June 28, 2024
2 mins read

The U.S. Crackdown on T86 Clearance: Unpacking the Impact on Cross-Border E-commerce

The recent stringent scrutiny by U.S. Customs on T86 customs clearance has caused multiple customs brokers to suspend operations, leading to increased logistics costs and delays in cargo flow. This T86 clearance incident is a double-edged sword, presenting challenges and opportunities. What are the underlying reasons behind this crackdown, and how should businesses interpret its impact?

The Core Reasons Behind the T86 Clearance Incident

The T86 clearance issue has garnered significant attention in the industry. Under the intensified scrutiny by U.S. Customs, several customs brokers have been ordered to suspend their T86 clearance operations for the next three months for rectifications. As a result, major U.S. ports are now overwhelmed with thousands of tons of cross-border e-commerce parcels awaiting clearance, prompting many airlines to temporarily cancel flights to the U.S. or adopt a wait-and-see approach.

Several factors contribute to the likelihood that this stringent scrutiny will continue:

Regulatory Pressure on U.S. Customs

Over the past two years, cross-border e-commerce has led to a surge in parcels sent to the U.S., with some platforms shipping millions of packages daily. We estimate at least 5 million cross-border e-commerce parcels are sent to the U.S. via air transport each day, weighing thousands of tons. These parcels are primarily cleared through major U.S. ports like Los Angeles, New York, Miami, and Chicago. The “800-dollar exemption policy” allows goods valued below $800 to enter the U.S. tax-free, significantly increasing the volume of parcels needing clearance and putting immense pressure on customs personnel.

Inadequate Professional Capabilities of Logistics Companies

The influx of cross-border e-commerce parcels has attracted numerous logistics companies to invest in T86 clearance facilities and licenses near major U.S. airports. However, many of these companies need help with inadequate review of clearance documentation, insufficient professional knowledge and operational capabilities, and a limited understanding of the cross-border e-commerce business model. These deficiencies need to be addressed to improve their operations.

E-commerce Platforms’ Excessive Cost-Cutting

Many e-commerce platforms excessively emphasize cost and efficiency, compressing logistics costs and squeezing the profit margins of logistics service providers. This cost-cutting can lead to inadequate human resources and information systems investment, resulting in non-compliance or incomplete clearance documentation. Such practices contribute to incidents like the T86 clearance crackdown and negatively impact e-commerce platforms as well. To achieve sustainable development, e-commerce platforms must allow logistics service providers reasonable profit margins to improve and enhance their services, ensuring long-term compliance and efficiency.

Lack of Global Standardization

The varying levels of digital governance and data-driven regulatory capabilities across different countries pose challenges in effectively managing and taxing cross-border e-commerce parcels. While China has made significant strides in this area, there is still substantial room for positive information sharing and communication between Chinese regulatory bodies and their foreign counterparts. The absence of a globally recognized standard framework leads to trade and regulatory barriers, which can result in unpredictable events as cross-border e-commerce volumes increase.

Impact on Different Enterprises

The most immediate impact of the T86 clearance incident is the rise in costs. With fewer qualified customs brokers, those remaining will prioritize compliance and regulatory standards, leading to increased clearance costs. Many brokers have already started raising prices.

Additionally, with significant ports under intense scrutiny, logistics companies may divert cargo to other ports to avoid congestion, increasing demand for T86 clearance services at these alternative locations. This diversion will also affect airline and charter company route planning.

Overall, these adjustmentsโ€”including changes in service chains, resource reallocation, and cost model restructuringโ€”will likely result in higher prices for cross-border e-commerce parcels sent to the U.S. Price increases are reasonable under these circumstances; maintaining low costs would be unsustainable.

The Path Forward

To ensure sustainable development within the cross-border e-commerce logistics sector, all stakeholders must focus on operating within safety, compliance, and risk management boundaries. The industry needs a mechanism facilitating communication and coordination among all participants, from e-commerce platforms to logistics providers and regulatory authorities.

Ultimately, resolving the underlying issues highlighted by the T86 clearance incident will require a collaborative effort to establish a practical, transparent, and sustainable regulatory framework. Only then can the cross-border e-commerce industry achieve long-term growth and stability.

What are your thoughts on the impact of the T86 clearance crackdown on the cross-border e-commerce industry? Share your insights in the comments below!

Joe Zhang

Independent Consultant. 2X Founder and Contributor. Based in Shenzhen, China.

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Joe Zhang

Independent Consultant. 2X Founder and Contributor. Based in Shenzhen, China.


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