Seko Logistics is dropping its case against the United States, months after the third-party logistics (3PL) services provider had been briefly banned from two import programs by U.S. Customs and Border Protection (CBP).
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The logistics provider filed for voluntary dismissal with the U.S. Court of International Trade on Tuesday, three months after the company filed a complaint with the court on the grounds that details of its alleged import violations were never provided.
In late May, Seko Logistics was suspended from participating in the Entry Type 86 and Customs-Trade Partnership Against Terrorism (C-TPAT) imports programs.
Just days later, after Seko threatened legal action, the CBP conditionally reinstated the company into both programs. But given the vagueness related to specifics of the violations, as well as the lack of clarity into a future remediation plan, Seko filed the complaint on June 1, seeking out an immediate unconditional reinstatement and a detailed audit report on the Entry Type 86 violations.
The CBP issued a letter to Seko at the behest of the court on June 11, saying that the suspension was based on an analysis of two judgment samples of T86 entries, which each consisted of 10 individual entries. The analysis also included references to two separately noted shipments.
“While CBP cited specific entries for which T86 filing violations were alleged in the Violations Letter, CBP failed to identify any violations of customs laws as a result of Seko’s alleged noncompliance,” Seko said in an August filing. “The Violations Letter also omits how Seko failed to exercise reasonable care.”
Seko had applied for a preliminary injunction against its removal from the programs in June. As an alternative, the firm requested a stay in the lawsuit to learn how CBP attempts to hold Seko liable for alleged third-party fraud since the agency identified specific entries. But a month later, the court denied the company’s plea, finding that it already received all the relief it sought when CBP conditionally reinstated Seko.
The agency requested, and received, a remedial action plan from Seko on July 24 that would correct the violations, which it denied.
In the wake of the denial, the plaintiff claimed that it continues “daily to suffer the irreparable financial and reputational harm associated with Defendant’s initial suspension” of the company from both the Entry Type 86 and C-TPAT programs. The company also said that being required to come up with a remedial plan further damages Seko’s reputation, in that “it is being held accountable for issues that were not caused by Seko.”
Seko did not give a statement why it decided to dismiss the case, but it occurred after the U.S. itself moved for dismissal. Like the U.S. Court of International Trade, the defendant claimed that Seko does not have a cause of action since it has already been conditionally reinstated into the programs.
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Sourcing Journal reached out to Seko Logistics.
Both import programs in question are considered “a necessity for customs brokers to stay competitive in the industry” as more clients expect the service they provide, Seko said in the June complaint.
Seko was one of multiple customs brokerages suspended from the Entry Type 86 program, which is designed specifically to expedite packages imported into the U.S. valued at less than the $800 de minimis threshold . The other brokerages have never been made public.
Shein, a Seko customer, leverages the de minimis threshold to ship cargo into the U.S., as well as chief rival Temu. A Loadstar report covering the initial crackdown in May said a CBP seizure of goods from Shein occurred close to Seko’s suspension.
The de minimis provision has driven massive business in 2024, whether more e-commerce retailers are looking to get around taxes or simply want to fly goods into the U.S. directly to consumers.
Through the third quarter, the CBP now estimates that 1 billion de minimis-eligible packages, tracked by bills of lading, entered the U.S. That matches the roughly 1 billion that entered American borders throughout all of 2023.
The overwhelming number over these products come into the country via air, to the tune of 918 million in the first nine months of the year, the CBP said. This marks an increase from the 2023 annual numbers of 880.2 million sent via air.
Total de minimis value of the products shipped to the U.S. is $47.8 billion so far in 2024, nearing the full-year 2023 total of $54.5 billion.
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