Consultant Insight: Cross-border e-commerce sparks interest in customs expertise

As cross-border e-commerce growth continues, the logistics behind it have become a favorite target for companies expanding via mergers and acquisitions. Logistics companies with strong customs capabilities, in particular, make for attractive M&A targets when government regulatory requirements can hold up shipments for days, or even weeks. [caption id="attachment_69752" align="alignright" width="298"] Cathy Roberson, Cargo Facts Consulting senior consultant and Air Cargo World columnist[/caption] Pre-pandemic, cross-border e-commerce was growing at double-digits and represented 20% of global e-commerce spending, according to the consulting firm Accenture. Growth accelerated further during the pandemic; according to Global-e, a European vendor that helps web merchants sell online globally, cross-border online sales increased by 21% between January and June 2020, compared with the same period in 2019. The International Post Corporation, a cooperative association of 25 member postal operators in the Asia Pacific, Europe and North America, identified the top three cross-border countries as China, the U.S. and Germany in its latest report, “ Cross-Border E-Commerce Shopper Survey 2020 .” The U.S. Customs and Border Protection (CBP) processed more than 32.8 million entries valued at $2.4 trillion during the fiscal year 2020, the period ending Sept. 30, 2020. The government agency noted that, thanks to e-commerce, there was a 28% increase in low-value shipments and a 219% increase in air cargo. For the fiscal year 2020, total intellectual property rights (IPR) seizures declined 4.1% from the previous fiscal year to 26,490 shipments. However, total shipments seized due to IPR — as well as for import safety and other trade violation seizures — increased 17.9% to 73,708 shipments. The intricacies surrounding customs have become more pronounced thanks to e-commerce. Because of that, there is a greater need for customs expertise. As a result of this growth, the CBP has undertaken an e-commerce data pilot and compliance guide, to speed up the clearance of e-commerce goods; the agency is also working to identify and reduce counterfeits. Customs brokers are even taking action to improve processes. Alba Wheels Up, a provider of customs brokerage, freight forwarding and other logistics services, announced March 5 it would partner with Southfield Capital “to expand its touch and capabilities to the trade community.” The partnership will provide Alba with the capital and resources needed to grow. Noted for its customs expertise, Alba’s executive team maintains close ties with the CBP, with Executive Vice President Vince Iacopella having served on the Advisory Committee on Commercial Operations of CBP. Salvatore Stile, co-owner of Alba Wheels Up, noted the company saw higher demand for its core freight and brokerage service as well as its recently launched direct-to-consumer (DTC) program in 2020. Alba plans to invest more into its DTC program to reduce transit times, including for ocean freight. At the same time, delivery windows are likely to expand for some e-commerce purchases. Despite the dramatic increase in air cargo the CBP recorded for the fiscal year 2020, Stile expects e-commerce ocean freight will increase for both low-end and high-end purchases as customers become more willing to wait longer for big-ticket items, such as e-bikes and customized products. While most of the e-commerce growth focus has been on business-to-consumer (B2C) shipments, business-to-business (B2B) is also growing rapidly, particularly as more people work from home. Market research firm Digital Commerce 360 noted that B2B sales increased 10.9% to $9.0 trillion in 2019, up from $8.1 trillion in 2018. As both B2C and B2B e-commerce grow, the globalization of supply chains will make the need for customs expertise even more critical. The Alba and Southfield Capital partnership is unlikely to be the last such deal in the space.

Consultant Insight: Cross-border e-commerce sparks interest in customs expertise

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