Cross-border trucks risk stepped-up CBP penalties

The explosion of cross-border e-commerce in the United States is bringing with it increased scrutiny and enforcement of electronic shipment filing that’s leaving truck drivers more exposed to monetary fines.

On January 1, U.S. Customs and Border Protection (CBP) began enforcing a regulation requiring carriers to file an advance electronic manifest for Section 321 merchandise – goods valued at $800 or less that are allowed to enter the U.S. duty-free and tax-free.

In an alert published at the end of last year, CBP noted that a technical glitch in its Automated Commercial Environment (ACE) system was limiting electronic manifest filing for Section 321 merchandise to shipments of 5,000 or less when transported by truck. CBP said it would not pursue penalties until ACE technical difficulties were fixed. However, carriers with 5,000 shipments or less filing manually could still be penalized, CBP stated, with fines of $5,000 for the first offense and $10,000 for subsequent offenses.

“Because most trucking companies along on the southern border rely on a U.S. or Mexican broker to file their manifests, it will be the trucker, not the broker, that will be fined for not filing electronically,” Tom Gould, senior director for customs and international trade at the law firm of Sandler, Travis & Rosenberg, told FreightWaves.

“If you’re a small trucking company moving from Tijuana to San Diego and back and spending most of your time waiting in line at customs, getting hit with a $5,000 penalty can eat up a week’s worth of income or more,” Gould said. “This is CBP’s way of scaring people to ‘do it our way or we’ll hit you hard’.”

Gould also noted that if such penalties either put smaller trucking companies out of business or cause them to abandon the cross-border market, the result could mean less truck capacity along the southern border, making it more challenging and potentially more expensive for importers.

While some cross-border U.S.-Mexico freight are long-haul moves, the majority remains in the border commercial zone, with trailers brought to the border in Mexican trucks and then transferred to a U.S.-based carrier. The number of incoming cross-border trucks from Mexico grew 4 percent to 6.04 million crossings in 2017, according to the latest government data.

Before March 10, 2016, the “de minimis” value of duty-free good was set at $200, but was raised to $800 to make it faster and less expensive for the government to clear imports as e-commerce shipments grew. In addition to not exceeding $800 in value, goods cannot be split among several lots under a single order or contract, and must be imported into the U.S. by one person per day.