How tariffs have made clearing goods for customs a headache for UPS, customers
Seth Poston’s company makes outdoor and hunting products including lightweight archery quivers. They’re popular with bow hunters and generally sell well during Black Friday and Cyber Monday.
They’re also not something you’d expect to get caught up in a global trade war.
Even though Poston makes the $180 carbon fiber quivers in the U.S., they include parts produced overseas.
And that’s where he hit a snag last month, when packages got stuck in shipping purgatory upon their arrival at a major UPS hub.
The tariff landscape has been changing almost weekly in the last six months, and global shippers like Sandy Springs-based UPS, which calculate customs duties and confirm documentation for government officials, have been left scrambling to adjust in real time.
Plus, when the U.S. government ended a longstanding customs exemption for packages worth less than $800, the company’s customs volume increased tenfold, UPS CEO Carol Tomé told investors last week. That exemption, known as de minimis, is how goods for many consumer and small business purchases previously entered the U.S. with little hassle.
Even with the new customs demands, “We were able to clear 90% of those packages without any manual intervention, which is great,” she said.
“But that 10% needed some help. And where they needed some help, they really needed some help.”
The company says its prescient investments in technology and artificial intelligence have enabled it to handle what it has.
But given UPS’ size — it’s the world’s largest package delivery company with about 16 million daily packages — a small percent can mean a lot of unhappy customers, Chief Financial Officer Brian Dykes told the The Atlanta Journal-Constitution.
“On the air side we’re auto clearing 97%. On the ground side we’re auto clearing 93%. Unfortunately, that means that we’ve got thousands of packages a day that require follow up with customers,” he said.
An hour and a half away
Poston, president of Burlington, Kentucky-based Sirius Outdoor Group, was one such customer.
He told the AJC that his packages arrived on time in mid-September to UPS’ Louisville “Worldport” facility, just an hour and a half away.
But then, “we noticed that it just keeps updating every day, saying, ‘Tomorrow is going to be your estimated delivery date.’”
Day after day, the tracker didn’t budge.
Through his UPS account representative, Poston said he eventually learned that the issue was that the product contained aluminum, which President Donald Trump has hit with hefty tariffs.
Even though Poston had prepaid tariffs on the packages, he was asked to fill out an “anti-dumping” form about the aluminum contents, which he said he did immediately.
“And then all of a sudden, (our account representative) gets a notification that three of the four packages are being destroyed,” Poston said. They were worth about $6,000.
“We are likely going to lose a very big customer over this. And now we’re also not going to make Black Friday/Cyber Monday with this product,” he said.
To this day, Poston doesn’t know what happened to the fourth package, and one package’s tracking still says “out for delivery.”
Meanwhile, international shipments via FedEx and DHL arrived successfully during the same time period, he said.
In a statement, UPS spokesperson Tash Amadi told the AJC that because of changes in import regulations, “we are seeing many packages that are unable to clear customs due to missing or incomplete information about the shipment required for customs clearance.”
After three attempted contacts, Amadi said it can either be returned to the original shipper or “if the customer does not respond and the package cannot be cleared for delivery, it is considered abandoned, and we dispose of it in compliance with U.S. customs regulations.”
‘Not easy’
This complicated tariff landscape has especially affected a group that UPS has made a strategic priority: small- and medium-sized businesses.
“This tariff and de minimis landscape has gotten so complex that it has gotten really, really difficult, particularly for consumer-to-consumer shippers and (small- and medium-sized businesses) to navigate,” Dykes said.
Tomé told investors the company is watching this latter group “very closely.”
“Some are doing just fine and managing through the changes in trade policy, and some of them, candidly, are challenged,” she said.
In the third quarter alone she said UPS offered 12 trade webinars to more than 8,300 participants and had conversations with 61,000 customers. It has a whole webpage for shippers dedicated to the topic.
In another example of economic whipsawing caused by Trump’s trade policies, a much anticipated U.S.-China trade deal will have a new host of implications for shippers.
Satish Jindel, president of shipment technology firm ShipMatrix, said it has not been easy for companies like UPS to keep up this trade environment.
“It’s easy for the person in Washington to sign an executive order, but that triggers a lot of work for everyone who has to comply with it, and that takes days and weeks to incorporate,” he said.
“There are so many things that are intertwined with your software that you make a change in one place, it triggers changes in other places, and it can put things out of sync.”
But for people like Suzanne Kindler, these changes are existentially threatening her livelihood, and she is at her wit’s end with UPS over it.
Kindler, an American living in Rothenburg, Germany, sells hand-painted wooden goods like Christmas ornaments on Etsy.
In September, two packages full of work got caught up in customs en route to the U.S.
She said UPS asked her to fill out a pesticide form because the products were made of wood, but she was never able to get a copy of the form. Hold times were hourslong.
“I can’t even begin to count the hours I’ve spent on phone calls, emails, research and paperwork to get one package delivered,” she said in an interview conducted over email.
She said she still doesn’t know where the shipments are. She was told one package had been delivered, but it hadn’t. She filed a lost claim but was denied.
She’s worried Etsy will withdraw the cost of the missing product from her bank account.
“I’m honestly afraid to send anything else to the U.S.,” she said, though the country has made up 80% of her sales.
“We will soon be out of business.”
‘An opportunity for us’
Dykes said the company is “maniacal about trying to serve our customers” and understands that consumers blame UPS when things go wrong.
“We are very sympathetic. We’re deploying AI as fast as we can to try to keep up with the changes so we can improve that auto clear rate to as high as we can get it,” he said.
However, he said, “While it’s hugely disruptive to global trade, it’s actually an opportunity for us.”
For those they are able to help navigate tariffs and de minimis issues, “it creates a stickiness in the customer relationship that we think is tremendously valuable,” he said.
Plus, the company has also seen new volume growth in international trade lanes including between India to Europe and South Asia to the Americas.
But for Poston, the Kentucky small outdoors business owner, the damage has been done.
“Between phone calls and emails and texts with the account rep, they’re sick of us. Frankly, I’m sick of them,” he said.
He has moved almost all of his shipping business over to FedEx.
About the Author
As a business reporter, Emma Hurt leads coverage of the Atlanta airport, Delta Air Lines, UPS, Norfolk Southern and other travel and logistics companies. Prior to the Atlanta Journal-Constitution she worked as an editor and Atlanta reporter for Axios, a politics reporter for WABE News and a business reporter for the Arkansas Democrat-Gazette.
