Latest / Outside the Box with Asendia USA: The International e-Commerce Podcast / 34: Cross-Border Compliance Changes: What e-Commerce Shippers Need to Know

Transcript

34: Cross-Border Compliance Changes: What e-Commerce Shippers Need to Know · Outside the Box with Asendia USA: The International e-Commerce Podcast

• 0:00
  I mean I also think too as well at a certain point in the EU I think DDU or duties, taxes unpaid is dead.
• 0:06
  I do believe that DDP will be the only method in the next couple of years.
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• 0:27
  Go Outside the Box with Asendia USA.
• 0:30
  Welcome back to Outside th Box with Asendia USA podcast.
• 0:34
  I am Nick Agnetti, one of your co hosts with my other co hosts Jason Rowland.
• 0:39
  Welcome back everyone.
• 0:40
  Good to see you again.
• 0:41
  We are coming to you live from parcel form 2026 in Orlando, Florida.
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  You can hear some background noise, not as much as other episodes, but bear with us with that.
• 0:51
  We've got a very special guest today, a repeat guest, long standing, Mike Lorentzen, Senior Director of Enterprise Sales at Asendia to talk about compliance changes related to Canada and the E.U.
• 1:04
  Yeah, absolutely.
• 1:05
  Well, excited to be back.
• 1:06
  Yeah, yeah, welcome back.
• 1:07
  It's great to have you back.
• 1:09
  Diving in a little bit.
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  EU made a bunch of changes this year.
• 1:13
  26, it was a big year for the EU a lot of them pretty significant changes to low value imports and how we they're treated.
• 1:20
  Give us some background what happened in 2026, what changed?
• 1:24
  Yeah, so as of July 1, an IoSS number is now required.
• 1:29
  So for anything shipments under 100 has to require an IoSS number when it's going DDP, when it's DDU, it obviously doesn't need the IoSS number.
• 1:39
  In the past customers tried to circumnavigate that by sending a DDU parcel and then utilizing an IOSS that's no longer allowed.
• 1:48
  We can't accept those anymore.
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  So it needs to be a DDP shipment and IOSS if it wants to go and get the IOSS collected from the consumer.
• 1:58
  So what in a case where a customer then doesn't have access to an ioss right.
• 2:03
  Does do we have any solutions that help them out with them?
• 2:07
  You know we have our partners open border that obviously we can, you know, introduce you to and they'll be able to actually help you access an I.O.S.
• 2:15
  S number.
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  We also are coming up with some other solutions to be determined, you know, to also help our shippers out, you know, so everyone stays compliant or we also have a notion where we can use one of our partner
• 2:28
  carriers, where we can upgrade your service through our elite service and we can also send a DDP that way.
• 2:34
  What about.
• 2:35
  Okay, so.
• 2:36
  So for, for listeners and viewers, we're going to break it down just a second from what Mike was talking about.
• 2:41
  So, so let's talk about ddu, DDP and ioss.
• 2:44
  So DDU delivered duty, unpaid, DDP delivered duty, prepaid or paid.
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  And IOSS is import one stop shop.
• 2:53
  So we've talked about that for years now on the podcast because it has been in play.
• 2:59
  IOSS just wasn't required previously as opposed to now.
• 3:04
  If you're shipping DDP or delivery duty paid, as Mike mentioned, it is a requirement.
• 3:08
  And that's really applicable for those shipments that are under €150 with the de minimis starting now at zero.
• 3:14
  Right, yes, you mentioned open border.
• 3:18
  What about Zonos?
• 3:19
  Yes, we do have a partner with Zonos too as well.
• 3:22
  We can do the same thing where we can supply an IOSS number for a small fee per shipment.
• 3:28
  That's great because then the difference maker there is that some companies don't either have access, don't qualify, they haven't registered yet.
• 3:35
  So having a solution that lets them use an already established IOSS to get their material in can make a big difference to some customers.
• 3:43
  I mean, and the thing too as well is right now is how we're handling those parcels is we're collecting them and we're reaching back out to the client.
• 3:49
  Now it's a very lengthy process where we have to say either do you want to upgrade it or do you want to utilize one of these other services?
• 3:56
  Now I've seen a lot of customers, especially you know, the three PLs approaching their customers saying, hey, we got to get you an iOS or we have to upgrade it.
• 4:03
  And everyone's been doing a really great job of really, you know, being collaborative and being compliant with and it's been a huge help for our operators.
• 4:11
  And I can definitely say we've been able to move more parcels DDP over the last couple of months than probably we've had in the past.
• 4:19
  We've converted a lot of DDU business to ddp and I think that's going to continue to the end of the year, especially as more and more countries follow suit with compliancy.
• 4:27
  I mean, I also think too as well, at a certain point in the eu, I think DDU or duties, Taxes unpaid, is dead.
• 4:33
  I do believe that DDP will be the only method in the next couple of years.
• 4:38
  Yeah, let's speak to that a little bit I mean, we know for sure Germany's already put it out there that DDU is, is done.
• 4:44
  What's the date on that?
• 4:45
  Does anybody know that it's October?
• 4:47
  I thought it was November.
• 4:48
  I thought it was November two as well.
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  November first.
• 4:51
  Yeah.
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  Okay, so we'll have to confirm that for everybody because that's relatively new, but that's very important.
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  Germany in the terms of the EU you look at outside of Europe as a continent.
• 5:01
  The UK is number one when it comes to size of E commerce market in Europe.
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  But if you look at the EU Germany's number one in terms of the E commerce just gdp, if you will.
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  And so that's significant for those that are shipping DDU shipments.
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  Still to this day, without an IOSS going into Germany, some significant changes are going to have to be made.
• 5:24
  So have to work through a tax intermediary to get an IOSS and or depend upon other partners like we mentioned, like Zonos Open Border to make that happen.
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  What about.
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  Let's talk about responsibility in terms of the.
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  Actually, let's break it down further.
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  What.
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  What is in place now in terms of the duty, the 3 duty, you know, per HS code.
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  Let's talk a little bit about that.
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  That was put into place and then who's responsible for paying that?
• 5:52
  Yeah, so the seller is going to be responsible for that.
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  And that's where the Europe really wanted to move to, was having more seller responsibility.
• 5:58
  I think we've seen it with some other countries in the past that has been more the preferred method of ddp.
• 6:04
  I think EU is trying to do the same thing too as well and not to get political too as well.
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  I think it obviously probably is also facing the, you know, all the different, you know, tariffs and trade compliances that it's going on across the world.
• 6:17
  I'm sure that has something to do with it, even though, you know, it hasn't came out and said anything regarding that.
• 6:22
  But I do believe that, you know, that's part of all this whole process.
• 6:26
  Yeah.
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  And I think the IOSS changes that we've seen really are only a part of the overall scheme change that's going on right now.
• 6:34
  Right.
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  So iOS S is part of it.
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  It started with ICS 2 a couple of years ago where they wanted to get the data before the item ever leaves your store to get.
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  The IOSS obviously is VAT connected and it's all kind of gearing towards this big murky July 2028 endgame where it's all going to culminate in this EU customs data hub.
• 6:59
  Yep.
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  Right.
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  Where all of this is, all these three things are going to come together.
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  The IOSS, the VAT and ICS 2 were all going to kind of culminate in a final scheme, which is this data hub that EU was putting together.
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  And this change in July was just the next step toward that inevitable end.
• 7:16
  Interesting.
• 7:17
  So, okay, so what about if you're buying something off of Amazon?
• 7:20
  EU what?
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  Or what if you're selling through that channel?
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  So, so Amazon has its own IOSS number.
• 7:27
  So obviously you would be able to submit that through the data that we would receive and then we would upload that to our broker and their final model transportation company and we'd be able to get that clear.
• 7:38
  We've done a really good job of some of the software that we've kind of put in place to stop a lot of parcels that don't have an IOSS number.
• 7:45
  Yeah.
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  And every IOSS number should start with IM and that's how, you know, you know how it relates to this service.
• 7:52
  Okay, got it.
• 7:53
  All right, good.
• 7:56
  So I think as Europe continues to fundamentally kind of change how we look at low value parcels, are there, is this really about them getting a couple extra euros on each transaction or is there like more going on
• 8:11
  here for the, for the European Union?
• 8:14
  Is this, obviously there's the larger end game, but is it just about getting a couple extra euros on each transaction or is it about more?
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  I think it's about more.
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  I think it's about obviously steadying the ship when it comes to compliance and everything like that.
• 8:28
  I think they don't want the parcels sneaking through of high value or the low value items, I should say, that aren't collecting proper fees.
• 8:37
  I think in years past they had a certain threshold where under 150 with an IOSS they first were going to come out and say, hey, we're not going to have, you know, certain fees related to that.
• 8:47
  Now they said, you know what, let's kind of wipe that out and let's make sure Everybody has an I.O.S.
• 8:51
  S.
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  And we start from $1.
• 8:54
  Okay.
• 8:55
  Yeah.
• 8:56
  So, so then I guess my next kind of question is as we shift away from EU into countries that are a little closer to home, more like Canada, where we have the great over the border flow between U.S.
• 9:11
  and Canada.
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  It's one of obviously our closest neighborhood.
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  What are we seeing northbound?
• 9:17
  Yeah.
• 9:18
  So, you know, at the end of the month you're going to start to see on specific items, you know, a little bit more related to, you know, industry, manufacturing, type Goods and everything like that.
• 9:27
  But you're going to see either a 15, 25 or a 50%, you know, surtax that's going to be billed back through the duties to specific items.
• 9:37
  Now, I know one item for sure which is, you know, fragrances and some of the cosmetics is definitely being hit more towards that 50% mark.
• 9:45
  So we've obviously acknowledged that with a lot of our clients.
• 9:48
  We sent out messages, started to prepare for them, but I don't think that people are ever fully prepared until they finally see the first invoice.
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  I know, yeah, yeah.
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  I mean, you and I probably have customers directly impacted by this.
• 9:59
  Oh, yeah, for sure.
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  And that'll go back to.
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  You had mentioned open border.
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  Yes.
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  That's a great partner to help when it comes to that checkout of making sure that that surtax is included in the checkout.
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  Absolutely.
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  It's not a total loss.
• 10:13
  Right.
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  Because it's a significant amount.
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  What is, I guess, are there other references or something that you would want to give to a shipper or seller when it comes to managing, you know, the HS codes for that, you know, for the Surtex, all that
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  stuff?
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  Yeah.
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  I mean, listen, you know, feel free to reach out to, you know, any of the team at Asendia.
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  We're more than willing to help.
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  You know, we can vet through some of those HS codes and help you kind of relay and say, hey, is this going to be a 15, 25, 50 or is this maybe not even part of the threshold?
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  So I think we'll be able to help.
• 10:45
  Really.
• 10:46
  Well, I think we've kind of got this one down a little bit.
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  The issue that comes about is that, you know, I think last year we had the same thing.
• 10:52
  Surtax came and went.
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  I think it lasted for, you know, not too long.
• 10:55
  And I have a feeling it's going to wind up being the same at some point.
• 10:59
  It's just frustrating because we're going into peak season.
• 11:01
  People are preparing for, you know, orders and whatnot.
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  And I think this is going to throw a lot of shippers off and, you know, even the consumers themselves, when they go to buy and they go to check out.
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  Yeah, yeah, yeah.
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  It leads to a lot of that, you know, card abandonment.
• 11:14
  Right.
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  As soon as they get through, they see the fees and then they.
• 11:17
  They choose to spend their money elsewhere.
• 11:19
  Yeah, I, I'm not sure how big the effect will be, but it will have some tangible effect on Pete this year.
• 11:24
  I, again, it's going to be very item specific.
• 11:27
  So I know personally from let's say like a beard or hair care product that's a 50% surtax.
• 11:34
  Yeah.
• 11:35
  I don't know the exact HS code offhand, but it's a significant uptick in costs associated with everything that's with those products.
• 11:44
  So it is just being consultative and making sure that you're equipping those customers or shippers with that information.
• 11:53
  So.
• 11:53
  Good point too, Mike.
• 11:55
  So for those listening, watching whenever this comes out, it's good to whether you are a partner of Asendia's or not, it's good to be in touch with us anyway to sign up for our worldwide hotspots to make sure
• 12:09
  that that you're informed as to changes that are going on in the world, whether that's eu, Canada, you name it.
• 12:14
  They send out communications all the time and that will keep you informed and kind of equip you with the info you need so you're not behind when these things take place.
• 12:21
  Yeah.
• 12:23
  And the one thing about this certax too, in Canada, so everyone knows its country of origin is the US It's US made good.
• 12:30
  Very important.
• 12:31
  Just so everybody knows, this is not related to any other countries.
• 12:35
  We're specifically talking about country of origin, US goods that are going up to Canada.
• 12:41
  Jason, you have anything else you want to talk to Mike about?
• 12:43
  No.
• 12:43
  Mike, you are great.
• 12:44
  You're a great guest as always.
• 12:45
  Thanks for joining us.
• 12:46
  Thanks for all the info and you do a great job.
• 12:49
  Keep it up.
• 12:49
  All right.
• 12:50
  Thanks, Mike.
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  Appreciate it.
• 12:51
  Yeah, thanks for being here.
• 12:52
  Share, subscribe and download our podcast to learn more about today's topic or for a free consultation, email us at either ecommerce.usa@asendia.com Come back for more insightful discussions on E commerce, shipping to Canada, Mexico and worldwide.