WEBVTT
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Welcome to another episode of the Decoding Cross-Border E-Commerce Podcast.
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Aaron, uh, I think we talked about this last time, uh, but now we have information on the guidance on the de minimis change into the EU.
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It's June 3rd, and this goes in uh today.
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Yes, today is June 3rd.
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Yes.
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Yes, yes, no, so and the changes go into effect July 1st.
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And when did the guidance come out?
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Uh the implementation guidance came out today.
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Today, all right, everybody.
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We have uh less than Are you having a case of deja vu?
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Yeah, this is like US 30 day.
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And this might not be the last case of deja vu we have this summer either.
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So and that was uh that was a pretty chaotic 30 days.
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Yeah, I think we I think we've got a I think we've got a double header coming up this summer between the EU changes and probably more stuff coming out in the US.
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We'll we'll table that.
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Let's hope for a few days.
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Let's zoom out.
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Comparing it to the US, how disruptive is this?
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Do how disruptive was the US on a scale of one to ten?
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And how disruptive is this on a scale of one to ten?
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US is more disruptive, was more disruptive for sure.
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It was like a 10 in disruptive.
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I don't know how it could have been.
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That was pretty bad.
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Um let's give this one uh let's give this one a seven.
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Uh pretty disruptive.
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Yeah.
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So all right.
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So what what's happening?
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Just tell to generally, what is it?
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What's the what's the change?
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Talk to us.
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Yeah, and actually, you know, uh, we kind of put this together quickly because we had the the guidance that just rolled out.
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We knew this was coming, and then the details that a lot of the questions operationally and implementation-wise, that like we're waiting for a document to come out.
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Now we just got a 32-page document that I feel like I went back to school today going through this document.
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But you were so excited.
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Talk to me about what you found in the document.
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You're like Clint.
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Tons of exciting things.
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Nuance, this nuance, we'll get to the fun stuff at some point.
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Mostly what I expected, but you know, some surprises in there too.
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Um, but I think to start with, we usually have a dad joke, right?
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We usually do, I usually try to weave it in naturally.
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I'm not gonna do that this time.
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Okay, but I do have a question for you.
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Like, when does a joke become a dad joke?
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I don't know.
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When the punchline is apparent.
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Ah, jeez.
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I told you, don't tell me the joke beforehand.
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I usually don't know when they're coming.
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And so everybody gets to watch me real time if they're watching or even care how slow I am on the uptake.
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That was good.
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That was good.
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All right.
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So, and the other thing that wasn't apparent, apparent, was all the details of this EU uh stuff that was coming out.
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What we knew was come July 1st, EU was removing their 150-year-old de minimis.
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We also knew that they're gonna put in some simplified duty calculations for B2C shipments into the EU.
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So um, you know, kind of the high-level stuff we knew.
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Uh, all that was really confirmed with this implementation guidance of and think of it, think of it this way: the there's a lot of details about the what-ifs and how does it affect B2B?
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How does it affect C2C shipments?
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What happens is de minimis goes away.
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Duty-free is dead, duty-free is 150 uh except for gifts.
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There's still a 45 euro gift um de minimis.
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Now it's the standard duty calculation for everything where duty applies except B2C shipments under 150 euro.
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And that is where this 3 euro fee gets thrown around, which is it's a duty.
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It's a three euro duty, and it's charged per line item.
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So it's not based on value, it's not anything else, it's per line item on the declaration.
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What does per line item mean?
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Ooh, that's a good question.
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You'd think that would be a straightforward answer, and it for the most part it is.
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Um it's so they in the EU they have some simplified clearance processes.
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What they call as an H7 is what's going to apply to most of these shipments.
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And on this H7, why do they call it that?
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I don't know.
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Oh, okay.
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It's just a number.
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I mean, why do they call it a type 11 or type 1?
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I see, I see.
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It's it's it's a clearance model, right?
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H1 is more of the formal model, but it requires all the data elements.
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And so let's let's talk with the H1.
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Okay.
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Okay.
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Let's do a little a little game here on how you can define a line.
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An H1 requires a full 10-digit HS code, description, um a country of origin, right?
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And then of course the values.
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What type of shipments are going in H1 today?
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Uh shipments for sure that over 150 euro.
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Okay.
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So even small package shipments over 150 euro H1s.
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Yep.
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Okay.
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Um and the the typical example of a or definition of a line item is by HS code description country of origin.
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Yep.
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Now, if you move to the simplified H7, which can be used for shipments under 150 euro.
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Now, there's another one called an H6 for postal specific up to 1,000 euro.
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We don't, it's simplified.
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We won't talk about it much.
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Most of what's going to be used in both postal and commercial will be that H7.
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The required datum elements are a six-digit HS code, no country of origin.
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So now you can so the same shipment in an H1 would have three line items.
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And if it's you're going to do it um with the simplified H7, it's what you can put those all in one line item.
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As long as they share the same digit subheading.
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Six-digit subheading.
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Give me an example of a good that would typically have a whole bunch of different ten-digits um, well, they gave people in this, in this, they gave an example of like uh an Anorak, a wind cheater, and a wind jacket that might actually have different HS codes at the at the eight and ten digit level, but at the six they share the same.
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And they show that example of like, hey, actually combine all of these into one line item and pay the pay one three euro fee.
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But if it goes to an H1, it's now nine euros because each one's actually a different HS code.
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So there's advantages for consolidation on this simplified clearance process that um is interesting because they they can even be made in different countries, but it doesn't matter because on that H7 they don't ask for it.
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But there's a lot of trade-offs here.
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We'll get to them.
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There is, there is.
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So don't don't walk away from this episode right now thinking that everything should go in as an H7.
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Yeah, everything's great.
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So H7 can be used for everything under 150 euro.
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That does not include and that does not include excise goods or prohibited or restricted goods.
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Okay, but that's gonna be the so the line share of e-commerce will be using H7 on these on these low-value shipments, and we'll use that consolidation logic on the declaration.
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Now, do you know why they're doing this three euro duty and not just regular ad velorum duty?
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Uh I was gonna ask you that question, but let me try to answer it.
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Yes, please.
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Um let's speculate here.
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Postal?
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It's super complicated the the answer.
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The postal difficulties in calculating duties.
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Really?
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It's not just postal.
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No.
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Well, I mean, I know what this has to do with China.
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Like, you know, all the things that are.
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But why didn't they just say why don't they just do ad valorum?
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I don't know.
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They're going to in two years.
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Right.
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This is a temporary process.
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Why is it temporary?
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I don't know, Aaron, you're embarrassing me.
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Come on.
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You're a software guy.
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Easy math.
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Their systems aren't ready to do anything else.
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That's it.
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They're just they this is like we gotta do something, and this is the easiest way to do it.
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They've got Okay, you know what?
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I should have gotten that right because Aaron, why did they do such a simplified process into the US for qualified parties?
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Yeah, it's technical limitations.
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So how did they solve this technically into the US?
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It's a simplified process.
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What's the process?
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The qualified party process.
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You mean how does that qualified process work?
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Yeah, they had to go outside the ACE environment because it wasn't ready yet.
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Correct.
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And it's all done in a in a parallel path with spreadsheets.
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Email.
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An email.
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And an attachment.
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Yep.
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Now this is going to be in their software, but it's going to count based on the line on a declaration multiplied by three.
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A little bit better than the US process in that case.
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So um that I mean really is a technical limitation why they did it this way.
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And the plan is to be regular duty calculations in two years.
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And in the interim, they set up this EU um commission because right now you got like 27 different systems for clearance and everything.
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They're unifying that across the whole EU.
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That's where this EU data hub comes in.
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So they're working on the technology to be able to kind of unify this EU clearance.
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So, anyways, great stuff.
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Um, De Minimus goes away.
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This is the trend around the world.
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Three euro per line comes in, depends on the clearance type.
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Um, now there's some other nuances to this.
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What are the questions you have?
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Let's just hit the questions kind of in the order you got them.
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If if I skip IOS, can I skip the the three euros here?
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Now three euro applies for for all B2C shipments under 150.
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Okay.
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Uh trade agreements.
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Ooh, good.
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Yes.
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You can like preferential treatment.
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I can get preferential treatment.
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Absolutely, you can.
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Okay.
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How does that work?
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Um you want all the gotchas around that.
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So I know that yep.
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So there's technically a path to do this.
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Now, is it realistic for a lot of shippers?
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Probably not.
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Here's why.
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The only way to get preferential treatment is to move it from that simplified H7 declaration to a more formal H1 declaration.
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That's where you have to have all the extra data control.
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Okay, so all I have to do then is just that's it's just that simple.
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I just do an H1 instead.
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But you also can't use IOS anymore.
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Okay, so not only I can't hold on.
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So IOS, which was didn't they come that out?
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It's like this is an upgrade.
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So we lose the upgrade.
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Yeah, and I don't understand.
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I don't fully understand why.
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So you can't use IOS if you want free trade agreements.
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You want preferential treatment on your meaning that the tax has to be then collected with the duties in the clearance process if you want that treatment.
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Okay.
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Yep.
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But that's it.
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You just have to that that's the only nuance.
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But when you do that, once you move it from IOS, then you bring in another problem.
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What iOS has this great benefit of being able to use one country to clear into for the entire European Union.
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When you go outside of IOS, they also said, well, when IOS isn't being used, you must clear in the destination country.
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Wait, wait, wait.
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So under IOS, you can do one.
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I'm just pitching physically, right?
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You have you're clearing into the Netherlands, let's say.
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Which is very common.
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Which is very common.
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People are doing that in the Netherlands.
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They bring everything.
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Now, if you're in free trade agreements, they have to clear it individually into each individual country.
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Yep.
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Okay, so and that's because the rule if it's not an IOS shipment.
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Yeah.
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Do you see how the kind of the decision tree kind of works you into?
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Forces you away from if you want preferential treatment, you gotta go away from IOS, which then forces you to use a logistics provider that can clear the destination country.
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And a ton of e-commerce logistics providers like to do things like bulk clearance in the Netherlands to for the entire European Union.
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Aaron, consolidators.
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Do you think they're going to be getting free trade agreements applied to their goods going into these countries?
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Um that's going to be very difficult for them because most of them like to push IOS for this reason.
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What about the integrators?
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UPS, FedEx, DHL.
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It'll be easier for them.
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Yep.
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And here's the other thing.
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I've seen solutions with consolidators where they allow for clearance to the destination country, but it comes at a cost.
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Using express carriers comes at a cost.
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So now you've got the cost of transportation.
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Like maybe there's a good solution you have.
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It's a you know it's a complicated world, but make sure if you're gonna go away from IOS just to get preferential treatment, now you've got to bring in the transportation costs and see if it all still makes sense.
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What about the postal stuff?
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Is that gonna get the free trade agreements?
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Um it's the same, it's the same thing that and honestly, but postal is clearing in the destination country, right?
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Like like a true postal shipment would so a true postal shipment, as long as it's H1 clearance and it is clearing into that country, actually could get this treatment.
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Yeah.
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So in order for this to clear differently, is this the broker then that's making the decision on the clearance process?
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That's a good question.
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I'm not the expert on clearance and how that all works and how how they know to use the H1 to get the preferential treatment.
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Those are some details we're working on to try to get sorted out.
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Interesting.
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But think of the math though.
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If you have a mixed shipment, okay, let's say you have a mixed shipment of things you want preferential treatment on and others that you don't.
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So like a hoodie, a shirt, and um a shirt that's made in China, a shirt that's made in Malaysia, and a hoodie.
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Uh-huh.
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So you got to take into account now, okay, what's the value of the stuff I want preferential treatment on?
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How much do I save on duties there?
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I now have to clear in the destination country.
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So is there extra cost or not with my transportation to do that?
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Now I'm going to an H1 clearance.
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I have to give the country of origin and the full HS code.
00:13:37.120 --> 00:13:48.480
Now my line item consolidation benefits go away, and I might get charged more, you know, additional three euro fees that I wasn't, that I wouldn't if I still but the three euro fee goes away if it's if it's only on the stuff that's preferential treatment.
00:13:48.639 --> 00:13:48.799
All right.
00:13:48.879 --> 00:13:52.320
So if the whole batch had preferential treatment, you might save nine euro.
00:13:53.039 --> 00:13:57.200
If one item has preferential treatment, you're saving three euro out of the nine.
00:13:57.600 --> 00:14:00.159
But if you that's the math of like, is that worth it?
00:14:00.320 --> 00:14:04.639
Oh, but if you did it the other way, it'd be three euros because you can consolidate them under the same six digits.
00:14:04.799 --> 00:14:05.759
So some complicated math.
00:14:06.000 --> 00:14:13.679
All right, we're uh I'm sure we'll be getting very good at doing this uh um on the fly because that's kind of that's kind of our our thing.
00:14:13.759 --> 00:14:14.559
But that's crazy.
00:14:14.720 --> 00:14:25.440
And really, I was just looking at this from the perspective like, okay, as a business, like I came from uh, you know, uh an e-commerce retailer, shipping operations, those kind of things.
00:14:25.519 --> 00:14:29.600
So I'm looking at this through the lens of how do I navigate this and make decisions?
00:14:30.000 --> 00:14:34.639
And I think the majority of people are gonna go, you know what, let's just keep it simple for now.
00:14:34.799 --> 00:14:39.679
Preferential tariffs are you I think there's gonna be use cases for it for sure.
00:14:39.840 --> 00:14:43.360
Um, but it is not a simple, straightforward answer.
00:14:43.600 --> 00:14:50.480
Once they threw in that little caveat that, oh, you can't use iOS for uh uh for uh preferential tariffs.
00:14:50.559 --> 00:14:53.759
That that kind of threw a monkey wrench in all this that I didn't see coming.
00:14:54.559 --> 00:14:58.720
So Okay, but the good news is on e-commerce on returns.
00:14:58.960 --> 00:15:00.159
I was just gonna ask about returns.
00:15:00.320 --> 00:15:01.679
What do you think is gonna happen?
00:15:02.480 --> 00:15:03.840
There's good news for returns?
00:15:04.000 --> 00:15:04.480
No, there's not.
00:15:04.879 --> 00:15:06.080
I was gonna say, what are you talking about?
00:15:06.399 --> 00:15:08.240
It's non-refundable, non-refundable.
00:15:08.799 --> 00:15:09.840
Okay, yeah.
00:15:10.080 --> 00:15:12.559
Um dang.
00:15:12.799 --> 00:15:14.480
Yeah, this is all good news, right?
00:15:14.879 --> 00:15:16.080
All good news here.
00:15:16.320 --> 00:15:21.440
Um so on H1 returns.
00:15:22.960 --> 00:15:23.440
Non-refundable.
00:15:23.679 --> 00:15:31.679
There's some language in there that like maybe there's some exception, but really for the most part, in all practice, there's there's no there's no refunds on this.
00:15:31.919 --> 00:15:38.399
I mean, that's kind of a status quo what what we have here in the US was you know the some of the IP and 122 teras.
00:15:38.639 --> 00:15:40.080
Okay, how are merchants gonna calculate this?
00:15:40.240 --> 00:15:41.679
I guess they're gonna have to just decide.
00:15:41.759 --> 00:15:47.440
Do you think generally either let a software like dynamically try to make decisions and then you have to change the clearance process?
00:15:47.519 --> 00:15:48.799
I mean, that'd be super tricky.
00:15:48.960 --> 00:15:50.639
You're probably picking one path or the other.
00:15:50.720 --> 00:15:55.600
Either I'm gonna be doing all H7s or H1s.
00:15:55.840 --> 00:16:01.759
And here's the other thing that I like we need to be working closely with our partners to understand.
00:16:02.240 --> 00:16:13.519
Just because you can consolidate something, you have to make sure your provider is consolidating it the most efficient way possible when they create the declaration, create the entry.
00:16:14.080 --> 00:16:17.679
Which means you need to produce really good documentation so they do it right.
00:16:17.759 --> 00:16:22.159
Yeah, which that we we help with that software to do that to automatically make sure it's okay.
00:16:22.240 --> 00:16:24.080
That now, but contrast for me.
00:16:24.240 --> 00:16:34.240
So the the express carriers, power of attorney, like there's this power of attorney stuff, the declarant, we need to talk about the declarant versus postal operators.
00:16:34.559 --> 00:16:41.200
There's how are these two being handled differently, or not necessarily handled differently, but why practically are they different?
00:16:41.440 --> 00:16:45.279
So this is where it gets interesting too, specifically around IOS shipments.
00:16:45.919 --> 00:16:54.720
There's also that they're pushing the liability for the declarant or the person that should be um that's gonna be responsible for the duty, the debtor.
00:16:55.200 --> 00:17:03.039
They're pushing that on to the IOS merchant, or they could have it, they could sign up an indirect representative to be able to act in their behalf.
00:17:03.279 --> 00:17:17.039
Um this is like it's it's one thing in concept, because they they technically just want this duty collected upstream, but they didn't put very good rails in place to actually make this happen, practically speaking, to make sure the duty can be paid.
00:17:17.200 --> 00:17:42.240
Uh, it would make a lot more sense if they just made the duty somehow combined with IOS on remittance, and then these IOS uh um uh merchants can just remit duty along with their taxes, but instead the IOS still gets remitted, the duty gets collected at import, and the rails to actually get that duty where it needs to go are it it's now kind of up in the air and getting figured out right now.
00:17:42.400 --> 00:17:53.440
Um, what's happening is if the IOS is holder is technically supposed to be the declarant, but a representative can step in their place.
00:17:53.519 --> 00:18:09.039
What we're seeing is some express carriers reaching out to shippers to sign a power of attorney so that way the the shipper can just be the declarant and then you know DHL, FedEx, GPS, whoever will bill their customer like a normal DDP transaction where they're there's gonna be all the duty and taxes back to the shipper.
00:18:09.359 --> 00:18:16.640
So um, but they're having to get a POA from each of their customers uh to try to try to make this all work.
00:18:16.960 --> 00:18:29.839
Um and there's a lot of concern from marketplaces and others around like their liability for this duty, that's it, there's a lot of fragmented disconnected relationships here to make sense of it all.
00:18:30.079 --> 00:18:33.920
Um but it gets even more complicated.
00:18:34.079 --> 00:18:40.720
So DHL, for example, owns a relationship with the shipper and they're delivering and they're doing the clearance, and it all it all makes sense, right?
00:18:40.880 --> 00:18:41.920
That'll probably be the declarant.
00:18:42.000 --> 00:18:43.839
They own the relationship with that shipper.
00:18:44.079 --> 00:18:54.880
But if you're La Post, Deutsche Post, any other European postal operator, how much of a relationship do you have with a shipper in Canada over what is coming to you?
00:18:55.119 --> 00:18:58.960
You have you have and you have no contractual relationship or anything with that shipper.
00:18:59.359 --> 00:19:01.759
So they did one smart thing here.
00:19:02.079 --> 00:19:10.400
They they carved something out specific for postal operators that allows them to, in fact, I can just read it here.
00:19:10.480 --> 00:19:11.119
Let's see here.
00:19:11.359 --> 00:19:15.920
Um postal operators acting acting under the UPU.
00:19:16.000 --> 00:19:26.799
So this is just a normal postal shipment that's tied in with the UPU, can ask the Pope postal operators at origin to designate an indirect representative in the EU to be the declarant.
00:19:27.119 --> 00:19:35.599
Okay, so let's say Australia going to Europe, Australia Post can select a declarant.
00:19:37.440 --> 00:19:38.720
Or they could be the declarant.
00:19:38.960 --> 00:19:40.640
You have to be an EU entity.
00:19:41.279 --> 00:19:42.319
Okay, if they had an EU entity.
00:19:42.480 --> 00:19:48.160
So they have they can pick someone with an EU entity, um, similar to the qualified party process to be the declarant.
00:19:48.240 --> 00:19:48.559
Yep.
00:19:48.799 --> 00:19:52.480
What uh okay, what does the declarant entail?
00:19:52.720 --> 00:19:55.680
What do they why why is there a declarant?
00:19:55.759 --> 00:19:56.799
I don't understand.
00:19:57.200 --> 00:20:00.480
Uh they need a throat to choke uh when it comes to duty.
00:20:00.559 --> 00:20:03.519
Who's responsible for duty and the data on that that's coming in?
00:20:03.839 --> 00:20:04.319
What is responsible?
00:20:04.480 --> 00:20:06.400
So they're the payer of the duties all the time?
00:20:06.480 --> 00:20:07.119
They're the payer?
00:20:07.359 --> 00:20:09.119
Uh no, they're just still unresponsible.
00:20:09.359 --> 00:20:09.920
What does that mean?
00:20:10.160 --> 00:20:10.960
Okay, whoa.
00:20:11.119 --> 00:20:13.680
So they don't necessarily pay the duties, but they're responsible for the duties.
00:20:13.920 --> 00:20:17.359
I mean, tech you could have business arrangements to have someone else pay it.
00:20:17.519 --> 00:20:21.680
It's kind of like a an importer of record might have the ultimate liability for the case.
00:20:21.839 --> 00:20:22.240
Got it for two.
00:20:22.400 --> 00:20:23.200
So it's kind of like an butt.
00:20:23.359 --> 00:20:28.319
This per this is the this is the backstop, the only backstop.
00:20:28.640 --> 00:20:31.119
Yeah, they they do have a cascade of like the first line.
00:20:32.160 --> 00:20:34.960
And then there can be like a second, if they don't pay it, they default or something.
00:20:35.440 --> 00:20:38.400
So what could they because that's cas- oh maybe it's just too much, but it cascades.
00:20:38.480 --> 00:20:39.759
It's like it gets more complicated.
00:20:39.920 --> 00:20:42.000
They're the they're going after everybody here that they can't.
00:20:42.480 --> 00:20:46.640
If you get the right party to be the declarant, they're the responsible party to make sure things get paid.
00:20:46.720 --> 00:20:55.359
Now the payment to customs might be facilitated through the carrier or through the postal operator in the EU, but ultimately that that person is or the broker.
00:20:56.000 --> 00:20:56.480
Yep.
00:20:56.720 --> 00:20:57.039
Yeah.
00:20:57.200 --> 00:20:58.400
But the the declarant?
00:20:58.640 --> 00:20:59.200
The declarant.
00:21:00.480 --> 00:21:00.559
Yeah.
00:21:01.119 --> 00:21:02.160
So Okay.
00:21:02.559 --> 00:21:02.880
Yeah.
00:21:03.039 --> 00:21:18.079
So that's where, like a, you know, an Australia Post, for example, could sign up with a EU entity as the declarant to be their representative for all shipments coming from Australia into the EU.
00:21:18.640 --> 00:21:24.720
And that would then satisfy the complications that like DHL trying to get a POA from every shipper.
00:21:25.039 --> 00:21:27.440
Instead, Australia Post doesn't have to go out and do that.
00:21:27.519 --> 00:21:30.559
They they can sign up and have someone represent all of their shipments.
00:21:30.799 --> 00:21:34.640
How practical is it for the post in this case to have collection upon delivery?
00:21:34.799 --> 00:21:37.359
Let's say you're a foreign postal operator, right?
00:21:37.599 --> 00:21:39.920
Into the US, you've been forced to collect duties.
00:21:40.160 --> 00:21:42.559
It's it's it's like is this like an optional thing?
00:21:42.720 --> 00:21:51.680
I mean, like uh is the is the destination post gonna do collect upon delivery or they don't want that at all.
00:21:52.160 --> 00:21:54.319
Did they like explicitly say they don't want that?
00:21:54.480 --> 00:21:55.119
Oh, yeah, yeah.
00:21:55.200 --> 00:21:56.079
They they don't want that.
00:21:56.240 --> 00:21:59.680
The whole intent of this is the duty is a is for the business.
00:22:00.400 --> 00:22:01.440
It's not a tax on consumers.
00:22:01.680 --> 00:22:04.480
Oh, oh, so it's paid by the uh the exporting.
00:22:05.599 --> 00:22:06.240
I've heard this before.
00:22:06.480 --> 00:22:08.480
In the US, I think uh Trump loved to say that.
00:22:08.720 --> 00:22:09.680
This isn't a tax on consumer.
00:22:10.000 --> 00:22:13.200
And they want they don't want that surprise delivery, you know, electronic delivery.
00:22:13.359 --> 00:22:13.599
Yeah.
00:22:15.440 --> 00:22:25.200
But operationally speaking, that's why they and that's why they want to push the liability of the declarant on the IAS holder or their indirect representative and and so on.
00:22:25.279 --> 00:22:27.119
They they don't want it to be the consumer.
00:22:27.359 --> 00:22:29.279
However, it could be somebody else.
00:22:29.519 --> 00:22:38.000
And there has been talk about like, well, from a business arrangement standpoint, they can still go collect from them, even though someone else is a declarant.
00:22:38.079 --> 00:22:40.720
And there might, there's posts exploring that too.
00:22:40.880 --> 00:22:45.200
Um, we'll see, but in practice, that is not the way of the future.
00:22:45.359 --> 00:22:47.039
That is a recipe.
00:22:47.279 --> 00:22:48.880
This is this is that's a recipe for problems.
00:22:49.200 --> 00:22:53.680
So the US, the qualifying party process pretty much made this impossible.
00:22:54.079 --> 00:22:54.559
Yep.
00:22:55.119 --> 00:23:00.720
In Europe, it's not necessarily mandated, it's just difficult practically to pull this off.
00:23:01.039 --> 00:23:01.839
It is out.
00:23:02.160 --> 00:23:02.880
I I think so.
00:23:02.960 --> 00:23:05.440
And there there has this is where it's interesting.
00:23:05.680 --> 00:23:13.039
The sentiment within the EU, uh, postal operators and even carriers trying to figure out how to how to approach all of this.
00:23:13.200 --> 00:23:16.480
There's been question marks because this implementation guidance hasn't come out.
00:23:16.640 --> 00:23:20.400
So there's been a lot of exploration of people willing to say, hey, can we still collect on delivery?
00:23:20.480 --> 00:23:21.440
Maybe that's our plan.
00:23:21.599 --> 00:23:24.799
Now that this is rolled out, we'll see if the any of those sentiments change.
00:23:24.960 --> 00:23:31.279
But practically speaking, um, having a B D DP on these B2C shipments is is really the right path to go.
00:23:31.680 --> 00:23:34.000
Is there is there any chance this gets delayed?
00:23:36.319 --> 00:23:40.000
I'm very interested to see what they can do in four weeks.
00:23:41.519 --> 00:23:44.160
Ooh, I don't even know where to put my money on that one.
00:23:46.400 --> 00:23:53.599
Now that this has come out and more comments and things are going to come in and they can update this guidance, I'm curious to see if they if they run into major snags.
00:23:53.759 --> 00:24:06.079
There's probably, you know, let's say 200 countries out there probably half of them no longer ship, these post offices no longer ship to the US.
00:24:07.119 --> 00:24:07.440
Right?
00:24:08.000 --> 00:24:08.480
Half of them.
00:24:08.799 --> 00:24:12.400
Most of the volume, there's a lot of the volume coming in, but a lot of these smaller countries.
00:24:13.279 --> 00:24:20.880
This is now all these countries shipping to Europe, especially like that are out in that region, um Asia, etc.
00:24:21.119 --> 00:24:24.559
Like that's that's uh that's gonna be super impactful for them.
00:24:25.039 --> 00:24:31.119
Um now Aaron, what are what are uh just to kind of like as we finish up here?
00:24:32.640 --> 00:24:34.400
How do how are we helping with this?
00:24:34.559 --> 00:24:44.640
Because we so we moved the vast majority of postal volume into the United States, um, which means that we're for the most part, I think, pretty equipped to help now go into these other countries.
00:24:44.720 --> 00:24:52.319
Let's say we're collecting duties inside of a prepay app, um, you know, our our mobile app inside of who did we just go live with someone like the other day?
00:24:52.480 --> 00:24:53.119
What country?
00:24:53.519 --> 00:24:53.920
Oh, geez.
00:24:54.079 --> 00:24:56.960
We go live with was it uh I don't remember which one you're talking about.
00:24:57.119 --> 00:24:58.240
There's the number of Columbia?
00:24:58.720 --> 00:25:00.720
Uh that that's one that's been recent, yeah.
00:25:00.880 --> 00:25:01.200
Yeah.
00:25:01.359 --> 00:25:02.079
Um Togo?
00:25:02.480 --> 00:25:11.279
Anyways, but um so we can collect the duties there, and it's gonna be probably fairly easy for them now to comply with this.
00:25:11.519 --> 00:25:13.839
The collection aspect of the collection aspect, yeah.
00:25:13.920 --> 00:25:27.440
I think and then us working either as the declarant, which we, you know, we have some documentation on this, either acting as the declarant, but facilitating that collection of the duties and getting them to the you know, uh to the final authority or to the final payer of those duties.
00:25:27.680 --> 00:25:43.039
Yeah, that that's the beauty of this is um because we went through the the storm of last year in the US and the that level 10 disruption that we had there, there is a lot of things put in place that we can leverage to help foreign posts outside the EU.
00:25:43.519 --> 00:25:56.000
Now add the EU to their uh their list of countries where they they collect duty on alongside the US, and we can leverage that same framework to help post continue shipping to the EU.
00:25:56.480 --> 00:26:10.799
Uh, then we are we're also working very closely with IPC, UPU, and the EU Post to put the the framework in place there to make sure the everything's in place to be able to pay them properly on all of these shipments.
00:26:10.960 --> 00:26:16.960
And the here's the crazy part about this uh where did we just set up a new office?
00:26:17.359 --> 00:26:18.079
Netherlands.
00:26:18.319 --> 00:26:19.119
In the EU.
00:26:20.160 --> 00:26:27.839
And that actually positions us to be able to act as a declarant on these shipments and alleviate some of those those uh friction points as well.
00:26:28.160 --> 00:26:34.480
So we're actually set up very well to be able to turn on a solution of the EU in the in the limited time given.
00:26:34.799 --> 00:26:40.400
I mean, heck, we did we did it to the US with much less preparation than we have now going to the EU.
00:26:40.480 --> 00:26:45.759
So I'm pretty confident we can have, I'm very confident and bullish that we can have some very workable solutions in place.
00:26:45.839 --> 00:26:47.920
Come to workable and fast.
00:26:48.319 --> 00:26:50.240
One thing our team can do is move quickly.
00:26:50.400 --> 00:26:53.440
We have we already have most of these applications in place.
00:26:53.759 --> 00:26:57.839
It just about getting in touch with us and our team, and we'll we'll help the the post.
00:26:58.319 --> 00:26:59.839
I mean, look, and merchants, right?
00:26:59.920 --> 00:27:05.359
So if you're a foreign post or you're an express carrier, you're a consolidator, and your merchants are needing help.
00:27:05.519 --> 00:27:06.720
This is just a start.
00:27:06.880 --> 00:27:13.119
Like calculating this is you know, somewhat simple, kind of been simple for a qualified party process as well.
00:27:13.359 --> 00:27:15.839
That's not gonna remain simple, right?
00:27:16.000 --> 00:27:23.759
It's about to get more complex, and then same thing with the EU, and that's where we've already got all of this built out and are, I think, ready to help.
00:27:23.839 --> 00:27:30.880
Uh, I mean, we work with retailers, marketplaces, large marketplaces, postal operators, customs, right?
00:27:31.039 --> 00:27:35.920
So we're kind of we have uh an ecosystem that's uh pretty unique.
00:27:36.160 --> 00:27:36.559
Absolutely.
00:27:36.640 --> 00:27:45.440
And it and it's worth talking, like one thing we didn't touch on much was the rails for collection of the within the commercial carrier space.
00:27:45.680 --> 00:27:47.359
I think that's pretty well figured out.
00:27:47.440 --> 00:27:49.680
Uh we talked about it a little bit.
00:27:50.000 --> 00:27:59.680
If you're you know Atlanta cost guarantee customer of ours, you'll see your calculations change and duties start getting calculated, and we'll still be able to guarantee it.
00:27:59.759 --> 00:28:02.000
And and the rails are already in place for that.
00:28:02.240 --> 00:28:08.799
Where there's some some newer hiccups and issues on the postal side that we've got to put some solutions together to help with that.
00:28:08.960 --> 00:28:15.920
Um, but overall, you know, to your point, our teams, our team moves fast and we'll have solutions ready to roll.
00:28:16.000 --> 00:28:17.759
Uh, I think there's more details that'll be coming out.
00:28:17.839 --> 00:28:24.400
Obviously, the guidance just came today, so we'll have more information as we as we start putting these puzzle pieces together and have a clearer vision.
00:28:24.559 --> 00:28:27.039
We'll probably have some different webinars for postal operators.
00:28:27.119 --> 00:28:32.559
We'll have a lot of things coming out to help um keep everybody, get everybody ready to rock and roll.
00:28:32.799 --> 00:28:34.480
Okay, one last thing.
00:28:34.799 --> 00:28:35.920
This is July 1st.
00:28:36.000 --> 00:28:37.359
What happens November 1st?
00:28:37.599 --> 00:28:38.960
Oh my gosh.
00:28:39.599 --> 00:28:42.079
We totally forgot one very important thing.
00:28:44.240 --> 00:28:45.680
You're right, you remembered.
00:28:45.759 --> 00:28:49.200
And thank you for remembering product identifiers.
00:28:49.279 --> 00:28:55.519
This was another topic as they try to capture more information on the on the goods coming in.
00:28:56.240 --> 00:29:01.839
They have and and the way luckily they're phasing this in so it's not all hitting on July 1st.
00:29:02.400 --> 00:29:03.359
That's not close, man.
00:29:03.519 --> 00:29:04.400
Four months before peak.
00:29:04.720 --> 00:29:05.119
Four months.
00:29:05.279 --> 00:29:08.640
Now, this we'll call this a practice period from July 1st to November 1st.
00:29:08.720 --> 00:29:10.720
You can start transmitting this data.
00:29:10.960 --> 00:29:13.759
Here's the best part about it it's data that already exists.
00:29:13.920 --> 00:29:16.559
So it's not like creating data.
00:29:17.519 --> 00:29:18.559
It's it exists.
00:29:18.799 --> 00:29:19.519
In the ether, okay.
00:29:19.680 --> 00:29:20.319
In the ether.
00:29:20.799 --> 00:29:22.559
And that's what that's what the EU wants.
00:29:22.640 --> 00:29:23.759
They just want people to give them that data.
00:29:24.000 --> 00:29:24.559
What is this data?
00:29:24.640 --> 00:29:27.119
What's the what's the product identifiers here?
00:29:27.200 --> 00:29:27.599
What is this?
00:29:27.759 --> 00:29:30.640
Part numbers, manufacturer numbers, UPC codes, etc.
00:29:30.799 --> 00:29:33.440
So they they bucket them into three different categories.
00:29:33.599 --> 00:29:38.240
You've got um, let's just say the from a manufacturer they assign a part number.
00:29:38.400 --> 00:29:46.000
Is that part number standardized, like a UPC code or EAN number, or is it just their own made-up number that's not actually publicly registered?
00:29:46.160 --> 00:29:46.799
Yeah, right.
00:29:47.119 --> 00:29:49.519
So that's one where it's driven by the manufacturer.
00:29:49.599 --> 00:30:01.920
And then you as a seller, if you're reselling my product that I give you, it could my product comes with my part number, and you might overlabel it with your number, or maybe it's just my own number for your own inventory purposes.
00:30:02.079 --> 00:30:02.400
Yep.
00:30:02.559 --> 00:30:04.960
That's that's a merchant-driven part number.
00:30:05.039 --> 00:30:08.640
Now you might use the same number, or you might have your own in addition to it.
00:30:08.960 --> 00:30:10.240
Those are the numbers we're talking about.
00:30:10.400 --> 00:30:11.440
They want both those numbers.
00:30:11.599 --> 00:30:13.119
They want both of those.
00:30:13.359 --> 00:30:23.039
Now, they have three fields: one for your number, yeah, one for the manufacturer's number, my number, and one for my number that is standardized.
00:30:23.279 --> 00:30:27.440
So if I have a UPC code on mine, I could just put the same number.
00:30:27.599 --> 00:30:29.839
The same number could go in both fields.
00:30:30.079 --> 00:30:32.400
The the standardized one is not required.
00:30:32.480 --> 00:30:33.599
It's only it's optional.
00:30:34.079 --> 00:30:34.880
Okay, explain why.
00:30:34.960 --> 00:30:36.319
Why is this standardized even there?
00:30:36.400 --> 00:30:37.200
What's the point?
00:30:37.440 --> 00:30:45.759
Um because they want to know if it's registered in a public registry somewhere versus just made up by me as a manufacturer.
00:30:46.079 --> 00:30:47.519
There's a different that's a differentiator.
00:30:47.839 --> 00:30:52.640
So you could have a SKU that has the color in it or whatever, but that might not be the registered.
00:30:53.039 --> 00:30:54.559
Yeah, you could have you could have something different here.
00:30:54.880 --> 00:30:58.559
I can go to the UPC database and find information about a particular product.
00:30:58.880 --> 00:31:07.039
And so that's where and if you as a reseller just use my number for everything, it could be the same number across all the fields.
00:31:07.279 --> 00:31:08.880
But they just want visibility into that.
00:31:09.200 --> 00:31:16.079
Okay, how a consumer in Japan, right, sit shipping something, how are they gonna get this?
00:31:16.319 --> 00:31:17.039
These numbers.
00:31:17.279 --> 00:31:17.920
Oh, yeah.
00:31:18.079 --> 00:31:21.599
There's uh that's a whole other topic of collecting those numbers and passing them.
00:31:21.680 --> 00:31:25.920
And there's carve outs on when it's not required, like handmade goods and those kind of things.
00:31:26.079 --> 00:31:27.359
But a lot of that going on.
00:31:27.519 --> 00:31:29.680
Um, but a lot of how does it get collected?
00:31:29.920 --> 00:31:31.680
How does it get transmitted?
00:31:31.839 --> 00:31:33.440
That's the industry trying to sort that out.
00:31:33.519 --> 00:31:35.599
The good news is it exists in ether, and we have some research.
00:31:35.839 --> 00:31:40.319
We're very good at doing this kind of stuff and getting these this information, but man, this is wild.
00:31:40.480 --> 00:31:41.119
It's gonna be fun.
00:31:41.519 --> 00:31:48.000
So if we got to lay out the next six months, no, five months, wait, less than five months.
00:31:48.240 --> 00:31:48.880
Yeah.
00:31:49.200 --> 00:31:52.079
Um, we've got duty to minimis going away.
00:31:52.240 --> 00:31:53.920
We just talked about all of that in the EU.
00:31:54.720 --> 00:31:58.000
We've got an enhanced postal clearance process coming into the U.S.
00:31:58.319 --> 00:32:00.559
Going to a normal clearance process, most likely.
00:32:00.720 --> 00:32:01.039
Yep.
00:32:01.200 --> 00:32:02.559
That's coming later this summer.
00:32:02.880 --> 00:32:03.839
That'll be disruptive.
00:32:04.000 --> 00:32:07.759
And then you've got the part number, you know, product identifier stuff coming in November.
00:32:08.000 --> 00:32:09.839
And that's gonna impact everybody.
00:32:10.160 --> 00:32:14.480
And the and the stuff in the US is also there's a lot of data requirements around that too.
00:32:14.799 --> 00:32:21.440
So we're actively uh we've got some creative solutions to be able to capture these extra data elements, which we don't have time for today.
00:32:21.759 --> 00:32:31.359
But the problem is country, you know, if you had to sum it up in two things, compliance for these low value shipments is ratcheting up.
00:32:31.440 --> 00:32:32.240
That's data.
00:32:32.400 --> 00:32:35.039
They want more information and they want their money.
00:32:35.200 --> 00:32:36.960
That's where the de minimis is going away.
00:32:37.119 --> 00:32:42.160
And so that's those are two things we're very well equipped to solve, and we're in the middle of uh of working with the industry on.
00:32:42.240 --> 00:32:45.039
So we'll continue to keep everyone updated as as things come out.
00:32:45.279 --> 00:32:45.440
Okay.
00:32:45.519 --> 00:32:46.720
All right, now I think we can actually finish.
00:32:46.960 --> 00:32:47.440
Let's wrap it up.
00:32:47.519 --> 00:32:48.319
Hey, thanks, Aaron.
00:32:48.480 --> 00:32:49.039
Thanks.
00:00:06.799 --> 00:00:10.880
Welcome to another episode of the Decoding Cross-Border E-Commerce Podcast.
00:00:11.199 --> 00:00:20.000
Aaron, uh, I think we talked about this last time, uh, but now we have information on the guidance on the de minimis change into the EU.
00:00:20.399 --> 00:00:23.600
It's June 3rd, and this goes in uh today.
00:00:23.679 --> 00:00:25.039
Yes, today is June 3rd.
00:00:25.120 --> 00:00:25.359
Yes.
00:00:25.519 --> 00:00:29.839
Yes, yes, no, so and the changes go into effect July 1st.
00:00:29.920 --> 00:00:31.679
And when did the guidance come out?
00:00:32.079 --> 00:00:34.399
Uh the implementation guidance came out today.
00:00:34.560 --> 00:00:35.520
Today, all right, everybody.
00:00:35.600 --> 00:00:38.560
We have uh less than Are you having a case of deja vu?
00:00:39.119 --> 00:00:42.240
Yeah, this is like US 30 day.
00:00:42.880 --> 00:00:45.840
And this might not be the last case of deja vu we have this summer either.
00:00:46.000 --> 00:00:49.359
So and that was uh that was a pretty chaotic 30 days.
00:00:49.520 --> 00:00:56.640
Yeah, I think we I think we've got a I think we've got a double header coming up this summer between the EU changes and probably more stuff coming out in the US.
00:00:56.719 --> 00:00:57.439
We'll we'll table that.
00:00:57.759 --> 00:00:58.640
Let's hope for a few days.
00:01:05.519 --> 00:01:06.560
Let's zoom out.
00:01:06.719 --> 00:01:10.159
Comparing it to the US, how disruptive is this?
00:01:10.400 --> 00:01:13.439
Do how disruptive was the US on a scale of one to ten?
00:01:13.840 --> 00:01:16.400
And how disruptive is this on a scale of one to ten?
00:01:17.280 --> 00:01:20.000
US is more disruptive, was more disruptive for sure.
00:01:20.319 --> 00:01:21.760
It was like a 10 in disruptive.
00:01:21.920 --> 00:01:22.879
I don't know how it could have been.
00:01:22.959 --> 00:01:23.760
That was pretty bad.
00:01:23.920 --> 00:01:28.319
Um let's give this one uh let's give this one a seven.
00:01:28.480 --> 00:01:29.680
Uh pretty disruptive.
00:01:29.840 --> 00:01:30.159
Yeah.
00:01:30.400 --> 00:01:31.920
So all right.
00:01:32.000 --> 00:01:34.959
So what what's happening?
00:01:35.120 --> 00:01:37.200
Just tell to generally, what is it?
00:01:37.359 --> 00:01:38.719
What's the what's the change?
00:01:38.959 --> 00:01:39.680
Talk to us.
00:01:39.920 --> 00:01:46.079
Yeah, and actually, you know, uh, we kind of put this together quickly because we had the the guidance that just rolled out.
00:01:46.159 --> 00:01:54.239
We knew this was coming, and then the details that a lot of the questions operationally and implementation-wise, that like we're waiting for a document to come out.
00:01:54.400 --> 00:02:02.239
Now we just got a 32-page document that I feel like I went back to school today going through this document.
00:02:02.480 --> 00:02:03.439
But you were so excited.
00:02:03.599 --> 00:02:05.200
Talk to me about what you found in the document.
00:02:05.599 --> 00:02:06.319
You're like Clint.
00:02:06.719 --> 00:02:07.359
Tons of exciting things.
00:02:07.840 --> 00:02:09.840
Nuance, this nuance, we'll get to the fun stuff at some point.
00:02:10.159 --> 00:02:13.759
Mostly what I expected, but you know, some surprises in there too.
00:02:13.919 --> 00:02:19.280
Um, but I think to start with, we usually have a dad joke, right?
00:02:19.840 --> 00:02:22.400
We usually do, I usually try to weave it in naturally.
00:02:22.479 --> 00:02:23.599
I'm not gonna do that this time.
00:02:23.759 --> 00:02:25.680
Okay, but I do have a question for you.
00:02:25.840 --> 00:02:30.000
Like, when does a joke become a dad joke?
00:02:31.680 --> 00:02:32.400
I don't know.
00:02:32.639 --> 00:02:34.800
When the punchline is apparent.
00:02:36.319 --> 00:02:37.360
Ah, jeez.
00:02:38.479 --> 00:02:40.479
I told you, don't tell me the joke beforehand.
00:02:40.560 --> 00:02:42.000
I usually don't know when they're coming.
00:02:42.080 --> 00:02:47.520
And so everybody gets to watch me real time if they're watching or even care how slow I am on the uptake.
00:02:47.599 --> 00:02:48.000
That was good.
00:02:48.080 --> 00:02:48.560
That was good.
00:02:48.639 --> 00:02:49.039
All right.
00:02:49.199 --> 00:02:54.560
So, and the other thing that wasn't apparent, apparent, was all the details of this EU uh stuff that was coming out.
00:02:54.639 --> 00:03:00.000
What we knew was come July 1st, EU was removing their 150-year-old de minimis.
00:03:00.319 --> 00:03:05.840
We also knew that they're gonna put in some simplified duty calculations for B2C shipments into the EU.
00:03:06.400 --> 00:03:09.199
So um, you know, kind of the high-level stuff we knew.
00:03:09.360 --> 00:03:20.719
Uh, all that was really confirmed with this implementation guidance of and think of it, think of it this way: the there's a lot of details about the what-ifs and how does it affect B2B?
00:03:20.879 --> 00:03:23.199
How does it affect C2C shipments?
00:03:23.919 --> 00:03:27.039
What happens is de minimis goes away.
00:03:27.439 --> 00:03:33.039
Duty-free is dead, duty-free is 150 uh except for gifts.
00:03:33.199 --> 00:03:36.960
There's still a 45 euro gift um de minimis.
00:03:38.400 --> 00:03:47.840
Now it's the standard duty calculation for everything where duty applies except B2C shipments under 150 euro.
00:03:48.800 --> 00:03:54.159
And that is where this 3 euro fee gets thrown around, which is it's a duty.
00:03:54.319 --> 00:03:59.199
It's a three euro duty, and it's charged per line item.
00:03:59.840 --> 00:04:06.000
So it's not based on value, it's not anything else, it's per line item on the declaration.
00:04:06.400 --> 00:04:08.159
What does per line item mean?
00:04:08.319 --> 00:04:10.159
Ooh, that's a good question.
00:04:10.319 --> 00:04:13.680
You'd think that would be a straightforward answer, and it for the most part it is.
00:04:13.919 --> 00:04:21.040
Um it's so they in the EU they have some simplified clearance processes.
00:04:21.279 --> 00:04:25.279
What they call as an H7 is what's going to apply to most of these shipments.
00:04:25.519 --> 00:04:27.759
And on this H7, why do they call it that?
00:04:27.920 --> 00:04:28.480
I don't know.
00:04:28.639 --> 00:04:29.439
Oh, okay.
00:04:29.759 --> 00:04:30.560
It's just a number.
00:04:30.639 --> 00:04:32.639
I mean, why do they call it a type 11 or type 1?
00:04:32.959 --> 00:04:33.439
I see, I see.
00:04:33.680 --> 00:04:35.759
It's it's it's a clearance model, right?
00:04:35.920 --> 00:04:39.920
H1 is more of the formal model, but it requires all the data elements.
00:04:40.079 --> 00:04:42.240
And so let's let's talk with the H1.
00:04:42.399 --> 00:04:42.560
Okay.
00:04:42.879 --> 00:04:43.040
Okay.
00:04:43.360 --> 00:04:46.240
Let's do a little a little game here on how you can define a line.
00:04:47.199 --> 00:04:57.759
An H1 requires a full 10-digit HS code, description, um a country of origin, right?
00:04:58.079 --> 00:04:59.279
And then of course the values.
00:04:59.680 --> 00:05:01.759
What type of shipments are going in H1 today?
00:05:01.920 --> 00:05:04.399
Uh shipments for sure that over 150 euro.
00:05:04.639 --> 00:05:04.800
Okay.
00:05:05.040 --> 00:05:07.759
So even small package shipments over 150 euro H1s.
00:05:07.920 --> 00:05:08.079
Yep.
00:05:08.160 --> 00:05:08.399
Okay.
00:05:08.879 --> 00:05:18.319
Um and the the typical example of a or definition of a line item is by HS code description country of origin.
00:05:18.560 --> 00:05:19.199
Yep.
00:05:19.920 --> 00:05:26.240
Now, if you move to the simplified H7, which can be used for shipments under 150 euro.
00:05:26.560 --> 00:05:30.720
Now, there's another one called an H6 for postal specific up to 1,000 euro.
00:05:30.879 --> 00:05:31.759
We don't, it's simplified.
00:05:31.839 --> 00:05:32.720
We won't talk about it much.
00:05:32.959 --> 00:05:36.399
Most of what's going to be used in both postal and commercial will be that H7.
00:05:37.199 --> 00:05:42.560
The required datum elements are a six-digit HS code, no country of origin.
00:05:42.800 --> 00:05:48.480
So now you can so the same shipment in an H1 would have three line items.
00:05:49.199 --> 00:05:56.240
And if it's you're going to do it um with the simplified H7, it's what you can put those all in one line item.
00:05:56.560 --> 00:05:58.480
As long as they share the same digit subheading.
00:05:58.720 --> 00:05:59.600
Six-digit subheading.
00:05:59.680 --> 00:06:18.560
Give me an example of a good that would typically have a whole bunch of different ten-digits um, well, they gave people in this, in this, they gave an example of like uh an Anorak, a wind cheater, and a wind jacket that might actually have different HS codes at the at the eight and ten digit level, but at the six they share the same.
00:06:18.800 --> 00:06:24.879
And they show that example of like, hey, actually combine all of these into one line item and pay the pay one three euro fee.
00:06:24.959 --> 00:06:29.439
But if it goes to an H1, it's now nine euros because each one's actually a different HS code.
00:06:29.759 --> 00:06:39.920
So there's advantages for consolidation on this simplified clearance process that um is interesting because they they can even be made in different countries, but it doesn't matter because on that H7 they don't ask for it.
00:06:40.160 --> 00:06:41.120
But there's a lot of trade-offs here.
00:06:41.199 --> 00:06:41.680
We'll get to them.
00:06:42.000 --> 00:06:42.879
There is, there is.
00:06:43.199 --> 00:06:47.600
So don't don't walk away from this episode right now thinking that everything should go in as an H7.
00:06:47.839 --> 00:06:48.639
Yeah, everything's great.
00:06:48.720 --> 00:06:51.360
So H7 can be used for everything under 150 euro.
00:06:51.600 --> 00:06:56.480
That does not include and that does not include excise goods or prohibited or restricted goods.
00:06:56.560 --> 00:07:05.519
Okay, but that's gonna be the so the line share of e-commerce will be using H7 on these on these low-value shipments, and we'll use that consolidation logic on the declaration.
00:07:05.680 --> 00:07:10.959
Now, do you know why they're doing this three euro duty and not just regular ad velorum duty?
00:07:11.920 --> 00:07:15.279
Uh I was gonna ask you that question, but let me try to answer it.
00:07:15.439 --> 00:07:16.079
Yes, please.
00:07:16.240 --> 00:07:17.839
Um let's speculate here.
00:07:18.160 --> 00:07:18.720
Postal?
00:07:18.879 --> 00:07:20.720
It's super complicated the the answer.
00:07:21.040 --> 00:07:23.360
The postal difficulties in calculating duties.
00:07:23.680 --> 00:07:23.839
Really?
00:07:24.319 --> 00:07:25.519
It's not just postal.
00:07:26.160 --> 00:07:26.480
No.
00:07:26.959 --> 00:07:28.800
Well, I mean, I know what this has to do with China.
00:07:28.879 --> 00:07:30.000
Like, you know, all the things that are.
00:07:30.319 --> 00:07:32.639
But why didn't they just say why don't they just do ad valorum?
00:07:33.279 --> 00:07:33.839
I don't know.
00:07:34.079 --> 00:07:35.360
They're going to in two years.
00:07:35.600 --> 00:07:35.920
Right.
00:07:36.000 --> 00:07:37.040
This is a temporary process.
00:07:37.199 --> 00:07:37.920
Why is it temporary?
00:07:38.079 --> 00:07:39.839
I don't know, Aaron, you're embarrassing me.
00:07:40.000 --> 00:07:40.399
Come on.
00:07:40.560 --> 00:07:42.079
You're a software guy.
00:07:42.480 --> 00:07:43.600
Easy math.
00:07:44.800 --> 00:07:46.639
Their systems aren't ready to do anything else.
00:07:47.360 --> 00:07:47.759
That's it.
00:07:48.160 --> 00:07:52.879
They're just they this is like we gotta do something, and this is the easiest way to do it.
00:07:52.959 --> 00:07:54.000
They've got Okay, you know what?
00:07:54.079 --> 00:08:00.560
I should have gotten that right because Aaron, why did they do such a simplified process into the US for qualified parties?
00:08:00.800 --> 00:08:02.319
Yeah, it's technical limitations.
00:08:02.639 --> 00:08:06.079
So how did they solve this technically into the US?
00:08:06.319 --> 00:08:09.439
It's a simplified process.
00:08:09.759 --> 00:08:10.319
What's the process?
00:08:10.480 --> 00:08:11.519
The qualified party process.
00:08:17.199 --> 00:08:18.879
You mean how does that qualified process work?
00:08:19.040 --> 00:08:21.439
Yeah, they had to go outside the ACE environment because it wasn't ready yet.
00:08:21.600 --> 00:08:22.160
Correct.
00:08:22.399 --> 00:08:26.160
And it's all done in a in a parallel path with spreadsheets.
00:08:26.399 --> 00:08:26.720
Email.
00:08:26.879 --> 00:08:27.439
An email.
00:08:27.680 --> 00:08:28.560
And an attachment.
00:08:28.720 --> 00:08:28.959
Yep.
00:08:29.120 --> 00:08:34.799
Now this is going to be in their software, but it's going to count based on the line on a declaration multiplied by three.
00:08:35.440 --> 00:08:37.919
A little bit better than the US process in that case.
00:08:38.159 --> 00:08:43.759
So um that I mean really is a technical limitation why they did it this way.
00:08:43.919 --> 00:08:47.120
And the plan is to be regular duty calculations in two years.
00:08:47.279 --> 00:08:56.399
And in the interim, they set up this EU um commission because right now you got like 27 different systems for clearance and everything.
00:08:56.480 --> 00:08:58.320
They're unifying that across the whole EU.
00:08:58.799 --> 00:09:00.720
That's where this EU data hub comes in.
00:09:00.799 --> 00:09:05.039
So they're working on the technology to be able to kind of unify this EU clearance.
00:09:05.120 --> 00:09:07.440
So, anyways, great stuff.
00:09:07.679 --> 00:09:09.519
Um, De Minimus goes away.
00:09:09.679 --> 00:09:11.440
This is the trend around the world.
00:09:11.679 --> 00:09:15.279
Three euro per line comes in, depends on the clearance type.
00:09:15.519 --> 00:09:18.159
Um, now there's some other nuances to this.
00:09:18.320 --> 00:09:19.360
What are the questions you have?
00:09:19.440 --> 00:09:21.279
Let's just hit the questions kind of in the order you got them.
00:09:21.600 --> 00:09:26.559
If if I skip IOS, can I skip the the three euros here?
00:09:26.720 --> 00:09:30.240
Now three euro applies for for all B2C shipments under 150.
00:09:30.559 --> 00:09:30.720
Okay.
00:09:31.919 --> 00:09:33.120
Uh trade agreements.
00:09:33.360 --> 00:09:33.840
Ooh, good.
00:09:33.919 --> 00:09:34.080
Yes.
00:09:34.159 --> 00:09:35.360
You can like preferential treatment.
00:09:35.600 --> 00:09:36.480
I can get preferential treatment.
00:09:36.720 --> 00:09:37.360
Absolutely, you can.
00:09:37.519 --> 00:09:37.679
Okay.
00:09:37.919 --> 00:09:38.799
How does that work?
00:09:39.039 --> 00:09:41.200
Um you want all the gotchas around that.
00:09:41.360 --> 00:09:42.399
So I know that yep.
00:09:42.639 --> 00:09:44.320
So there's technically a path to do this.
00:09:44.399 --> 00:09:46.799
Now, is it realistic for a lot of shippers?
00:09:46.960 --> 00:09:47.679
Probably not.
00:09:47.919 --> 00:09:48.720
Here's why.
00:09:48.879 --> 00:09:56.559
The only way to get preferential treatment is to move it from that simplified H7 declaration to a more formal H1 declaration.
00:09:56.720 --> 00:09:58.559
That's where you have to have all the extra data control.
00:09:59.039 --> 00:10:01.360
Okay, so all I have to do then is just that's it's just that simple.
00:10:01.440 --> 00:10:03.039
I just do an H1 instead.
00:10:03.440 --> 00:10:05.840
But you also can't use IOS anymore.
00:10:06.320 --> 00:10:09.279
Okay, so not only I can't hold on.
00:10:10.159 --> 00:10:14.080
So IOS, which was didn't they come that out?
00:10:14.159 --> 00:10:15.200
It's like this is an upgrade.
00:10:15.360 --> 00:10:16.159
So we lose the upgrade.
00:10:16.399 --> 00:10:17.039
Yeah, and I don't understand.
00:10:18.080 --> 00:10:18.879
I don't fully understand why.
00:10:19.120 --> 00:10:21.600
So you can't use IOS if you want free trade agreements.
00:10:21.919 --> 00:10:28.399
You want preferential treatment on your meaning that the tax has to be then collected with the duties in the clearance process if you want that treatment.
00:10:28.559 --> 00:10:28.720
Okay.
00:10:28.799 --> 00:10:28.960
Yep.
00:10:29.120 --> 00:10:29.600
But that's it.
00:10:29.759 --> 00:10:31.759
You just have to that that's the only nuance.
00:10:32.080 --> 00:10:37.279
But when you do that, once you move it from IOS, then you bring in another problem.
00:10:37.600 --> 00:10:47.120
What iOS has this great benefit of being able to use one country to clear into for the entire European Union.
00:10:47.360 --> 00:10:52.879
When you go outside of IOS, they also said, well, when IOS isn't being used, you must clear in the destination country.
00:10:53.200 --> 00:10:54.639
Wait, wait, wait.
00:10:54.879 --> 00:10:57.279
So under IOS, you can do one.
00:10:57.600 --> 00:10:59.600
I'm just pitching physically, right?
00:10:59.919 --> 00:11:02.559
You have you're clearing into the Netherlands, let's say.
00:11:03.120 --> 00:11:03.840
Which is very common.
00:11:04.320 --> 00:11:04.799
Which is very common.
00:11:04.879 --> 00:11:05.840
People are doing that in the Netherlands.
00:11:06.000 --> 00:11:06.480
They bring everything.
00:11:06.720 --> 00:11:11.840
Now, if you're in free trade agreements, they have to clear it individually into each individual country.
00:11:12.000 --> 00:11:12.639
Yep.
00:11:13.519 --> 00:11:18.879
Okay, so and that's because the rule if it's not an IOS shipment.
00:11:19.679 --> 00:11:20.080
Yeah.
00:11:20.320 --> 00:11:23.759
Do you see how the kind of the decision tree kind of works you into?
00:11:24.799 --> 00:11:31.919
Forces you away from if you want preferential treatment, you gotta go away from IOS, which then forces you to use a logistics provider that can clear the destination country.
00:11:32.000 --> 00:11:38.000
And a ton of e-commerce logistics providers like to do things like bulk clearance in the Netherlands to for the entire European Union.
00:11:38.320 --> 00:11:39.840
Aaron, consolidators.
00:11:40.639 --> 00:11:45.120
Do you think they're going to be getting free trade agreements applied to their goods going into these countries?
00:11:45.440 --> 00:11:51.360
Um that's going to be very difficult for them because most of them like to push IOS for this reason.
00:11:52.080 --> 00:11:53.440
What about the integrators?
00:11:53.600 --> 00:11:54.960
UPS, FedEx, DHL.
00:11:55.120 --> 00:11:56.240
It'll be easier for them.
00:11:56.399 --> 00:11:56.799
Yep.
00:11:56.960 --> 00:11:58.080
And here's the other thing.
00:11:58.159 --> 00:12:03.679
I've seen solutions with consolidators where they allow for clearance to the destination country, but it comes at a cost.
00:12:03.919 --> 00:12:06.559
Using express carriers comes at a cost.
00:12:06.720 --> 00:12:08.879
So now you've got the cost of transportation.
00:12:08.960 --> 00:12:10.799
Like maybe there's a good solution you have.
00:12:11.279 --> 00:12:20.000
It's a you know it's a complicated world, but make sure if you're gonna go away from IOS just to get preferential treatment, now you've got to bring in the transportation costs and see if it all still makes sense.
00:12:20.159 --> 00:12:20.960
What about the postal stuff?
00:12:21.039 --> 00:12:22.720
Is that gonna get the free trade agreements?
00:12:23.679 --> 00:12:30.799
Um it's the same, it's the same thing that and honestly, but postal is clearing in the destination country, right?
00:12:30.960 --> 00:12:39.679
Like like a true postal shipment would so a true postal shipment, as long as it's H1 clearance and it is clearing into that country, actually could get this treatment.
00:12:39.840 --> 00:12:40.480
Yeah.
00:12:40.879 --> 00:12:46.480
So in order for this to clear differently, is this the broker then that's making the decision on the clearance process?
00:12:46.720 --> 00:12:47.519
That's a good question.
00:12:47.600 --> 00:12:55.120
I'm not the expert on clearance and how that all works and how how they know to use the H1 to get the preferential treatment.
00:12:55.440 --> 00:12:58.480
Those are some details we're working on to try to get sorted out.
00:12:58.799 --> 00:12:59.120
Interesting.
00:12:59.279 --> 00:13:01.200
But think of the math though.
00:13:01.279 --> 00:13:07.440
If you have a mixed shipment, okay, let's say you have a mixed shipment of things you want preferential treatment on and others that you don't.
00:13:07.919 --> 00:13:17.440
So like a hoodie, a shirt, and um a shirt that's made in China, a shirt that's made in Malaysia, and a hoodie.
00:13:17.679 --> 00:13:18.080
Uh-huh.
00:13:18.240 --> 00:13:23.279
So you got to take into account now, okay, what's the value of the stuff I want preferential treatment on?
00:13:23.360 --> 00:13:25.279
How much do I save on duties there?
00:13:25.759 --> 00:13:28.320
I now have to clear in the destination country.
00:13:28.399 --> 00:13:32.159
So is there extra cost or not with my transportation to do that?
00:13:32.480 --> 00:13:34.399
Now I'm going to an H1 clearance.
00:13:34.480 --> 00:13:37.039
I have to give the country of origin and the full HS code.
00:13:37.120 --> 00:13:48.480
Now my line item consolidation benefits go away, and I might get charged more, you know, additional three euro fees that I wasn't, that I wouldn't if I still but the three euro fee goes away if it's if it's only on the stuff that's preferential treatment.
00:13:48.639 --> 00:13:48.799
All right.
00:13:48.879 --> 00:13:52.320
So if the whole batch had preferential treatment, you might save nine euro.
00:13:53.039 --> 00:13:57.200
If one item has preferential treatment, you're saving three euro out of the nine.
00:13:57.600 --> 00:14:00.159
But if you that's the math of like, is that worth it?
00:14:00.320 --> 00:14:04.639
Oh, but if you did it the other way, it'd be three euros because you can consolidate them under the same six digits.
00:14:04.799 --> 00:14:05.759
So some complicated math.
00:14:06.000 --> 00:14:13.679
All right, we're uh I'm sure we'll be getting very good at doing this uh um on the fly because that's kind of that's kind of our our thing.
00:14:13.759 --> 00:14:14.559
But that's crazy.
00:14:14.720 --> 00:14:25.440
And really, I was just looking at this from the perspective like, okay, as a business, like I came from uh, you know, uh an e-commerce retailer, shipping operations, those kind of things.
00:14:25.519 --> 00:14:29.600
So I'm looking at this through the lens of how do I navigate this and make decisions?
00:14:30.000 --> 00:14:34.639
And I think the majority of people are gonna go, you know what, let's just keep it simple for now.
00:14:34.799 --> 00:14:39.679
Preferential tariffs are you I think there's gonna be use cases for it for sure.
00:14:39.840 --> 00:14:43.360
Um, but it is not a simple, straightforward answer.
00:14:43.600 --> 00:14:50.480
Once they threw in that little caveat that, oh, you can't use iOS for uh uh for uh preferential tariffs.
00:14:50.559 --> 00:14:53.759
That that kind of threw a monkey wrench in all this that I didn't see coming.
00:14:54.559 --> 00:14:58.720
So Okay, but the good news is on e-commerce on returns.
00:14:58.960 --> 00:15:00.159
I was just gonna ask about returns.
00:15:00.320 --> 00:15:01.679
What do you think is gonna happen?
00:15:02.480 --> 00:15:03.840
There's good news for returns?
00:15:04.000 --> 00:15:04.480
No, there's not.
00:15:04.879 --> 00:15:06.080
I was gonna say, what are you talking about?
00:15:06.399 --> 00:15:08.240
It's non-refundable, non-refundable.
00:15:08.799 --> 00:15:09.840
Okay, yeah.
00:15:10.080 --> 00:15:12.559
Um dang.
00:15:12.799 --> 00:15:14.480
Yeah, this is all good news, right?
00:15:14.879 --> 00:15:16.080
All good news here.
00:15:16.320 --> 00:15:21.440
Um so on H1 returns.
00:15:22.960 --> 00:15:23.440
Non-refundable.
00:15:23.679 --> 00:15:31.679
There's some language in there that like maybe there's some exception, but really for the most part, in all practice, there's there's no there's no refunds on this.
00:15:31.919 --> 00:15:38.399
I mean, that's kind of a status quo what what we have here in the US was you know the some of the IP and 122 teras.
00:15:38.639 --> 00:15:40.080
Okay, how are merchants gonna calculate this?
00:15:40.240 --> 00:15:41.679
I guess they're gonna have to just decide.
00:15:41.759 --> 00:15:47.440
Do you think generally either let a software like dynamically try to make decisions and then you have to change the clearance process?
00:15:47.519 --> 00:15:48.799
I mean, that'd be super tricky.
00:15:48.960 --> 00:15:50.639
You're probably picking one path or the other.
00:15:50.720 --> 00:15:55.600
Either I'm gonna be doing all H7s or H1s.
00:15:55.840 --> 00:16:01.759
And here's the other thing that I like we need to be working closely with our partners to understand.
00:16:02.240 --> 00:16:13.519
Just because you can consolidate something, you have to make sure your provider is consolidating it the most efficient way possible when they create the declaration, create the entry.
00:16:14.080 --> 00:16:17.679
Which means you need to produce really good documentation so they do it right.
00:16:17.759 --> 00:16:22.159
Yeah, which that we we help with that software to do that to automatically make sure it's okay.
00:16:22.240 --> 00:16:24.080
That now, but contrast for me.
00:16:24.240 --> 00:16:34.240
So the the express carriers, power of attorney, like there's this power of attorney stuff, the declarant, we need to talk about the declarant versus postal operators.
00:16:34.559 --> 00:16:41.200
There's how are these two being handled differently, or not necessarily handled differently, but why practically are they different?
00:16:41.440 --> 00:16:45.279
So this is where it gets interesting too, specifically around IOS shipments.
00:16:45.919 --> 00:16:54.720
There's also that they're pushing the liability for the declarant or the person that should be um that's gonna be responsible for the duty, the debtor.
00:16:55.200 --> 00:17:03.039
They're pushing that on to the IOS merchant, or they could have it, they could sign up an indirect representative to be able to act in their behalf.
00:17:03.279 --> 00:17:17.039
Um this is like it's it's one thing in concept, because they they technically just want this duty collected upstream, but they didn't put very good rails in place to actually make this happen, practically speaking, to make sure the duty can be paid.
00:17:17.200 --> 00:17:42.240
Uh, it would make a lot more sense if they just made the duty somehow combined with IOS on remittance, and then these IOS uh um uh merchants can just remit duty along with their taxes, but instead the IOS still gets remitted, the duty gets collected at import, and the rails to actually get that duty where it needs to go are it it's now kind of up in the air and getting figured out right now.
00:17:42.400 --> 00:17:53.440
Um, what's happening is if the IOS is holder is technically supposed to be the declarant, but a representative can step in their place.
00:17:53.519 --> 00:18:09.039
What we're seeing is some express carriers reaching out to shippers to sign a power of attorney so that way the the shipper can just be the declarant and then you know DHL, FedEx, GPS, whoever will bill their customer like a normal DDP transaction where they're there's gonna be all the duty and taxes back to the shipper.
00:18:09.359 --> 00:18:16.640
So um, but they're having to get a POA from each of their customers uh to try to try to make this all work.
00:18:16.960 --> 00:18:29.839
Um and there's a lot of concern from marketplaces and others around like their liability for this duty, that's it, there's a lot of fragmented disconnected relationships here to make sense of it all.
00:18:30.079 --> 00:18:33.920
Um but it gets even more complicated.
00:18:34.079 --> 00:18:40.720
So DHL, for example, owns a relationship with the shipper and they're delivering and they're doing the clearance, and it all it all makes sense, right?
00:18:40.880 --> 00:18:41.920
That'll probably be the declarant.
00:18:42.000 --> 00:18:43.839
They own the relationship with that shipper.
00:18:44.079 --> 00:18:54.880
But if you're La Post, Deutsche Post, any other European postal operator, how much of a relationship do you have with a shipper in Canada over what is coming to you?
00:18:55.119 --> 00:18:58.960
You have you have and you have no contractual relationship or anything with that shipper.
00:18:59.359 --> 00:19:01.759
So they did one smart thing here.
00:19:02.079 --> 00:19:10.400
They they carved something out specific for postal operators that allows them to, in fact, I can just read it here.
00:19:10.480 --> 00:19:11.119
Let's see here.
00:19:11.359 --> 00:19:15.920
Um postal operators acting acting under the UPU.
00:19:16.000 --> 00:19:26.799
So this is just a normal postal shipment that's tied in with the UPU, can ask the Pope postal operators at origin to designate an indirect representative in the EU to be the declarant.
00:19:27.119 --> 00:19:35.599
Okay, so let's say Australia going to Europe, Australia Post can select a declarant.
00:19:37.440 --> 00:19:38.720
Or they could be the declarant.
00:19:38.960 --> 00:19:40.640
You have to be an EU entity.
00:19:41.279 --> 00:19:42.319
Okay, if they had an EU entity.
00:19:42.480 --> 00:19:48.160
So they have they can pick someone with an EU entity, um, similar to the qualified party process to be the declarant.
00:19:48.240 --> 00:19:48.559
Yep.
00:19:48.799 --> 00:19:52.480
What uh okay, what does the declarant entail?
00:19:52.720 --> 00:19:55.680
What do they why why is there a declarant?
00:19:55.759 --> 00:19:56.799
I don't understand.
00:19:57.200 --> 00:20:00.480
Uh they need a throat to choke uh when it comes to duty.
00:20:00.559 --> 00:20:03.519
Who's responsible for duty and the data on that that's coming in?
00:20:03.839 --> 00:20:04.319
What is responsible?
00:20:04.480 --> 00:20:06.400
So they're the payer of the duties all the time?
00:20:06.480 --> 00:20:07.119
They're the payer?
00:20:07.359 --> 00:20:09.119
Uh no, they're just still unresponsible.
00:20:09.359 --> 00:20:09.920
What does that mean?
00:20:10.160 --> 00:20:10.960
Okay, whoa.
00:20:11.119 --> 00:20:13.680
So they don't necessarily pay the duties, but they're responsible for the duties.
00:20:13.920 --> 00:20:17.359
I mean, tech you could have business arrangements to have someone else pay it.
00:20:17.519 --> 00:20:21.680
It's kind of like a an importer of record might have the ultimate liability for the case.
00:20:21.839 --> 00:20:22.240
Got it for two.
00:20:22.400 --> 00:20:23.200
So it's kind of like an butt.
00:20:23.359 --> 00:20:28.319
This per this is the this is the backstop, the only backstop.
00:20:28.640 --> 00:20:31.119
Yeah, they they do have a cascade of like the first line.
00:20:32.160 --> 00:20:34.960
And then there can be like a second, if they don't pay it, they default or something.
00:20:35.440 --> 00:20:38.400
So what could they because that's cas- oh maybe it's just too much, but it cascades.
00:20:38.480 --> 00:20:39.759
It's like it gets more complicated.
00:20:39.920 --> 00:20:42.000
They're the they're going after everybody here that they can't.
00:20:42.480 --> 00:20:46.640
If you get the right party to be the declarant, they're the responsible party to make sure things get paid.
00:20:46.720 --> 00:20:55.359
Now the payment to customs might be facilitated through the carrier or through the postal operator in the EU, but ultimately that that person is or the broker.
00:20:56.000 --> 00:20:56.480
Yep.
00:20:56.720 --> 00:20:57.039
Yeah.
00:20:57.200 --> 00:20:58.400
But the the declarant?
00:20:58.640 --> 00:20:59.200
The declarant.
00:21:00.480 --> 00:21:00.559
Yeah.
00:21:01.119 --> 00:21:02.160
So Okay.
00:21:02.559 --> 00:21:02.880
Yeah.
00:21:03.039 --> 00:21:18.079
So that's where, like a, you know, an Australia Post, for example, could sign up with a EU entity as the declarant to be their representative for all shipments coming from Australia into the EU.
00:21:18.640 --> 00:21:24.720
And that would then satisfy the complications that like DHL trying to get a POA from every shipper.
00:21:25.039 --> 00:21:27.440
Instead, Australia Post doesn't have to go out and do that.
00:21:27.519 --> 00:21:30.559
They they can sign up and have someone represent all of their shipments.
00:21:30.799 --> 00:21:34.640
How practical is it for the post in this case to have collection upon delivery?
00:21:34.799 --> 00:21:37.359
Let's say you're a foreign postal operator, right?
00:21:37.599 --> 00:21:39.920
Into the US, you've been forced to collect duties.
00:21:40.160 --> 00:21:42.559
It's it's it's like is this like an optional thing?
00:21:42.720 --> 00:21:51.680
I mean, like uh is the is the destination post gonna do collect upon delivery or they don't want that at all.
00:21:52.160 --> 00:21:54.319
Did they like explicitly say they don't want that?
00:21:54.480 --> 00:21:55.119
Oh, yeah, yeah.
00:21:55.200 --> 00:21:56.079
They they don't want that.
00:21:56.240 --> 00:21:59.680
The whole intent of this is the duty is a is for the business.
00:22:00.400 --> 00:22:01.440
It's not a tax on consumers.
00:22:01.680 --> 00:22:04.480
Oh, oh, so it's paid by the uh the exporting.
00:22:05.599 --> 00:22:06.240
I've heard this before.
00:22:06.480 --> 00:22:08.480
In the US, I think uh Trump loved to say that.
00:22:08.720 --> 00:22:09.680
This isn't a tax on consumer.
00:22:10.000 --> 00:22:13.200
And they want they don't want that surprise delivery, you know, electronic delivery.
00:22:13.359 --> 00:22:13.599
Yeah.
00:22:15.440 --> 00:22:25.200
But operationally speaking, that's why they and that's why they want to push the liability of the declarant on the IAS holder or their indirect representative and and so on.
00:22:25.279 --> 00:22:27.119
They they don't want it to be the consumer.
00:22:27.359 --> 00:22:29.279
However, it could be somebody else.
00:22:29.519 --> 00:22:38.000
And there has been talk about like, well, from a business arrangement standpoint, they can still go collect from them, even though someone else is a declarant.
00:22:38.079 --> 00:22:40.720
And there might, there's posts exploring that too.
00:22:40.880 --> 00:22:45.200
Um, we'll see, but in practice, that is not the way of the future.
00:22:45.359 --> 00:22:47.039
That is a recipe.
00:22:47.279 --> 00:22:48.880
This is this is that's a recipe for problems.
00:22:49.200 --> 00:22:53.680
So the US, the qualifying party process pretty much made this impossible.
00:22:54.079 --> 00:22:54.559
Yep.
00:22:55.119 --> 00:23:00.720
In Europe, it's not necessarily mandated, it's just difficult practically to pull this off.
00:23:01.039 --> 00:23:01.839
It is out.
00:23:02.160 --> 00:23:02.880
I I think so.
00:23:02.960 --> 00:23:05.440
And there there has this is where it's interesting.
00:23:05.680 --> 00:23:13.039
The sentiment within the EU, uh, postal operators and even carriers trying to figure out how to how to approach all of this.
00:23:13.200 --> 00:23:16.480
There's been question marks because this implementation guidance hasn't come out.
00:23:16.640 --> 00:23:20.400
So there's been a lot of exploration of people willing to say, hey, can we still collect on delivery?
00:23:20.480 --> 00:23:21.440
Maybe that's our plan.
00:23:21.599 --> 00:23:24.799
Now that this is rolled out, we'll see if the any of those sentiments change.
00:23:24.960 --> 00:23:31.279
But practically speaking, um, having a B D DP on these B2C shipments is is really the right path to go.
00:23:31.680 --> 00:23:34.000
Is there is there any chance this gets delayed?
00:23:36.319 --> 00:23:40.000
I'm very interested to see what they can do in four weeks.
00:23:41.519 --> 00:23:44.160
Ooh, I don't even know where to put my money on that one.
00:23:46.400 --> 00:23:53.599
Now that this has come out and more comments and things are going to come in and they can update this guidance, I'm curious to see if they if they run into major snags.
00:23:53.759 --> 00:24:06.079
There's probably, you know, let's say 200 countries out there probably half of them no longer ship, these post offices no longer ship to the US.
00:24:07.119 --> 00:24:07.440
Right?
00:24:08.000 --> 00:24:08.480
Half of them.
00:24:08.799 --> 00:24:12.400
Most of the volume, there's a lot of the volume coming in, but a lot of these smaller countries.
00:24:13.279 --> 00:24:20.880
This is now all these countries shipping to Europe, especially like that are out in that region, um Asia, etc.
00:24:21.119 --> 00:24:24.559
Like that's that's uh that's gonna be super impactful for them.
00:24:25.039 --> 00:24:31.119
Um now Aaron, what are what are uh just to kind of like as we finish up here?
00:24:32.640 --> 00:24:34.400
How do how are we helping with this?
00:24:34.559 --> 00:24:44.640
Because we so we moved the vast majority of postal volume into the United States, um, which means that we're for the most part, I think, pretty equipped to help now go into these other countries.
00:24:44.720 --> 00:24:52.319
Let's say we're collecting duties inside of a prepay app, um, you know, our our mobile app inside of who did we just go live with someone like the other day?
00:24:52.480 --> 00:24:53.119
What country?
00:24:53.519 --> 00:24:53.920
Oh, geez.
00:24:54.079 --> 00:24:56.960
We go live with was it uh I don't remember which one you're talking about.
00:24:57.119 --> 00:24:58.240
There's the number of Columbia?
00:24:58.720 --> 00:25:00.720
Uh that that's one that's been recent, yeah.
00:25:00.880 --> 00:25:01.200
Yeah.
00:25:01.359 --> 00:25:02.079
Um Togo?
00:25:02.480 --> 00:25:11.279
Anyways, but um so we can collect the duties there, and it's gonna be probably fairly easy for them now to comply with this.
00:25:11.519 --> 00:25:13.839
The collection aspect of the collection aspect, yeah.
00:25:13.920 --> 00:25:27.440
I think and then us working either as the declarant, which we, you know, we have some documentation on this, either acting as the declarant, but facilitating that collection of the duties and getting them to the you know, uh to the final authority or to the final payer of those duties.
00:25:27.680 --> 00:25:43.039
Yeah, that that's the beauty of this is um because we went through the the storm of last year in the US and the that level 10 disruption that we had there, there is a lot of things put in place that we can leverage to help foreign posts outside the EU.
00:25:43.519 --> 00:25:56.000
Now add the EU to their uh their list of countries where they they collect duty on alongside the US, and we can leverage that same framework to help post continue shipping to the EU.
00:25:56.480 --> 00:26:10.799
Uh, then we are we're also working very closely with IPC, UPU, and the EU Post to put the the framework in place there to make sure the everything's in place to be able to pay them properly on all of these shipments.
00:26:10.960 --> 00:26:16.960
And the here's the crazy part about this uh where did we just set up a new office?
00:26:17.359 --> 00:26:18.079
Netherlands.
00:26:18.319 --> 00:26:19.119
In the EU.
00:26:20.160 --> 00:26:27.839
And that actually positions us to be able to act as a declarant on these shipments and alleviate some of those those uh friction points as well.
00:26:28.160 --> 00:26:34.480
So we're actually set up very well to be able to turn on a solution of the EU in the in the limited time given.
00:26:34.799 --> 00:26:40.400
I mean, heck, we did we did it to the US with much less preparation than we have now going to the EU.
00:26:40.480 --> 00:26:45.759
So I'm pretty confident we can have, I'm very confident and bullish that we can have some very workable solutions in place.
00:26:45.839 --> 00:26:47.920
Come to workable and fast.
00:26:48.319 --> 00:26:50.240
One thing our team can do is move quickly.
00:26:50.400 --> 00:26:53.440
We have we already have most of these applications in place.
00:26:53.759 --> 00:26:57.839
It just about getting in touch with us and our team, and we'll we'll help the the post.
00:26:58.319 --> 00:26:59.839
I mean, look, and merchants, right?
00:26:59.920 --> 00:27:05.359
So if you're a foreign post or you're an express carrier, you're a consolidator, and your merchants are needing help.
00:27:05.519 --> 00:27:06.720
This is just a start.
00:27:06.880 --> 00:27:13.119
Like calculating this is you know, somewhat simple, kind of been simple for a qualified party process as well.
00:27:13.359 --> 00:27:15.839
That's not gonna remain simple, right?
00:27:16.000 --> 00:27:23.759
It's about to get more complex, and then same thing with the EU, and that's where we've already got all of this built out and are, I think, ready to help.
00:27:23.839 --> 00:27:30.880
Uh, I mean, we work with retailers, marketplaces, large marketplaces, postal operators, customs, right?
00:27:31.039 --> 00:27:35.920
So we're kind of we have uh an ecosystem that's uh pretty unique.
00:27:36.160 --> 00:27:36.559
Absolutely.
00:27:36.640 --> 00:27:45.440
And it and it's worth talking, like one thing we didn't touch on much was the rails for collection of the within the commercial carrier space.
00:27:45.680 --> 00:27:47.359
I think that's pretty well figured out.
00:27:47.440 --> 00:27:49.680
Uh we talked about it a little bit.
00:27:50.000 --> 00:27:59.680
If you're you know Atlanta cost guarantee customer of ours, you'll see your calculations change and duties start getting calculated, and we'll still be able to guarantee it.
00:27:59.759 --> 00:28:02.000
And and the rails are already in place for that.
00:28:02.240 --> 00:28:08.799
Where there's some some newer hiccups and issues on the postal side that we've got to put some solutions together to help with that.
00:28:08.960 --> 00:28:15.920
Um, but overall, you know, to your point, our teams, our team moves fast and we'll have solutions ready to roll.
00:28:16.000 --> 00:28:17.759
Uh, I think there's more details that'll be coming out.
00:28:17.839 --> 00:28:24.400
Obviously, the guidance just came today, so we'll have more information as we as we start putting these puzzle pieces together and have a clearer vision.
00:28:24.559 --> 00:28:27.039
We'll probably have some different webinars for postal operators.
00:28:27.119 --> 00:28:32.559
We'll have a lot of things coming out to help um keep everybody, get everybody ready to rock and roll.
00:28:32.799 --> 00:28:34.480
Okay, one last thing.
00:28:34.799 --> 00:28:35.920
This is July 1st.
00:28:36.000 --> 00:28:37.359
What happens November 1st?
00:28:37.599 --> 00:28:38.960
Oh my gosh.
00:28:39.599 --> 00:28:42.079
We totally forgot one very important thing.
00:28:44.240 --> 00:28:45.680
You're right, you remembered.
00:28:45.759 --> 00:28:49.200
And thank you for remembering product identifiers.
00:28:49.279 --> 00:28:55.519
This was another topic as they try to capture more information on the on the goods coming in.
00:28:56.240 --> 00:29:01.839
They have and and the way luckily they're phasing this in so it's not all hitting on July 1st.
00:29:02.400 --> 00:29:03.359
That's not close, man.
00:29:03.519 --> 00:29:04.400
Four months before peak.
00:29:04.720 --> 00:29:05.119
Four months.
00:29:05.279 --> 00:29:08.640
Now, this we'll call this a practice period from July 1st to November 1st.
00:29:08.720 --> 00:29:10.720
You can start transmitting this data.
00:29:10.960 --> 00:29:13.759
Here's the best part about it it's data that already exists.
00:29:13.920 --> 00:29:16.559
So it's not like creating data.
00:29:17.519 --> 00:29:18.559
It's it exists.
00:29:18.799 --> 00:29:19.519
In the ether, okay.
00:29:19.680 --> 00:29:20.319
In the ether.
00:29:20.799 --> 00:29:22.559
And that's what that's what the EU wants.
00:29:22.640 --> 00:29:23.759
They just want people to give them that data.
00:29:24.000 --> 00:29:24.559
What is this data?
00:29:24.640 --> 00:29:27.119
What's the what's the product identifiers here?
00:29:27.200 --> 00:29:27.599
What is this?
00:29:27.759 --> 00:29:30.640
Part numbers, manufacturer numbers, UPC codes, etc.
00:29:30.799 --> 00:29:33.440
So they they bucket them into three different categories.
00:29:33.599 --> 00:29:38.240
You've got um, let's just say the from a manufacturer they assign a part number.
00:29:38.400 --> 00:29:46.000
Is that part number standardized, like a UPC code or EAN number, or is it just their own made-up number that's not actually publicly registered?
00:29:46.160 --> 00:29:46.799
Yeah, right.
00:29:47.119 --> 00:29:49.519
So that's one where it's driven by the manufacturer.
00:29:49.599 --> 00:30:01.920
And then you as a seller, if you're reselling my product that I give you, it could my product comes with my part number, and you might overlabel it with your number, or maybe it's just my own number for your own inventory purposes.
00:30:02.079 --> 00:30:02.400
Yep.
00:30:02.559 --> 00:30:04.960
That's that's a merchant-driven part number.
00:30:05.039 --> 00:30:08.640
Now you might use the same number, or you might have your own in addition to it.
00:30:08.960 --> 00:30:10.240
Those are the numbers we're talking about.
00:30:10.400 --> 00:30:11.440
They want both those numbers.
00:30:11.599 --> 00:30:13.119
They want both of those.
00:30:13.359 --> 00:30:23.039
Now, they have three fields: one for your number, yeah, one for the manufacturer's number, my number, and one for my number that is standardized.
00:30:23.279 --> 00:30:27.440
So if I have a UPC code on mine, I could just put the same number.
00:30:27.599 --> 00:30:29.839
The same number could go in both fields.
00:30:30.079 --> 00:30:32.400
The the standardized one is not required.
00:30:32.480 --> 00:30:33.599
It's only it's optional.
00:30:34.079 --> 00:30:34.880
Okay, explain why.
00:30:34.960 --> 00:30:36.319
Why is this standardized even there?
00:30:36.400 --> 00:30:37.200
What's the point?
00:30:37.440 --> 00:30:45.759
Um because they want to know if it's registered in a public registry somewhere versus just made up by me as a manufacturer.
00:30:46.079 --> 00:30:47.519
There's a different that's a differentiator.
00:30:47.839 --> 00:30:52.640
So you could have a SKU that has the color in it or whatever, but that might not be the registered.
00:30:53.039 --> 00:30:54.559
Yeah, you could have you could have something different here.
00:30:54.880 --> 00:30:58.559
I can go to the UPC database and find information about a particular product.
00:30:58.880 --> 00:31:07.039
And so that's where and if you as a reseller just use my number for everything, it could be the same number across all the fields.
00:31:07.279 --> 00:31:08.880
But they just want visibility into that.
00:31:09.200 --> 00:31:16.079
Okay, how a consumer in Japan, right, sit shipping something, how are they gonna get this?
00:31:16.319 --> 00:31:17.039
These numbers.
00:31:17.279 --> 00:31:17.920
Oh, yeah.
00:31:18.079 --> 00:31:21.599
There's uh that's a whole other topic of collecting those numbers and passing them.
00:31:21.680 --> 00:31:25.920
And there's carve outs on when it's not required, like handmade goods and those kind of things.
00:31:26.079 --> 00:31:27.359
But a lot of that going on.
00:31:27.519 --> 00:31:29.680
Um, but a lot of how does it get collected?
00:31:29.920 --> 00:31:31.680
How does it get transmitted?
00:31:31.839 --> 00:31:33.440
That's the industry trying to sort that out.
00:31:33.519 --> 00:31:35.599
The good news is it exists in ether, and we have some research.
00:31:35.839 --> 00:31:40.319
We're very good at doing this kind of stuff and getting these this information, but man, this is wild.
00:31:40.480 --> 00:31:41.119
It's gonna be fun.
00:31:41.519 --> 00:31:48.000
So if we got to lay out the next six months, no, five months, wait, less than five months.
00:31:48.240 --> 00:31:48.880
Yeah.
00:31:49.200 --> 00:31:52.079
Um, we've got duty to minimis going away.
00:31:52.240 --> 00:31:53.920
We just talked about all of that in the EU.
00:31:54.720 --> 00:31:58.000
We've got an enhanced postal clearance process coming into the U.S.
00:31:58.319 --> 00:32:00.559
Going to a normal clearance process, most likely.
00:32:00.720 --> 00:32:01.039
Yep.
00:32:01.200 --> 00:32:02.559
That's coming later this summer.
00:32:02.880 --> 00:32:03.839
That'll be disruptive.
00:32:04.000 --> 00:32:07.759
And then you've got the part number, you know, product identifier stuff coming in November.
00:32:08.000 --> 00:32:09.839
And that's gonna impact everybody.
00:32:10.160 --> 00:32:14.480
And the and the stuff in the US is also there's a lot of data requirements around that too.
00:32:14.799 --> 00:32:21.440
So we're actively uh we've got some creative solutions to be able to capture these extra data elements, which we don't have time for today.
00:32:21.759 --> 00:32:31.359
But the problem is country, you know, if you had to sum it up in two things, compliance for these low value shipments is ratcheting up.
00:32:31.440 --> 00:32:32.240
That's data.
00:32:32.400 --> 00:32:35.039
They want more information and they want their money.
00:32:35.200 --> 00:32:36.960
That's where the de minimis is going away.
00:32:37.119 --> 00:32:42.160
And so that's those are two things we're very well equipped to solve, and we're in the middle of uh of working with the industry on.
00:32:42.240 --> 00:32:45.039
So we'll continue to keep everyone updated as as things come out.
00:32:45.279 --> 00:32:45.440
Okay.
00:32:45.519 --> 00:32:46.720
All right, now I think we can actually finish.
00:32:46.960 --> 00:32:47.440
Let's wrap it up.
00:32:47.519 --> 00:32:48.319
Hey, thanks, Aaron.
00:32:48.480 --> 00:32:49.039
Thanks.
