ShipBob is getting in on the duty-free de minimis craze.
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Three of the supply chain and fulfillment platform’s fulfillment centers in Toronto, Canada and another in Tijuana, Mexico are now fulfilling Section 321-compliant orders bound for customers in the U.S.
The hotly contested provision, considered a “loophole” in American trade laws by some lawmakers, allows foreign shipments worth $800 or less into the country tax-free.
In launching the offering, ShipBob aims to help customers save money on duty and tariff fees, and reduce the paperwork required to import goods into the U.S., ultimately speeding up delivery times.
“Most of what we do to expand our network comes from customer needs, both what we hear from them directly and what we see in our data, and this is no different,” said Divey Gulati, chief operating officer of ShipBob. “Across our fulfillment network in North America, we have large operations in Southern California, as well as the Northeast U.S. and Canada, so the decision to expand to and unlock Section 321 in Mexico and Canada was a great fit.”
ShipBob’s technology automatically allocates Section 321-eligible orders to a fulfillment center in Canada or Mexico and generates a fully compliant “eManifest” for a streamlined customs clearance experience.
From there, ShipBob coordinates transportation to the nearest of its 30+ U.S. hubs, where the parcel is sent into their carrier network for a delivery experience that the company says is on par with standard U.S.-based fulfillment.
According to the company, the section 321-eligible fulfillment centers function seamlessly with the rest of the ShipBob network, which is powered by four primary hubs in Chicago, Moreno Valley, Calif., Kutztown, Pa. and Grapevine, Texas. When an order is placed, ShipBob’s algorithm automatically selects the warehouse and carrier that will give the quickest turnaround based on the company’s “demand profile,” which identifies where individual products are selling best.
The de minimis provision has gotten plenty of publicity in the wake of the popularity of Shein and Temu , both of which have heavily leveraged the trade exception to ship more packages into the U.S.
But Gulati cautioned brands on jumping in head first into the de minimis ecosystem, saying “It’s not for everyone.”
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“It’s not just about making Chinese-origin products cheaper. There is often significant benefit to having a stopover in our NAFTA partner countries that is outside of the duty benefit,” Gulati told Sourcing Journal. “Caution is important and you should not compromise on compliance around product regulations. You also need to have extra safeguards to ensure you aren’t shipping over the de minimis threshold.”
Despite some of the negative connotations often tied with Section 321 , the provision also is designed to help shippers offer more consumer-facing benefits. Savings from de minimis exceptions could be passed on to consumers, its proponents argue, making foreign products more accessible. This inherently expands the variety of products offered by a retailer. Plus, consumers can get online orders delivered faster without the barriers associated with the customs process.
The supply chain firm has fulfilled domestic and international orders in Canada since 2020, with the Toronto-based fulfillment centers able to ship to the U.S. East Coast in an average transit time of two-to-three days.
According to Gulati, ShipBob will continue to expand the section 321-eligibility “as demand dictates across our Canadian network,” meaning it could potentially be expanded to its Vancouver and Woodbridge warehouses.
“One great thing about Canada is that it serves domestic Canada very well—in fact, for ShipBob it was built to do that originally. The 321 entry type is just one extra outbound lane—almost like a carrier—for a merchant. So there is great opportunity to grow within a large e-commerce market while simultaneously capturing 321 entry benefits.”
The Canada warehouses are non-bonded, which means brands pay Canadian duties upon entry into Canada, but then file a duty drawback to recoup costs via the company’s preferred partner, Canusa Logistics.
ShipBob’s bonded warehouse in Mexico is strategically located to easily and cost-effectively import products into any Southern California port and is fully integrated with bonded transportation, covering shipping from port to porch.
“We are excited for this next step in expanding our global footprint by offering customized solutions for large, growing merchants,” said Gulati in a statement. “Because of ShipBob’s full-stack approach and deep carrier partnerships in these geographies, merchants get a very streamlined experience without having to navigate all the different logistical pieces coming together, while reducing customs delays to delight customers.”
Like the entire ShipBob fulfillment network, which stretches to more than 50 warehouses worldwide, the Canada and Mexico fulfillment centers run on the company’s proprietary warehouse management system and service level agreements.
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