With several hundred billion dollars of annual trade value between Canada and the USA, it is hard to imagine how many shipments get stopped at the border for inspection. With 328 ports of entry, it is hard to keep track. That is why it is understandable that the US Customs and Border Protection agency (or CBP) is determined to find ways to make the whole process more efficient.
What is Section 321?
In 2019, the CBP established Section 321, allowing smaller shipments to pass through the border with less hassle. When developing Section 321, regulators discovered that certain shipments were not worth inspecting due to value and size.
In other words, getting them across the border as fast as possible was better economically than holding them up. Section 321 exempts these shipments from all duties, taxes, and fees to achieve this. In addition, because processing these shipments requires less time, larger shipments (which are more likely to cause problems) are given greater attention.
Businesses hoping to utilize Section 321 for their shipments must follow these three rules:
- Maximum value: the shipment must have a maximum value of $800 USD or less.
- One shipment per day: each recipient is allowed to receive one Section 321-compliant shipment per day.
- Not for resale: Section 321 shipments must be for personal use only.
Additionally, only some products that cross the border are eligible. Some of the ineligible products are as follows:
- Cigarettes and cigars
- Alcoholic beverages
- Dangerous, toxic, or otherwise harsh chemicals
- Products that require inspection
- Products under government regulation
You can learn more about Section 321 and its related programs on the CBP site.
How Does Section 321 Benefit Canadian Businesses?
This program not only makes the CBP more efficient, but it also benefits businesses exporting from Canada into the United States in a few ways.
Cost Savings
Thanks to the exemption from duties and taxes, Canadian businesses can enjoy a daily hassle-free shipment at a lower cost. Companies that benefit from this can even pass those savings to the customer, who, in turn, can enjoy reduced shipping costs. This is especially true for low-value goods that ship in larger quantities.
Faster Clearance Times
Much of the paperwork a shipment experiences is due to the same duties and taxes. Without them, businesses and carriers can both expect a much easier time getting their shipment from one side of the border to the other. Although this does not nullify all the necessary paperwork, less of it reduces the risk of a shipment getting stopped and causing further delays.
Competitive Advantage
Those in an industry with much larger competition may find shipping across the border intimidating. However, Section 321 only benefits smaller shipments with less overall value. This means you and your customer can expect reduced shipping time and cost compared to businesses dealing with much larger shipments subject to duties and taxes.
Improved Supply Chain Efficiency
The entire supply chain benefits from this program by streamlining the overall process, from when the product leaves your hands until it reaches the customer. Less paperwork means less time, better savings, and higher customer satisfaction.
Common Challenges with Section 321
It is hard to imagine such a program has any drawbacks, but there are a few points to remember if you want to get the most out of Section 321.
Managing Data Accurately and Efficiently
Although the goal is to achieve a more efficient shipping process, businesses cannot become lax in the accuracy of their data. In fact, you should be extra careful to refrain from inputting false data regarding Section 321, or you may incur additional fees and delays. It might also prove difficult if you are making not only Section 321 shipments but larger shipments as well.
Adhering to US CBP Regulations
Most importantly, everyone must follow the US CBP regulations. Although the shipment may be exempt from taxes and duties, other customs requirements remain. Failure to comply can result in penalties such as fines or delays, negating any benefit Section 321 may have provided you.
Working with 3PL Providers to Leverage Section 321 Benefits
Communication is vital if a third-party logistics company (or 3PL) handles your ecommerce fulfillment. Be sure to inform your 3PL partner whether or not you intend to utilize Section 321, as it affects how they ship across the border. For low-value goods, this should be easy. However, high-value goods or a high volume of shipments can cause compliance issues.
Tips for Canadian Businesses to Optimize Section 321
As troublesome as these challenges are, there are a few ways to circumvent or mitigate them.
Automate Your Data Management Systems
Managing every aspect of your warehouse data by hand can prove difficult, cumbersome, and inefficient. Human error is not a matter of if but when. By automating your data management systems, you can minimize the risk of simple mistakes by establishing an efficient workflow that uses technology rather than pens, papers, and overstuffed filing cabinets.
Work with an Experienced 3PL Provider
3PL providers are a great way to handle your logistics, especially if you are a small business. With that in mind, be sure to choose a partner with experience. New 3PL providers can become more trouble than they are worth, costing your business more money than it would save otherwise.
Educate Your Team on Section 321 Regulations
Inform your team about Section 321 and its regulations and how it may affect their work and the business. Then, with everyone on the same page, you reduce the risk of errors and misunderstandings.
Optimize Your Supply Chain Strategy
Run the numbers and make sure that Section 321 is an efficient way for your business to ship goods across the border. Developing a supply chain strategy with an informed opinion can help you get the most out of your shipments.
Learn More About Section 321 with UCanTrade
Want to save money, time, and hassle on your next shipment into the United States? Reach out to the helpful experts at UCanTrade and we’ll be happy to answer your questions.
