Smart retailers look for ways to take additional cost out of the value chain without sacrificing customer experience. In addition, most US Online retailers want to have the ability to expand, not only into Canada, but globally. One strategy where our clients are seeing strong results is cross-border shipping using the little-known Section 321 exemption.
What is Section 321?
Under the recent Canada-United States-Mexico Agreement (CUSMA), there is a provision, known as Section 321, that allows small consumer items valued at less than US$800 and weighing under 22.6kg (50lbs) to cross from Canada to the United States duty free.
For direct-to-consumer (DTC) retailers, this offers an opportunity to take advantage of a clause that waives or refunds duties on items that enter Canada bound for U.S. recipients. For many of our clients, the savings are as high as 15 to 20%.
Understanding the Section 321 Exemption
The Section 321 exemption is a game-changer for U.S. direct-to-consumer retailers, as it enables them to bypass import fees and streamline their supply chain. By taking advantage of this exemption, retailers can significantly reduce their landed costs and offer more competitive pricing to their customers. Additionally, Section 321 helps expedite the customs clearance process, saving time and eliminating potential delays.
However, it’s important to note that not all products and shipments are eligible for the Section 321 exemption. Certain goods, such as those requiring customs inspection or falling under countervailing or anti-dumping duties, may not qualify. It’s crucial for retailers to familiarize themselves with the specific regulations and restrictions that apply to their products to ensure compliance with Section 321 requirements.
How to Utilize the Section 321 Form
To take advantage of the Section 321 exemption, retailers must ensure compliance with the necessary documentation and requirements. Here are some key steps to effectively utilize the Section 321 form:
1) Accurate Valuation
To comply with Section 321 regulations, retailers must provide proof of the retail value of their shipments. Accurate valuation is crucial for determining eligibility for the exemption. Retailers should maintain detailed records and documentation of the retail value of their products to ensure compliance and avoid potential penalties.
2) Consignee Information
Each Section 321 shipment must include the names and addresses of the consignees. This information is essential for customs clearance and facilitates the smooth flow of goods through the supply chain. Retailers should ensure that all consignee information is accurate and complete to avoid any delays or complications during the shipping process.
3) Strategic Partner Selection
Partnering with a reliable third-party logistics provider is essential for successful Section 321 fulfillment. Retailers should choose a partner with expertise in international shipping, customs compliance, and efficient supply chain management. By selecting the right partner, retailers can navigate the complexities of Section 321 and maximize the benefits of the exemption.
The Benefits of Section 321 Shipment
Implementing Section 321 shipments can offer numerous benefits for U.S. direct-to-consumer retailers. Let’s explore some of the key advantages:
1) Cost Savings
One of the primary benefits of Section 321 is the potential for significant cost savings. By eliminating import duties and taxes for shipments with a retail value under $800, retailers can reduce their landed costs and pass on the savings to their customers. This competitive pricing can attract more buyers and increase sales volume, ultimately driving revenue growth.
2) Fast clearance and delivery times
- Orders can be picked, packed, and shipped from fulfillment centers the same day they were placed online.
- Using Section 321 reduces the amount of paperwork required to import products into the U.S. and clear them across the border. This speeds up the shipping process and eliminates the risk of delays caused by shipments being held up at customs.
3) Enhanced competitiveness
Leveraging Section 321 allows U.S. retailers to offer better shipping rates and more affordable products to their customers. By reducing international shipping costs, retailers can attract a larger customer base and expand their market reach. This increased competitiveness can help retailers thrive in a highly competitive eCommerce landscape.
4) Improved supply chain efficiency
Section 321 eliminates the need for extensive paperwork and complex customs procedures for low-value shipments. This streamlined process minimizes administrative burdens and allows retailers to focus on core business operations. By optimizing their supply chain, retailers can improve efficiency, reduce costs, and better allocate resources to drive growth.
5) Lower cost per unit:
Saving up to 20% on duties and tariffs can lower the cost per unit of a retailer’s product, which can be invested elsewhere in your company, or passed on to the consumer.
6) International expansion:
By adding inventory to fulfillment centers in Canada, you can also expand your distribution into a new market of 36+ million Canadian consumers. For U.S. brands this offers an opportunity to test international growth in a smaller but similar market. Plus, by localizing in Canada your brand can deliver your products faster to Canadians with fewer shipping costs.
7) A seamless customer experience:
- For consumers receiving packages that are shipped using Section 321, there is no difference in the experience compared to if it was shipped domestically. The packages are labelled with a U.S. shipper address, so customers are unaware the goods started their journey in Canada.
- For each package the duties are prepaid, delivery times are as expected by consumers, and returns are processed the same as if the goods came from within the United States.
- In addition, by setting up localized fulfillment hubs in Canada, you can improve the buying experience for Canadian consumers with faster delivery and lower shipping costs compared to if you were shipping from the U.S.
How Does the Section 321 Process Work?
- Retailer orders goods from outside of North America
- Metro Supply Chain receives the goods into one of our secure warehouses
- As American consumers place orders, the items are packed and labelled for U.S. domestic shipping
- Each parcel is scanned and shipped from one of our facilities near the U.S. border
- Parcels clear U.S. Customs and are delivered to a UPS facility to be processed as regular domestic shipments
- U.S. consumers receive their orders as usual
- If Canadian duties were paid, the retailer receives a refund through the Duty Drawback program
Keeping things moving
The key to getting maximum value out of Section 321 is designing and managing the backend logistics from origin to consumer. Our team works with apparel, sporting goods, housewares, consumer wellness and other large volume direct-to-consumer retailers to design fast, compliant processes for Section 321 shipping.
We leverage our facilities in the Vancouver, Toronto and Montreal areas because of their access to ports of entry and proximity to the U.S. border. When shipments arrive, we work with freight forwarders and customs brokers to quickly clear the items and receive them in our GMP licensed warehouses. In addition, we work with our customers to fully understand product origin, which by understanding duties and tariffs, can make recommendations to reduce costs and complex integrations.
The team quickly unpacks, labels and adds the items to the inventory system ready to ship. As they are received, individual orders are repacked, and a domestic U.S. label is applied for same day shipping. Packages are consolidated and shipped to the border for processing, with proper documentation ready to go. The end consumer who is receiving the package in the USA, isn’t aware its being processed in Canada, as they get a tracking number and can follow the entire delivery life cycle.
Reverse logistics are just as seamless. If a consumer chooses to return an item, they contact the retailer for a return shipping label and the package is consolidated with other returns and sent to our facility for inspection. Saleable items are returned to inventory while damaged items are disposed of responsibly or returned to the vendor.
Making U.S. cross-border shipping easier with a reliable south-bound fulfillment partner
If you’re interested in learning more about Section 321, or to download our helpful Section 321 guide, click here. If you’re ready to see how Metro Supply Chain can offer the same delivery times and costs as a US fulfillment partner leveraging the Section 321 exemption, without sacrificing the customer experience, talk to our team today. Our capabilities have helped many US and Canadian businesses expand their reach to new customers. Companies like Bench and Saysh rely on Metro Supply Chain’s cross-border e-commerce fulfillment solutions to give them a competitive advantage. We offer supply chain solutions from inbound, warehousing and inventory, to transportation and post-sale logistics.
If you source finished goods outside of North America, your product weighs less than 50lbs, and individual orders are valued at less than $US 800, you may qualify for the savings Section 321 can offer. Contact the Metro Supply Chain team today for more information.
Section 321 FAQs
1) What is Section 321 from Canada to USA?
Section 321 refers to a provision in the U.S. Customs and Border Protection regulations that allows low-value shipments (under $800) from Canada to enter the United States duty-free and without formal entry. This provision streamlines the clearance process for smaller shipments, making it easier for Canadian businesses to export goods to the U.S. market.
2) Does Canada have a Section 321?
No, Section 321 is a provision in the U.S. Customs and Border Protection regulations. It applies to shipments entering the United States from Canada, allowing for duty-free and expedited clearance of low-value shipments.
3) What is the 321 customs clearance?
321 customs clearance refers to the process of clearing shipments under Section 321 of the U.S. Customs and Border Protection regulations. This provision allows low-value shipments to enter the United States duty-free and without the need for formal entry procedures. It simplifies the clearance process for small shipments, reducing paperwork and facilitating faster delivery.
4) What is Section 321 daily restriction?
Section 321 does not have a specific daily restriction. It allows for duty-free entry of low-value shipments (under $800) from Canada to the United States. As long as the shipment meets the eligibility criteria, it can be cleared under Section 321 regardless of the number of shipments processed on a daily basis.
5) What is the difference between Section 321 and Type 86?
Section 321 and Type 86 are both provisions in the U.S. Customs and Border Protection regulations that facilitate the clearance of low-value shipments. However, there are some differences between the two. Section 321 applies to shipments from Canada and allows for duty-free entry of goods under $800. Type 86, on the other hand, applies to shipments from other countries and allows for duty-free entry of goods under $2,500. The specific requirements and procedures may vary between Section 321 and Type 86.
6) What is section 321 in customs?
Section 321 in customs refers to a provision in the U.S. Customs and Border Protection regulations. It allows for the duty-free entry of low-value shipments (under $800) from Canada to the United States. This provision simplifies the clearance process for small shipments, making it easier for Canadian businesses to export goods to the U.S. market.
7) What is Section 321 form?
There is no specific Section 321 form. The clearance of shipments under Section 321 of the U.S. Customs and Border Protection regulations does not require a separate form. Instead, the necessary information and documentation can be provided as part of the shipping manifest or electronic data interchange transmission.
8) What is Section 321 value?
Section 321 refers to a provision in the U.S. Customs and Border Protection regulations that allows for duty-free entry of low-value shipments (under $800) from Canada to the United States. The value of the shipment should not exceed $800 to be eligible for clearance under Section 321.
9)What is Section 321 exemption?
Section 321 provides an exemption from duty and formal entry requirements for low-value shipments (under $800) entering the United States from Canada. This exemption streamlines the clearance process for small shipments, reducing paperwork and facilitating faster delivery.
10) What is a Section 321 shipment?
A Section 321 shipment refers to a low-value shipment (under $800) from Canada to the United States that qualifies for duty-free and expedited clearance under Section 321 of the U.S. Customs and Border Protection regulations. This provision simplifies the entry process for small shipments, making it easier for Canadian businesses to export goods to the U.S. market.
11) What is Section 321 US ecommerce?
Section 321 US ecommerce refers to the use of Section 321 of the U.S. Customs and Border Protection regulations in the context of cross-border ecommerce between the United States and Canada. It allows for duty-free and expedited clearance of low-value shipments (under $800) from Canada to the United States, facilitating the growth of ecommerce trade between the two countries.
12) What is Section 321 fulfillment?
Section 321 fulfillment refers to the process of fulfilling orders that qualify for duty-free and expedited clearance under Section 321 of the U.S. Customs and Border Protection regulations. It involves streamlining the order fulfillment process to ensure compliance with the requirements and regulations of Section 321, enabling faster and more efficient delivery of low-value shipments from Canada to the United States.
Disclaimer: This page is solely for informational purposes and does not constitute legal advice. Programs are regulated and approved by the Canada Border Services Agency (CBSA) and U.S. Customs and Border Protection (CBP).
