UPS stumbles into holiday season amid shifting trade rules

New York City, United States – What could cause a chaotic holiday shopping season may be brought on by the recently repealed nearly ten-year-old trade law known as “de minimis” that American consumers and businesses are now subject to slower shipping, damaged packages, and high tariffs on international goods.

Navigating the most recent regulatory changes has proved more challenging for the major international carrier than for its rivals FedEx and DHL.

As UPS customers turn to his company to help them clear packages entering the US, Matthew Wasserbach, brokerage manager for Express Customs Clearance in New York, has seen the effects of his company’s assistance.

“Over the past few months, we’ve been seeing a lot of UPS shipments, particularly those that are stuck and being lost or disposed of,” Wasserbach said. After the de minimis was over, “Their]UPS’s entire business model changed.” And they simply weren’t able to do the clearance because so many people anticipate receiving international packages, which they won’t ever receive.

Al Jazeera requested a comment from UPS, but they did not.

Suspending tariff exemptions

Packages valued at $800 or less have been exempt from taxes and tariffs since 2016, according to the de minimis trade exemption. US Customs and Border Protection (CBP) estimates that from 139 million shipments in 2015 to more than one billion in 2023, the number of shipments entering the country receiving the exemption has increased by more than 600 percent.

All of this changed in August. Imports from the US are now subject to new forms of paperwork and procedures, including duties and tariffs based on their country of origin, as a result of President Donald Trump’s executive order suspending de minimis treatment for all nations.

Tezumi Tea, an online Japanese tea and teaware business that sells its products online and through meetups in New York City, was hit by the tariff backlog at US customs just one month after de minimis ended. Tezumi lost roughly 150kg (330lbs) of matcha, totalling about $13, 000.

Ryan Snowden, a cofounder of Tezumi, said, “We responded by increasing buffers in our supply planning across the dozen farms that we partner with.” “Many of our cafe customers suddenly needed to switch to another matcha blend because of the loss,” according to the statement from the company.

UPS is no longer accepting shipments from Japan, and Tezumi has switched to using DHL and FedEx as a replacement shipping method.

removing shipments

Similar instances of UPS importing losses have been reported in Wasserbach.

A UPS package is essentially left unopened in a UPS facility for a while, Wasserbach said. According to what I’ve seen, UPS says in their tracking that they are removing the shipments without making any effort to contact either the sender or the receiver to obtain the information necessary to obtain the clearance.

Wasserbach and Al Jazeera exchanged email addresses from UPS customers who had hacked into his business to get their customs clearance from there.

Stephan Niznik, a customer of UPS, responded to a notice from the UPS Alternate Broker Team claiming their packages had been “destroyed.”

According to Niznik, “UPS attempted to contact the sender (me) on numerous occasions, but this is false, aside from a request for more information on September 5 (which I immediately responded to),” according to the tracking. “My package was mishandled, and children’s toys were completely destroyed by UPS,” the statement read.

UPS informed Chenying Li of the release of their package in another email chain after Express Customs Clearance informed them the shipment had been cleared.

When Li’s package was still showing as “Pending Release,” UPS responded, “At this time we are unable to provide an ETA, &nbsp, as volume is currently backed up and awaiting delivery due to the De Minimis impact.”

“Add more pressure,” you say?

According to Virginia Tech Associate Professor David Bieri, cost prevention may be one factor in UPS choosing to dispose of packages that have been rejected by US customs as opposed to returning the packages to the senders.

According to Bieri, “All these new rules and regulations put additional pressure on these companies’ already comparatively low margins, such as UPS, FedEx, DHL, etc..”. They must make money, and sometimes it’s simpler to not provide a service than to cover the additional costs associated with customs clearance and ensuring that goods arrive at their destination.

Bieri added that using package disposal by UPS may indicate that they believe they are in a “sufficiently strong monopolistic position” to engage in such abhorrent behavior as unilateral non-fulfillment of contract.

We aren’t seeing these issues with FedEx and DHL shipments, Wasserbach claimed.

When questioned about whether FedEx had handled packages that were stuck in customs, a spokesperson said that FedEx works with senders to update paperwork to remit it to CBP or return packages to senders. Shippers can ask for packages to be disposed of in some circumstances if they prefer not to pay to have the package returned to the sender. In those uncommon cases, the shipper directs the recipients. This is not a typical practice. We continue to operate normally.

Delivery costs are final and delivered to your door.

However, UPS and DHL both face the same difficulties. Anyone who placed an order from abroad was liable for unexpected fees on imported goods since August, when de minimis was in effect and small packages were suddenly subject to taxes and tariffs.

The consumer essentially becomes the importer if packages worth $800 and less are not de minimis protected from import fees.

You might order something you find a bargain on the internet, or you might be unaware of where things are being shipped from, or you might be in for a rude awakening when it arrives at your door, Beiri said. You paid the price, and you believed this to be true. However, your deliverer claims that we are actually passing that cost on to you. because you are acting as the importer.

These fees might be higher than the product you originally purchased. You must pay more attention to small prints, according to Beiri.

With projected costs and lost packages in store, Beiri says shoppers will likely ask themselves, “Do you renovate or are you taking a vacation?” Do you spend your Christmas shopping sprees on yourself or do you like to dine out?

“These are interesting times when you have to make decisions and ponder what you can do given the current economic crisis, which includes paying rent, insurance, living expenses,” Beiri said. That is what is happening right now.

Wasserbach claims that UPS will likely aim to employ a sizable number of entry writers to provide the documentation needed for the legal passage of goods across international borders in order to better manage changing trade policy. Given the amount of training required, Wasserbach doubts that an increase in hiring will make a big difference now that Christmas shopping is the busiest time of year.

Trump’s policies have already had an impact on the company’s revenue. Imports from China, which is UPS’s most lucrative route, reportedly decreased by 35 percent earlier this year as a result of tariffs on China and the repeal of the de minimis rule.

Source: Aljazeera