By Roger Aitken / www.forbes.com / April 3rd, 2016
While it’s become even cheaper to ship goods to the US since 10 March 2016, UK and EU retailers – from online marketplace traders to major multi-channel stores – should be investing in new US sites and focussing more of their logistics and marketing budgets on this lucrative market to take advantage of the new $800 (c.£560) US duty threshold – up from $200 (c.£140) previously.
That is the message being delivered from ParcelHero, a global parcel broker that partners with the likes of DHL, UPS and others shipping to over 200 countries globally. It advises that if UK retailers must invest swiftly to maximise the opportunity and “realise thousands of dollars” in extra orders and reduced red tape, now that the US duty threshold has been raised fourfold.
As a result, goods from Britain being exported to the US have just become far more competitive over the Pond – even to the point of concerning some American companies.
A bicyclist rides past a FedEx Corp. vehicle parked in the Midtown neighborhood of New York, U.S. (Photographer: John Taggart/Bloomberg).
“The exemption limit of just $200 for imports by mail into the US was a long-standing bar to the importation of competitively priced UK-sourced products,” notes David Jinks, head of Consumer Research at ParcelHero in London.
He adds: “Finally the threshold has been raised to $800, which opens the way for significantly wider range of UK items to be exported into the US, before duties and taxes make imports uncompetitive.”
As agreed in the Trade Facilitation and Trade Enforcement Act of 2015, which was signed by President Barack Obama in February, U.S. Customs and Border Protection (CBP) announced on March 10, that it had raised the value of a shipment of merchandise imported by a single person on one day – that generally may be imported free from duties and taxes – from $200 to $800.
In fiscal year 2015, the CBP processed more than $2.4 trillion in trade, processed approximately 33 million import (entries) and collected roughly $46 billion in duties, taxes and other fees. This was the largest amount collected in the past five years.
British SME Exports To US
Around 35% of British SME (small and medium enterprises) ship and export goods to the US according to a report by FedEx Express , titled the ‘FedEx FDX +0.44% Great British Export Report 2015’, which canvassed the behaviour and opinions of over 1,000 SME’s across Great Britain. And, with this making it the largest export market outside the European Union (EU), the spoils and what are on offer is hardly paltry.
Behind the US in terms of exports for British SME’s, were Australia that accounted for 25%, Canada 20%, China 16%, Japan and India – both on 13%. Perhaps interestingly though, just over a fifth of UK SME’s (22%) found that the US was the “most challenging” of the global markets to enter – ahead of Australia (14%), China (13%), India (11%) and Canada (10%).
The average UK SME exporter ships goods worth £714,000 (c.$1.02 million) outside the EU annually – including the US. And, according to ParcelHero’s own projections the firm estimates that raising the duty threshold to a more generous level will “considerably increase” this figure.
The new market might potentially be worth c.£2.8m (c.$4.0m) annually for those UK SME exporters prepared to invest in marketing and shipping an increased range of higher value products to the US. Also the $800 threshold greatly increases the range and number of items now worthwhile to ship.
So far we have “not seen any great strategy changes” from UK internet retailers according to Jinks. But he cautions saying: “They must react quickly to the opportunity. And, UK business should unite to spread the message out in the US that imported goods are no longer liable for hefty duties.”
Effectively, the message needs to be promoted that UK products have just got a “whole lot more competitive”, the ParcelHero spokesman contends. But you wouldn’t really expect anything less from an operator that facilitates parcel deliveries with a host of international partners.
The new $800 threshold also means that all goods below this value will not need to go through formal customs procedure, thereby making deliveries to the US quicker as well as cheaper.
Previously most items valued at over $200 had duties imposed on them at a rate ranging from 0% to 37.5%, with the average duty rate being 5.63%. Now this is no longer the case.
ParcelHero reveals that some of its business customers selling cycles and kids’ clothes and toys have indeed already responded with increased marketing and shipments.
“But we have yet to see a concentrated attack on this market,” says Jinks and asserts that: “Other countries won’t be shy in exploiting the new opportunity and the UK ought to be on the front foot.”
On the marketing front, the cost of creating a US home page is increasingly minimal and relatively easy to do. In fact, ParcelHero reveals that is investing in technology to facilitate this. And, it should not be a barrier for retailers considering expanding into the US.
US domestic retailers are no doubt going to move swiftly to protect their markets, if they haven’t already taken measures. A number of American companies are known to be unhappy about the new duty threshold – with US bicycle shops having initially gone on the defensive – since it makes imports on a par with US prices.
“They will have plans in place to ensure they keep as many customers loyal to US retailers as possible,” says Jinks. Nonetheless, it’s a rare new opportunity that should be seized by web retailers in the UK (Brexit of not) and the rest of EU.
But whatever the item to US being shipped is, ensure the value doesn’t creep over the new $800 mark – or the recipient will to pay duties. Now that mistake is won’t be received too well.
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