it with those?
00:15:16.159 --> 00:15:16.480
No.
00:15:16.960 --> 00:15:17.759
Okay, interesting.
00:15:17.919 --> 00:15:18.960
All right, we'll get that answered.
00:15:19.360 --> 00:15:20.559
But I think overall it's gonna be very small.
00:15:20.879 --> 00:15:22.320
I mean, super small is a small percentage.
00:15:22.720 --> 00:15:22.960
Very small.
00:15:23.200 --> 00:15:30.159
So that okay, a few exceptions in this interim process, otherwise, otherwise more money, depending on country and if FTAs are apply or not.
00:15:30.240 --> 00:15:30.639
Yep.
00:15:30.960 --> 00:15:32.159
New process.
00:15:32.879 --> 00:15:37.279
What did should they be telling their customers, these postal operators, that they need to get ready for?
00:15:37.440 --> 00:15:42.399
PGAs is a big one because a large percentage and the posts need to get ready for this at the retail counters.
00:15:42.639 --> 00:15:45.759
What does that mean with these partner government authorities?
00:15:45.840 --> 00:15:46.480
What do they need to get?
00:15:46.799 --> 00:15:53.600
Just to put it in perspective, how many how many shipments or what percentage of shipments would you say are subject to a PGA?
00:15:53.840 --> 00:15:54.879
Or potentially subject.
00:15:55.039 --> 00:15:57.519
Or I guess if we include CPSD, potentially subject.
00:15:57.679 --> 00:16:01.360
I get a cheat because I kind of remember if it's around 50%, I believe you said that.
00:16:01.600 --> 00:16:02.480
That's correct, it's close to 50%.
00:16:02.879 --> 00:16:03.440
That's crazy.
00:16:03.759 --> 00:16:07.360
So about half of all shipments, uh parcels that you process today.
00:16:07.679 --> 00:16:08.399
In postal.
00:16:08.559 --> 00:16:14.399
In postal, we would expect to need additional data elements to be able to satisfy those partner government agency needs.
00:16:14.639 --> 00:16:24.240
So these additional data elements need to come in with the shipment, or we need to have gathered it indirectly on the post office's behalf with that customer, which we have solutions to do.
00:16:24.320 --> 00:16:27.840
So you need a what are some examples of this additional data elements you're gonna need.
00:16:28.159 --> 00:16:36.639
Yeah, so the Food and Drug Administration, they require anything that that is uh FDA eligible um to have a product code in addition to the HTS code.
00:16:36.720 --> 00:16:39.440
So this will specify exactly to their taxonomy.
00:16:39.519 --> 00:16:41.919
It's generally five or uh five or seven digits.
00:16:42.080 --> 00:16:45.519
What um what is that is that product code anchored in anything?
00:16:45.759 --> 00:16:51.840
Or is it like Yep, so they have a uh um a wizard that you can use to build this yourself on their site.
00:16:51.919 --> 00:16:54.320
It's so you kind of classify it to this product code.
00:16:55.120 --> 00:16:56.399
You have to do that for everyone.
00:16:56.559 --> 00:16:58.080
Um, it's not super friendly.
00:16:58.159 --> 00:17:03.919
Their site is, I'd say, um, it was it's not the most easily accessible.
00:17:04.079 --> 00:17:06.240
And there's a lot of information being left on the table.
00:17:06.319 --> 00:17:09.200
So uh we know what the HTS code of the product is.
00:17:09.359 --> 00:17:12.880
That eliminates a large portion of all FDA product codes.
00:17:13.039 --> 00:17:17.200
And so we're able to help you identify with really quickly what that what that code is.
00:17:17.279 --> 00:17:19.440
And many times it's it's known exactly.
00:17:19.680 --> 00:17:22.079
In some cases, it's narrowed down to a few.
00:17:22.160 --> 00:17:34.720
And we can uh we've built a lot of technology to help infer and make that process a lot easier where a user can attest and confirm that that's correct, and or they can say no, and we'll have very friendly questions to help them.
00:17:35.200 --> 00:17:38.880
When and who can get this product code at what point in the journey, right?
00:17:39.119 --> 00:17:44.880
Someone's showing up, they're they're about to ship a shipment, and let's say they're in Japan and they're using our mobile app, right?
00:17:44.960 --> 00:17:46.079
And they're taking photos.
00:17:46.319 --> 00:17:53.519
Or let's say someone's in you know Europe going to a post office and they're just going to the retail counter and the post office isn't using our app.
00:17:53.759 --> 00:17:57.680
What are um when when do they when and what needs to be gathered?
00:17:57.839 --> 00:17:59.279
Or it's a business, right?
00:17:59.680 --> 00:17:59.920
Yep.
00:18:00.079 --> 00:18:04.079
So we'll have a few solutions available for all of our customers.
00:18:04.240 --> 00:18:07.599
Um, the the first we'll we'll talk about is um and they're all actually.
00:18:07.920 --> 00:18:08.880
What if there isn't a solution?
00:18:08.960 --> 00:18:14.319
Just like what practically needs to happen and that needs to be gathered, and then let's talk about how to solve that problem.
00:18:14.640 --> 00:18:15.119
Sure, sure.
00:18:15.200 --> 00:18:21.440
So you'll need to gather, and it really depends on the commodity that you're shipping, uh, but you have to uh gather certain pieces of information.
00:18:21.519 --> 00:18:28.240
It could be the genus and species of the wood that you're uh uh makes up the product that you're shipping.
00:18:28.400 --> 00:18:35.839
It could be the FDA product code, it could be certain attestations of compliance um for the different partner government agencies.
00:18:35.920 --> 00:18:41.839
But there's a a number of these fields that you need to be collected, and it varies tremendously by the product type.
00:18:42.160 --> 00:18:54.720
And isn't there also um disclaim codes for like, hey, if it's personal use for certain situations that you could say, hey, this is this is just a personal use uh exemption from getting all of the other data?
00:18:54.960 --> 00:18:56.559
There's those kind of situations too, right?
00:18:56.720 --> 00:18:57.440
Yeah, that's correct.
00:18:57.519 --> 00:19:09.039
So it depends on the PGA and the partner government agency itself, but there are certain cases where if you meet certain criteria, and one of those might be end use or transaction type, then maybe that's disclaimable.
00:19:09.119 --> 00:19:12.000
Uh, but you'll have to know that and you have to attest to that.
00:19:12.319 --> 00:19:16.160
So this is like the uh a giant decision tree.
00:19:16.480 --> 00:19:16.559
Okay.
00:19:16.960 --> 00:19:22.319
So this decision tree is happening, and and let's say that just you're any, let's say we're not involved, right?
00:19:22.400 --> 00:19:24.720
So your former postal operator, you're working with your broker.
00:19:24.880 --> 00:19:29.680
This foreign postal operator needs to gather this type of information, give it to the broker, make the broker comfortable.
00:19:29.839 --> 00:19:31.839
We missed something super important about these brokers.
00:19:32.000 --> 00:19:33.440
Who's the importer of record on this?
00:19:33.599 --> 00:19:34.240
The broker.
00:19:34.480 --> 00:19:35.039
The broker.
00:19:35.359 --> 00:19:37.440
So no matter what, and it's mandated, correct?
00:19:37.920 --> 00:19:40.079
Yeah, that's very different from all other entry types.
00:19:40.240 --> 00:19:43.680
So now this broker's on the hook, right, for what's coming in.
00:19:43.839 --> 00:19:49.759
And so they're gonna be like pushing back on these foreign postal operators to gather this information themselves.
00:19:50.000 --> 00:19:56.799
Okay, now, Jonathan, to what you I think you were going is like we've had to think a lot about how we're gonna solve these problems.
00:19:57.039 --> 00:20:11.359
What are the solutions that either are in place today for a lot of foreign postal operators or they can start integrating with us um uh in order to, you know, and heck, look, if you're not working with us, you can go build something like this to go do it yourself if you want, right?
00:20:11.440 --> 00:20:15.599
But it just let's let's throw out some ideas of like how can you solve for this problem?
00:20:15.839 --> 00:20:17.680
Yeah, I think there's two ways to solve this problem.
00:20:17.839 --> 00:20:27.519
Um there's one which is uh I'd say prior to label creation, collect all the data elements you need for that shipment to to transit and be able to be cleared by it by a broker.
00:20:27.759 --> 00:20:41.039
So label gets created prior to that, sorry, prior to that, in an interface at the counter, sure, you're you're you're creating friction to get this information in some way or another in a UI.
00:20:41.279 --> 00:20:41.519
Yep.
00:20:41.759 --> 00:20:42.079
Got it.
00:20:42.240 --> 00:20:43.039
Okay, yep.
00:20:43.279 --> 00:20:55.440
Or the second way is to after the shipment's been created, maybe that's something that's happening via API or some other flow that's asynchronous, before it can clear, you have to get that information as well.
00:20:55.519 --> 00:21:07.680
Um, at that point, you risk if there's um uh uh delays in actually answering those questions, gathering that information, you risk the potential of holds at the border and delayed in uh processing times.
00:21:07.839 --> 00:21:14.559
Um so uh of those two, you know, the it could be the better customer experience might be that pre-collection of information.
00:21:14.799 --> 00:21:15.279
Could be.
00:21:15.519 --> 00:21:16.319
It'd be much more.
00:21:16.400 --> 00:21:19.039
Okay, so let's talk about how to how to pre-collect then.
00:21:19.119 --> 00:21:20.960
How that's because that just sounded super painful.
00:21:21.119 --> 00:21:22.799
How do you reduce the friction in the pre-collection?
00:21:23.119 --> 00:21:24.960
I'd like let's just put a pin in real quick.
00:21:25.200 --> 00:21:32.079
The post-collection would be we'd have tools to be able to send out messages, send out an email to somebody, email, WhatsApp, data collection, etc.
00:21:32.319 --> 00:21:32.480
Yep.
00:21:32.640 --> 00:21:34.559
Tell them, hey, we need some data, they go and attest to it.
00:21:34.720 --> 00:21:38.079
We we bring that in, marry that to the shipment, we're able to create the entry.
00:21:38.160 --> 00:21:38.400
Yep.
00:21:38.640 --> 00:21:38.960
Great.
00:21:39.119 --> 00:21:42.000
But if we already have that ahead of time, we don't have that step.
00:21:42.319 --> 00:21:43.759
Yeah, so if that's pre collected.
00:21:43.839 --> 00:21:59.759
So for example, if you had a catalog on file with your postal operator, or maybe it's in your e commerce platform that has the relevant information already attested to, then you can just look that up in the catalog when the shipment's created, and there's actually no additional questions, there's no uncertainty left.
00:22:00.400 --> 00:22:05.440
Okay, now then this goes to one of the like the solutions that we have built in order to manage this.
00:22:05.680 --> 00:22:19.200
Originally, when this rolled out, we gave a tool in our dashboard, we call it dashboard light, essentially, kind of a light version of our dashboard, to get your duty calculation to which was so at Etsy sent out an email to all their sellers and said, Hey, go use OnoSys calculator.
00:22:19.279 --> 00:22:23.519
Um, a lot of postal operators, um, like let's say in Australia, right?
00:22:23.599 --> 00:22:26.160
So all the retailers in Australia already have access to this dashboard.
00:22:26.240 --> 00:22:31.599
So one of the things they're gonna be able to do is I'm just gonna connect my my channels, right?
00:22:31.759 --> 00:22:32.160
Channels.
00:22:32.240 --> 00:22:38.720
Let's say a channel's Etsy, a channel is eBay, and now we're we're pre-gathering this information.
00:22:38.960 --> 00:22:47.359
And here's where this might become a superpower for some of these post postal operators is they can now have an experience that's super seamless pre-shipment, right?
00:22:47.519 --> 00:22:53.039
In order to attest for this information, including free trade agreements, right?
00:22:53.119 --> 00:22:55.599
Like that should be able to be on the table.
00:22:55.839 --> 00:22:57.200
So, what would that experience look like?
00:22:57.279 --> 00:22:59.839
Let's let's go for a business first, and then we'll get to an individual.
00:23:00.000 --> 00:23:03.680
Like, how can a business is now inside of our dashboard, right?
00:23:03.839 --> 00:23:06.960
Or you, hey, you can use our APIs to go create this kind of experience too.
00:23:07.039 --> 00:23:08.160
So we have the APIs.
00:23:08.319 --> 00:23:13.920
So as we talk about this interface, be thinking about how you could use this if you want it outside the interface as well.
00:23:14.160 --> 00:23:18.160
Because we're just going to provide this to your to your customers to go in and get this info.
00:23:18.400 --> 00:23:18.559
Yep.
00:23:18.640 --> 00:23:19.920
So the process is quite simple.
00:23:20.079 --> 00:23:25.759
Um, a verified account can log into their um dashboard, their their light account.
00:23:25.920 --> 00:23:29.599
They'll go ahead and they'll link their um e-commerce platform.
00:23:29.680 --> 00:23:40.799
It could be a Shopify store, eBay, Etsy, um, any of the supported uh e-commerce channels, they'll add uh authorize us uh to be able to pull order and catalog information.
00:23:40.960 --> 00:23:43.440
That'll get synced to us automatically.
00:23:43.599 --> 00:23:57.759
And then when there's a shipment created at the postal counter by that same tracking number, as long as that's in that e-commerce platform, which you generally do to be able to send out shipping notifications and the like, we'll be able to look up and say, okay, here's the exact catalog items that are in there.
00:23:57.920 --> 00:24:04.720
And all you have to do is you test one time, we store that information, and every single time you ship that item, that's already on file.
00:24:04.799 --> 00:24:06.240
You don't have to redeclare that same.
00:24:06.640 --> 00:24:11.119
But if I'm if I'm okay, so I sync my catalog as a as a merchant, we bring that in.
00:24:11.279 --> 00:24:12.480
How do I know how to test?
00:24:12.720 --> 00:24:13.920
Yeah, yeah, that's a great question.
00:24:14.000 --> 00:24:20.480
So we'll have we'll have uh uh and this can be triggered on shipment, or it could you could do it all at once in the catalog.
00:24:20.640 --> 00:24:25.519
Um, but you will ask you a series of questions, like a uh a question tree depending on the commodity.
00:24:25.839 --> 00:24:28.319
And we have an API that does this called we have an API.
00:24:28.400 --> 00:24:39.519
It we branded it as Zonos Clarify, which will just ask clarifying questions of what exactly this product is, uh any add it'll walk you through in a real user-friendly.
00:24:40.000 --> 00:24:43.279
The goal is that even my grandmother could be able to handle this, right?
00:24:43.519 --> 00:24:46.000
Um so it'll be she's pretty smart from what I hear.
00:24:46.319 --> 00:24:47.680
My my grandmother is.
00:24:47.759 --> 00:24:48.720
Um I believe it.
00:24:48.960 --> 00:24:54.319
But it will be it will be um very uh user-friendly to be able to walk through here's what we need.
00:24:54.400 --> 00:25:03.440
And in fact, what we do even before we ask all those questions is we actually infer what we think the answer to those questions might be, and we'll we'll give you a box at the top.
00:25:03.519 --> 00:25:09.519
Hey, it looks like you're shipping lipstick, it isn't it, it doesn't contain any pesticides and it meets this criteria.
00:25:09.759 --> 00:25:14.160
Click yes or no, and if they click yes, that they full stop, they're done.
00:25:14.319 --> 00:25:17.759
If they click no, then they can go ahead and answer those questions manually by themselves.
00:25:18.000 --> 00:25:46.799
So would the the tool then be really scrubbing my catalog and then just flagging the ones that I need I need to add more information so I could prepare everything ahead of time, and then as those goods are shipped, you're seeing the orders and linking that to the uh to tying all of that data to the entry, that's correct, supplementing with the the existing postal data that's like the IT mat and and other data elements, uh, that then create the full entry and all the data requirements needed.
00:25:47.119 --> 00:25:47.519
That's correct.
00:25:47.599 --> 00:25:55.440
And that way you can ensure you have full compliance of data and that um that that shipment is unlikely to be held by a PGA at the border.
00:25:55.759 --> 00:26:09.599
And then if as a business, if I uh was a little lazy and didn't stay on top of it, or I added a whole bunch of new stuff and didn't get uh do all the uh attestations, I would then be prompted to do that if I started shipping any of those goods.
00:26:09.839 --> 00:26:10.000
Correct.
00:26:10.240 --> 00:26:12.960
And then I but I would do it once for that that SKU and then it would be done.
00:26:13.200 --> 00:26:20.079
So the first time you ship a brand new product that maybe you haven't gone through this process for, we would be able to send you an email, a text, or WhatsApp, etc.
00:26:20.400 --> 00:26:21.440
Uh, with a link.
00:26:21.599 --> 00:26:28.640
You would click on that link, you'd be prompted with those same types of questions that would and that we would save that off on that catalog item.
00:26:28.720 --> 00:26:34.880
And now any future time you ship that item, we can just look up those attestations and handle it that way.
00:26:34.960 --> 00:26:39.039
There's no need to re-attest every single time you ship.
00:26:39.279 --> 00:26:52.079
So it'll be a really transparent experience, a really um you know user-friendly experience for for those that want to do everything ahead of time or those that would prefer to do it on the fly, uh, but we will minimize the the effort required at that point.
00:26:52.400 --> 00:26:52.720
All right.
00:26:52.799 --> 00:26:54.319
So there's some solutions.
00:26:54.480 --> 00:26:56.880
It is more complicated for these businesses, there's no doubt.
00:26:57.200 --> 00:27:01.119
And we're gonna be doing a lot more trainings and things on this stuff in the coming days.
00:27:02.079 --> 00:27:07.839
These businesses are gonna have and do have some of these same problems in the commercial stream, correct?
00:27:08.160 --> 00:27:10.559
They do, and it's actually quite unfortunate.
00:27:10.640 --> 00:27:13.359
A lot of these goods get held at the border.
00:27:13.440 --> 00:27:16.559
Um, while commercial is rough for these types of goods.
00:27:16.640 --> 00:27:19.440
There's that's there's a reason it's all going through postal right now.
00:27:19.680 --> 00:27:31.359
And so if it's it's a great way to keep your volume and know though that even though your your shippers are going to experience pain, it's a lot more painful for these PGAs, usually in the commercial stream.
00:27:31.680 --> 00:27:38.240
Yeah, the but the worst customer experience for both your shippers and their customers is to have that delay at the border while a broker.
00:27:38.640 --> 00:27:39.519
I see this as an opportunity.
00:27:39.599 --> 00:27:52.640
Honestly, like these postal operators, I see as an opportunity to like build out a better experience, right, than some other some of your um some of the other solutions that are out there to actually go and uh expand your volume.
00:27:53.039 --> 00:28:04.079
Like, don't look at this as like like necessarily like you can either take a crisis and turn it into an opportunity, or you can just sit on your hands and yeah, you'll get clobbered.
00:28:04.400 --> 00:28:07.839
And you will, like this, this stuff will clobber you if you don't if you don't get ahead of it.
00:28:10.000 --> 00:28:12.240
Individuals, right?
00:28:12.400 --> 00:28:13.200
The counter.
00:28:13.680 --> 00:28:15.440
How this is much different.
00:28:15.519 --> 00:28:29.039
Like I I I think probably the easiest way to illustrate this, and to to your point earlier, this is the experience we'll we're gonna walk through in our mobile app is the same kind of experience you could build into your your counter software with our APIs, right?
00:28:29.200 --> 00:28:29.440
Yep.
00:28:29.680 --> 00:28:39.359
Um But wouldn't you say that the prepay app, we have a mobile app that's deployed in a number of countries where someone creates their declaration, they can take a photo, create a declaration.
00:28:39.680 --> 00:28:42.480
What they need to be asked for today is pretty straightforward.
00:28:42.799 --> 00:28:50.400
But in the future state, if I'm your grandma or myself, this is probably not as smart as his grandma.
00:28:50.880 --> 00:28:59.200
When I when I go to create my my declaration on my shipment, is it true that I'll just start based on the what I'm trying to ship, I'll just get asked some questions?
00:28:59.440 --> 00:29:00.960
That's exactly very interactive, right?
00:29:01.279 --> 00:29:04.720
Super interactive and super uh easy to handle.
00:29:04.880 --> 00:29:07.920
And again, we'll we'll we'll front run everything with an inference.
00:29:08.000 --> 00:29:17.680
So we'll say, here's based off of the commodity description you provided, the image, uh, the HS code, um, here's what we think is the right answer to these questions.
00:29:17.759 --> 00:29:18.799
Please confirm that.
00:29:18.960 --> 00:29:22.240
And they can attest all in once with one click if if that's correct.
00:29:22.400 --> 00:29:29.359
Or if they say no, then they'll just go ahead and they'll they'll answer the relevant questions uh with with with what is what is correct.
00:29:29.599 --> 00:29:37.759
And so it's a very it balances that user experience uh with also the the full attestation that's needed for for compliance.
00:29:38.000 --> 00:29:51.440
So very similar to the businesses, but a business is pre-doing a lot of work with their catalog, whereas the the user might be you know shipping their you know one-time shipment and they just get get asked some questions for that shipment and the products are shipping and away they go.
00:29:51.680 --> 00:29:52.559
Correct.
00:29:53.599 --> 00:29:53.920
Okay.
00:29:54.240 --> 00:29:54.640
Wow.
00:29:54.880 --> 00:30:00.559
I and if you don't have this, you're gonna have to figure out a way to gather this kind of information from an individual.
00:30:00.720 --> 00:30:01.920
Well, in some way, one way or another.
00:30:02.240 --> 00:30:16.240
And this isn't this is such a complex dynamic set of information that you need that varies by commodity and government agency, that it it's not gonna be supported by the standard data that is is in postal.
00:30:16.319 --> 00:30:24.960
Yeah, and so this is a supplemental data stream that we're having to build out to complement um you know what what's existing today in uh in postal data.
00:30:25.359 --> 00:30:27.599
Yeah, none none of this is on an IT Matt.
00:30:27.839 --> 00:30:35.359
And I know we've talked about partner government agencies and the the need for that, but there's also a need for handle 232 and 301s as well.
00:30:35.519 --> 00:30:43.359
So these are the additional duties beyond uh the standard uh duty rates, uh called most favorable nation rates.
00:30:43.519 --> 00:30:50.160
Um there are many things that might be considered an automotive part or they might not be an automotive part based off of their HTS code.
00:30:50.240 --> 00:30:54.559
If you can if you can attest, hey, this is a non-auto part, then you get a different duty rate.
00:30:54.880 --> 00:30:58.480
Huge cost savings, or like the country of smelt and poor or test.
00:30:58.799 --> 00:31:03.279
Precisely the aluminum or steel content will influence the actual amount that's paid.
00:31:03.440 --> 00:31:09.920
And so if you if you don't collect that, your shippers will have to pay essentially the worst case scenario, right?
00:31:10.000 --> 00:31:22.400
They'll have to pay as though it was, you know, 100% steel or 100% aluminum, and um it was as though it was melted and and poured in in Russia, which has punitive uh duties on that.
00:31:22.480 --> 00:31:29.680
And so if you can collect this information ahead of time, you can offer that that uh differentiated experience on on cost as well.
00:31:30.000 --> 00:31:31.920
You brought up the IT, Matt.
00:31:33.279 --> 00:31:39.200
How how like how is this data or is this data, some of the like these elements, how is it going to come through?
00:31:39.279 --> 00:31:47.920
The is the UPU, IPC, are they doing some things to get enhanced data elements through the the data stream?
00:31:48.160 --> 00:31:51.279
They're working on some enhanced data elements for the EU, right?
00:31:51.680 --> 00:31:57.039
Product identifiers, but that's like three fields that's basically part numbers.
00:31:57.279 --> 00:31:58.960
So this is this is a whole nother bottle.
00:31:59.279 --> 00:32:00.160
So correct me if I'm wrong.
00:32:00.319 --> 00:32:08.240
I see in my mind, right, like these postal operators, they have their data stream with their um through the IT map, right?
00:32:08.319 --> 00:32:10.400
That's happening through the normal postal data stream.
00:32:10.640 --> 00:32:14.960
And they're probably gonna have a supplemental data stream that's connected directly to their broker.
00:32:15.200 --> 00:32:15.680
Correct.
00:32:15.920 --> 00:32:19.680
It really, I mean, realistically, like a dual integration.
00:32:19.839 --> 00:32:25.119
Whether, and actually honestly, the post, like if we're getting that data, the post office doesn't have to do the dual integration.
00:32:25.200 --> 00:32:26.480
We're like sidetracking with the post.
00:32:26.559 --> 00:32:30.319
Well, it's like, hey, we'll gather this data and enhance what's coming through in the IT mat.
00:32:30.640 --> 00:32:40.160
But otherwise, you got to gather both sets of data and give your broker that set of data for um for the broker to be able to actually get this entry done correctly.
00:32:41.839 --> 00:32:43.759
Yeah, and and just a quick trivia.
00:32:44.079 --> 00:32:56.640
Um if you um if you look at the the totality of goods that are affected by these 232, 301, and MFN um uh sorry um and PGA requirements.
00:32:56.880 --> 00:32:57.680
PGA requirements?
00:32:57.839 --> 00:32:58.079
Yep.
00:32:58.319 --> 00:33:00.319
That's that's close to 90%.
00:33:00.799 --> 00:33:02.799
Actually, a little over 90, wasn't it?
00:33:02.880 --> 00:33:04.160
Yeah, it's like 94%.
00:33:04.640 --> 00:33:08.400
If you look at the the force labor, that's with the 301 tariffs that are coming.
00:33:08.480 --> 00:33:09.119
Yep, yep.
00:33:09.359 --> 00:33:10.720
Okay, so oh geez.
00:33:10.799 --> 00:33:21.759
So the 301 tariffs that are coming, the 232s and the PGAs, the volume that we see, 91%, oh wow, will be impacted by something.
00:33:22.000 --> 00:33:23.440
By something in one of those categories.
00:33:23.599 --> 00:33:31.039
Yeah, so that could be your your uh that that that'll impact the calculations, that's why the the data needed, all of that.
00:33:31.200 --> 00:33:34.720
It's the new world is is very different than the old world.
00:33:34.960 --> 00:33:40.880
And and and I call this out specifically because there is a a decision point that you have to make, right?
00:33:41.359 --> 00:33:45.440
Um so after this 90 to 100 three to four months, right?
00:33:45.759 --> 00:33:50.720
Um you can decide to to participate in the entry type 13 test.
00:33:50.960 --> 00:33:53.359
And it is a test that they're calling, it's voluntary.
00:33:53.519 --> 00:34:06.480
You don't have to do it, but if you don't, then all of those things will be subject to formal entry, type one, which has a much higher MFN if you don't want to.
00:34:06.799 --> 00:34:08.079
What is the MFN fee in type one?
00:34:08.320 --> 00:34:15.280
The merchandise processing fee, it's three dollars and some change for the low end per entry.
00:34:15.519 --> 00:34:22.239
So alcohol tobacco tobacco comes through right now, somebody's getting a$33 fee just in clearance fees on the tobacco.
00:34:22.480 --> 00:34:23.119
That would be the fee.
00:34:25.760 --> 00:34:27.840
That'll start in 30 days, right?
00:34:28.239 --> 00:34:29.440
Yeah, yeah.
00:34:30.639 --> 00:34:30.960
Okay.
00:34:32.159 --> 00:34:42.079
There is their ability to do consolidation and maybe get tricky on or you know, at least you know, try to help out a little bit here if someone if there's a lot of volume coming through like that for a certain postal operator.
00:34:42.320 --> 00:34:45.280
Yeah, so consolidation informal is possible.
00:34:45.519 --> 00:34:54.960
You have to have the um you can have different ultimate consignees, so that you have to have it going to different people in the end in the US, but it has to have the same what they call nominal scale.
00:34:55.199 --> 00:34:57.360
Seems like a lot of work for just a few goods.
00:34:57.519 --> 00:34:58.159
Yeah, yeah.
00:34:58.320 --> 00:35:05.679
It it it will be, and especially if you look at the volume that's maybe coming on a given uh airplane or truck, right?
00:35:05.760 --> 00:35:08.480
Um, because that's kind of where you're saying it's gonna be tough to consolidate.
00:35:08.800 --> 00:35:10.400
You're not really gonna have those economies of scale.
00:35:10.480 --> 00:35:16.000
You need so some postal operators might just want to say no to a few goods.
00:35:16.480 --> 00:35:17.840
Alcohol and tobacco.
00:35:18.159 --> 00:35:18.719
Yeah, yep.
00:35:18.880 --> 00:35:21.519
That yep, that could that could be a reasonable approach for sure.
00:35:21.679 --> 00:35:26.559
So yeah, I I think in the end, uh this is this has been awesome.
00:35:26.719 --> 00:35:31.119
Um we just we've been digesting these just this morning.
00:35:31.280 --> 00:35:38.719
Uh there's there's a lot to unpack here, but I think we have a good handle on on kind of and we kind of saw a lot of this this coming and the way this is rolling out.
00:35:38.880 --> 00:35:44.960
Um but it's gonna be the disruption's not gonna be right out of the gate.
00:35:45.039 --> 00:35:48.239
Um, I I think the calculations are what's gonna land first.
00:35:48.320 --> 00:35:49.519
That's only gonna be a month from now.
00:35:49.679 --> 00:35:50.960
Calculations are gonna change.
00:35:51.199 --> 00:35:55.760
Broker will be required to be in the mix uh for for processing these new spreadsheets.
00:35:55.920 --> 00:36:03.760
But come this fall, that's that's what you really need to be gearing up for and and preparing for because that's where the the true disruption comes.
00:36:04.000 --> 00:36:06.719
And I think there's a danger to wait, right?
00:36:07.119 --> 00:36:09.840
So um don't be caught flat footed.
00:36:10.079 --> 00:36:12.719
These changes take time to collect these data elements.
00:36:12.800 --> 00:36:16.000
Um, and so that work should start immediately.
00:36:16.239 --> 00:36:16.639
Yeah.
00:36:16.880 --> 00:36:17.199
All right.
00:36:17.280 --> 00:36:20.320
Well, our team's gonna be ready to help for those that uh are working with us.
00:36:20.400 --> 00:36:26.880
We're also happy to answer any questions for postal operators, but uh uh all right, riveting.
00:36:27.199 --> 00:36:31.920
Um, I'm sure we'll have another episode soon on geez, everything EU, everything else going on.
00:36:32.000 --> 00:36:33.519
Uh we're we're we're definitely busy.
00:36:33.599 --> 00:36:36.239
So thanks for coming on today and uh looking forward to next time.
00:36:36.400 --> 00:36:37.199
All right, thanks, Clint.
00:36:37.440 --> 00:36:38.159
Thank you.
