The American Association of Exporters and Importers (AAEI) surveyed its members early in the COVID‑19 pandemic over a period of three weeks and found several salient features: All companies were affected, many were impacted by the import and export restrictions imposed by source countries delaying resupply, and some tried to build up inventory to avoid losing customers.
While US companies were likely already reassessing sourcing from a single country, COVID-19 reinforced the need for companies to diversify product sourcing, including domestic production.
As a result of the pandemic, one of the big stories of 2020 was the acceleration in the growth of e-commerce shipments. The -e-commerce supply chain proved its mettle in delivering groceries and toilet paper to the United States for over 10 months. Many companies that traditionally shipped by express air courier are taking advantage of the capacity and speed associated with e-commerce, limiting cost increases by switching shipments to ocean and truck cargo due to reduced air capacity and increased air express courier rates.
With increased use, regardless of companies’ desires to change to direct-sales models, shippers must continue to watch trade treatment associated with e-commerce. In July 2020, e-commerce shipments cleared by US Customs and Border Protection (CBP) as “type 86” entries under 19 CFR section 321 — i.e., low value shipments under $800 — eclipsed consumption entries for goods over $2,500 requiring a formal entry. The big question for 2021 is whether the US will have two trade regimes, one for e-commerce de minimis shipments under $800 and another for formal entry shipments.
This is a moment of clarity for the US. It remains to be seen whether the international trade community will lead the way in modernizing trade facilitation, moving away from transaction-based reporting, compliance, and risk management for the post-COVID-19 global supply chain and embracing new technologies and governance to integrate millions of small global traders into a system that is easier to understand and more closely resembles direct tax regimes.