US shipping without disruptions: Ask us anything

Hakan Steele, Starshipit: I'm personally very excited to be presenting this webinar, and in fact Starshipit's first Ask us Anything session. My name is Hakan Steele, I'm Partner Manager here at Starshipit, and I'll be running today's webinar. This is an Ask us Anything session, so anything specifically about US shipping is welcome. Please use the Q&A feature for any questions, and send in every question you have. We may not get to all the live questions during the session, but we'll use them to follow up and shape future content.

I'll start with a disclaimer: this webinar is for informational purposes only, and it is not tax advice. We do have qualified people here, and we're lucky to have some of the most respected people in the industry joining us. We'll start with a quick round of introductions, then each of us will answer one of the most popular questions we've been asked over the last month or two before we move into submitted questions.

I'll kick off. I've been at Starshipit for more than nine years and have a particular interest in international shipping. I've also spent hundreds of hours in fulfilment centres and warehouses, working with customers on shipping strategy and implementations. Justin Irvine, I'll throw to you.

Justin Irvine, The Aggregate Co.: Thank you very much. For everyone who hasn't worked with me before or isn't aware of The Aggregate Co., we're a consultancy and advisory firm that gets into the weeds with mid-market through enterprise brands, retailers and eCommerce merchants to help them navigate domestic and international supply chain, parcel and shipping challenges.

We work with a lot of high-growth clients we've helped take around the world, and we manage around one and a half billion dollars in Australian GMV across a very short two and a half years. I'm excited to be on this panel with a bunch of absolute eCommerce legends, and I'm looking forward to sharing advice, hearing the questions and hopefully helping people out today.

Hakan Steele, Starshipit: Nice one. Thanks, Justin. Morgan Hardy, over to you.

Morgan Hardy, Indirect Tax Solutions: Cheers, Hakan, and thanks to everyone for joining us. I'm Morgan Hardy. I founded Indirect Tax Solutions about five years ago, and I've been in international tax for about 30 years, focusing on income tax and indirect taxes, including GST, VAT and sales taxes.

I started Indirect Tax Solutions just after the COVID pandemic because indirect taxes became much more relevant for brands selling internationally, whether that's US sales tax after the Wayfair decision or changes in the UK and EU requiring point-of-sale collection. I assist brands in Australia, New Zealand and the US, particularly on the international side, helping them understand their tax obligations in destination markets so they're not surprised, and then helping them optimise their position and avoid big problems.

Waseem Abdoolla, Zonos: Hi everyone, thank you for joining. I'm Waseem from Zonos. I started about four years ago with Zonos in the office we created here on the Gold Coast. I began as a customer success manager, onboarding customers and working on retention, then about a year and a half ago moved into partnerships for Zonos Asia Pacific.

That means helping label platforms like Starshipit, carriers and postal operators. We're carrier agnostic, and all the major carriers and postal operators in Asia use Zonos. That's a little bit about me and Zonos.

Hakan Steele, Starshipit: Thanks, everyone. Let's get into it. Each of us will deliver and answer one of the most popular questions from the last few weeks. I'll kick off because I can't contain my excitement any longer.

One of the most common questions on registration, and over the last few weeks, is: is Starshipit going to integrate with Zonos? The short answer is yes, but let me expand on that. We've been working alongside Zonos for years with the commercial carriers. Zonos customers have been using Starshipit, and that's been great. However, we're on the brink of releasing our own end-to-end landed-cost solution.

This is really exciting and has been in heavy demand. Our product team has listened and has been working hard on it. We're going to release it next week. It will enable you to offer landed cost at checkout. Our existing eCommerce plugins and extensions already let you show shipping options with a dynamic shipping price, and we're adding a landed-cost calculator that includes duties and taxes at checkout.

There is a lot of debate around when to show duties and taxes, or whether to roll them into your product price. As with many things in Starshipit, it is configurable. You'll be able to roll duties into your product price, and Starshipit will calculate the duties included there, remove that portion from the sale price and declare the right value on the commercial invoice.

Starshipit will also ensure the correct remittance to Customs and Border Protection. You won't need a Zonos account in this scenario. We'll manage it on our end, with one Starshipit account and one bill from us. It will be seamless and have guaranteed accuracy, with discrepancies handled if an order arrives at customs. At the end, you'll be able to scan a QR code to register your interest and get up and running.

Justin Irvine, The Aggregate Co.: With the new policies in effect, the shipping landscape has changed a lot. For everyone who was shipping to the States, it was a watershed moment. You had basically been able to ship to the States like it was another part of Australia, with very little compliance or regulatory requirement compared with the UK or EU.

The US has now taken the stance that there is no longer free access in the way the world had become used to. You now need a level of regulatory compliance very similar to the UK and EU. If you want to frame it up, the US has caught on to something other markets have been doing for some time. We need to structure businesses around that.

That means understanding what this looks like and getting the basics in place. We need to think about pricing structures. Using the EU as an example, you could often get away with sending DDU, or delivery duty unpaid, and letting someone else deal with it. Now everyone is very much in a DDP, or delivered duty paid, scenario where Australia Post with Zonos is capturing duties, taxes and tariffs before shipping, which is a smart way to do it.

From a carrier standpoint, not much changes for express. There will be a few more charges, such as DDP charges or advance-of-funds fees, which are fees for collecting duties, taxes and tariffs and having those billed back to you by the express carriers. Some commercial carriers in the five-to-ten-day delivery window also have that, although they often don't charge DDP fees.

The big change is that free access to the US through Australia Post or another postal network operating out of Australia has changed. Duties and taxes need to be collected upfront. The landscape is now about understanding your numbers, getting your pricing strategies right, your back-of-house structure right and your carrier mix right. The same carriers are available; we just need to work in this new world.

Hakan Steele, Starshipit: You're exactly right. The education piece is important. Nobody got into eCommerce because they loved talking about tariffs and shipping, but now it's time to be across it. Waseem, I think your team has been getting questions around New Zealand Post and Australia Post, and how Zonos helped them start shipping back to the US quickly.

Waseem Abdoolla, Zonos: Yes. Most of the questions my team and I have been getting over the last fortnight have been around New Zealand Post and Australia Post, and how we helped them get shipping back to the US as quickly as possible. Originally, Zonos was one of two qualified parties by Customs and Border Protection to remit duties to the US.

We have built two primary offerings for postal operators: Post Collect and Zonos Collect. With Post Collect, the postal operator takes responsibility for collecting duties from the customer. With Zonos Collect, Zonos helps facilitate the collection of duties. The reason I bring that up is because New Zealand Post and Australia Post use different options.

New Zealand Post will bill its business customers directly. We receive the information, remit the duties, then bill New Zealand Post, and they bill their business accounts. Australia Post is a little different. We have verified accounts, which we'll talk about later, and that is how we bill business accounts directly for duties on US orders.

For orders under $800 US into America, duties are now applicable and you can go PDDP, which is postal delivery duties paid. We've been doing PDDP into Canada for just under two years. Right now, we have around 30 postal operators going live into the US. In APAC, that's Australia, New Zealand and South Korea, with a few other major postals going live shortly. Australia Post went live yesterday, and New Zealand Post is also live.

Hakan Steele, Starshipit: Just to build on that, if you are not using Starshipit's end-to-end landed-cost solution, Australia Post will be billing merchants for that. We'll get into more of that later. Morgan, over to you.

Morgan Hardy, Indirect Tax Solutions: The question I've had most is what's happening next, and whether this is just a blip you need to get through. Tariffs are a political issue in the US, and there was a lot of political drive behind bringing them in. They came in suddenly, and de minimis was reduced suddenly, because many of these changes have been brought in by executive order.

Will we see changes in the future? There will no doubt be tweaks along the way, so be agile and prepared to adjust. It's a very unpredictable environment. But the US had de minimis at such a high level, $800 US, that it was quite an outlier. Australia and New Zealand have $1,000 thresholds for tariffs collected at the border, other countries are much lower, and the EU has a zero threshold for customs collection.

I don't see the US high de minimis threshold coming back. Now there is an ability to collect the tariffs, the big administration reason for not reducing de minimis has gone. I can't see much appetite to bring it back.

The other big change was the schedule of tariffs for almost all countries, ranging from 10% up. For a while, tariffs on China went over 100%, and India is still at 50%. I think it will be difficult even for a new administration to eliminate these tariffs because it is an easy political attack to say they are not protecting US manufacturing jobs. Even if existing tariffs are challenged through the courts, we have seen this administration's willingness to change tack to achieve the ends it seeks. It's a new world, and it's time to get the back office in order.

Hakan Steele, Starshipit: Exactly. If a court ruling goes against one mechanism, there are plenty of other tools they may implement. It's not going away. Let's move into the live Q&A. Waseem, you're probably best placed to answer this first one: how do we find our HS tariff codes?

Waseem Abdoolla, Zonos: I'll keep this short and sweet because we have a free option. The verified account is a free account with a tool called the item quoter. You can plug in your item and get an HS code back. We've had a lot of smaller businesses use that tool over the last fortnight when they didn't have the most accurate information, and it has helped them get an accurate duty calculation based on the HS code we provide.

Hakan Steele, Starshipit: The new solution we're releasing will also be able to help with that. You will need good product descriptions, because that is key to getting an accurate HS code. There have also been questions around HTS codes. The HTS code is the US-specific extension of the six-digit HS code, which is the standardised global HS code. The remaining digits are specific to the US.

Another question is: can I label my products as Australian made? The short answer is yes, on one very specific condition: they are in fact Australian made. You need to be very careful here. As with HS codes, product data is more important than ever. Country of origin is now a mandatory field for Australia Post, and you'll get an error if you don't have one.

When defining country of origin, look at where goods are manufactured or substantially transformed. If you import material from India and make shirts in Australia, that material has gone through a substantial transformation and you may be able to sell them as Australian made. If you import shirts from India and add a pocket, that is not a substantial transformation. You need to be able to back up your claim. There is also a CBP binding ruling programme you can use if you're in a grey area.

Morgan Hardy, Indirect Tax Solutions: In terms of the new thresholds for taxes, duties and liabilities, with the $800 de minimis gone, there is now a zero threshold for tariffs in the US. Regardless of the value of the item, tariffs will be payable if there is a positive tariff on that item.

These changes only affect what tariffs are applicable and the elimination of de minimis. They don't change anything to do with sales tax or income tax in the US. They are about what you pay Customs and Border Protection at the border. We often talk about DDP as covering duties and taxes, but in the US, sales tax is administered at the state level. It is not something CBP collects, so sending DDP into the US allows you to prepay tariffs, but it doesn't change any state sales tax obligations.

Hakan Steele, Starshipit: On how this fits into the Starshipit workflow, the information we have from Australia Post is that parcels will be collected and taken to the depot. At that point, Australia Post will verify whether duties and tariffs have been paid before the parcel leaves the country.

They are looking for one of two things: either the customer has a Zonos verified account with a payment method, or, once launched, the order has come from Starshipit and Starshipit is picking up the bill. If the answer is no to both, the parcel will be returned to sender. The information we have is that it will be returned before it leaves the country.

Justin Irvine, The Aggregate Co.: MID codes are manufacturer identification codes. They've been in place for the States for quite some time, more for bulk shipments. It is an identification code used by US CBP.

To reiterate Hakan's point around correct origin, and I'll include valuation as well, there is a lot of bad eCommerce advice on social media telling people to clear products incorrectly. CBP has far more AI-based tools than many private businesses realise, and those tools are quickly picking up anomalies in historical pricing, valuation and origin across carriers like DHL, FedEx, UPS and DHL eCommerce.

The MID is an extension of that data tracking. It helps identify the factory name, where the factory is located and details around that. That setup creates a code with US customs so they can track and monitor blacklisted suppliers and suppliers that aren't meeting certain criteria. It's another one of those boring back-office things, but it is now required for shipping product to the US.

Hakan Steele, Starshipit: You can store MID codes against your SKUs in Starshipit if you don't have them against your SKUs in your eCommerce platform, and we can pass those through with the shipments. Morgan, what are some ways to manage duties, taxes and costs effectively?

Morgan Hardy, Indirect Tax Solutions: The first thing is what Hakan alluded to: if you display your price including tariffs, then when it comes to the import declaration those tariffs need to be excluded. You are giving the sale price of the underlying goods. That ensures you don't pay tariffs on tariffs.

When you're working out pricing, you'll decide whether to show tariffs included in the price or at checkout, probably based on your view of cart abandonment. If you include tariffs in the price, make sure your terms and conditions note that the customer is the importer and that you'll settle the tariffs for them. That provides the basis for excluding the tariff portion from the price you're paying.

After the sale, information flows through to your shipper and logistics software and into the customs declaration. If your settings and information flows aren't right, the wrong information can be passed through and you can double up your duty.

There are other structures you may hear about, such as first sale methodology, or business-to-business-to-consumer transactions where the import price is based on the price to the importer in the middle of that chain. Those can allow the import customs value to be lower than the retail price to the consumer, but they need to reflect the actual transactions. If you start muddying the waters with made-up prices, you risk penalties and your sales channel into the US. These structures are not simple and require a clean back office and good administration.

Hakan Steele, Starshipit: You talked about B2B-to-consumer and the transfer of funds. Is the B2B side like a wholesale price?

Morgan Hardy, Indirect Tax Solutions: Effectively, it might be a wholesale base price, maybe a bit higher than wholesale. The transaction value for an import has to be a bona fide sale. If it is between related parties, CBP can overturn the price if they believe the price was influenced by that relationship.

If you have an Australian distribution company and a US import company, or another Australian company that ships to the US consumer, we're talking about a sale price between those two related companies. You need to ask whether that sale would be made on those terms at that price. You would normally expect some form of markup rather than just a pure wholesale price.

If the middle business is buying and selling to the consumer, its profit and loss will be the consumer sale price less its cost of buying. If there's a big gap, that company will be left with large profits, and if those profits are in the US you'll have transfer-pricing issues with your local tax authority. The price needs to be above wholesale, but it also can't look unreasonably low just because the parties are related.

Hakan Steele, Starshipit: In the interest of time, let's skip to this one. Waseem, how can I charge customers a tariff via Zonos on Etsy and Shopify?

Waseem Abdoolla, Zonos: For Shopify, we have a module. We've been in the eCommerce space for about 16 years, and similar to what Starshipit is going to provide, our solution is a duties, taxes and fees calculator at checkout. We guarantee the amount. It is a module you plug into your checkout to display duties, taxes and fees as separate line items for your customer to prepay.

Etsy is newer for both Zonos and Etsy. Right now, a majority of customers handling this are adding the duty amount into shipping. Some customers who are not using Starshipit don't have the ability to distinguish and remove the duty amount from the item price, so an inflated item price can be reflected in all regions, which is not what they want. At the moment, most Zonos customers on Etsy are including the duty amount in the shipping price.

Hakan Steele, Starshipit: Exactly, and it will work the same way with the Starshipit solution next week. Morgan, how are small businesses dealing with tariffs, especially if a large component of the business is manufactured in China?

Morgan Hardy, Indirect Tax Solutions: This is a tough one. It's really hard for small businesses. Some businesses have stopped shipping to the US if it wasn't a large part of their market because the tariffs raise the price too much. If you don't have the volume or balance sheet to put stock into the US, unfortunately there is not a lot you can do. The tariffs are on the price at which the goods are imported.

Some businesses are looking for alternative suppliers. Others are looking at fulfilment out of China in more of a dropshipping model. That puts the import declaration on the supplier's side, and often the supplier doesn't have the transaction price, meaning the price the goods were sold to the consumer at. I am concerned that this can lead to under-declaration of values. I feel for small businesses because it's not easy, but make sure you avoid getting into a worse situation that could lead to penalties or affect your ability to sell to the US.

Justin Irvine, The Aggregate Co.: One other quick part is to make sure you're not putting tariffs on top of tariffs and then paying tariffs on tariffs. If you roll the tariff into revised pricing for the US market, make sure that when it is declared to the carrier you declare the actual value for duty, with the tariff taken out.

You will need to indicate on your website that you are including duties and tariffs so that you can back those duties out. That's a pitfall we've seen with a lot of small businesses. They go from $100 to $130, then don't take the $30 off, and end up declaring $130 for tariffs.

Hakan Steele, Starshipit: And make it really clear on the product page, too. Don't make customers hunt for it. If you make it obvious that tariffs are included, you may not look quite as expensive. Justin, can you talk about processing and clearance fees between carriers, Australia Post and DHL?

Justin Irvine, The Aggregate Co.: A lot of the standard commercial offerings, meaning non-postal, may charge an invoice fee for the week, which can be as low as 20 to 50 cents an item. For express carriers, I would expect to pay somewhere between $5 and $10 Australian, certainly no more than $10 Australian, for tariff charges or collection charges per shipment on a DDP basis.

For postal, I think Australia Post is $169 AUD and 10% of the duty amount. All of those charges are on top of shipping. If you were doing DDP to the UK, EU or Canada, you would already have been paying those. They usually show up in duties and tax invoices, and often you wouldn't know they're there. Some people are paying as high as $15 to $30 for a DDP collection charge when it should be closer to $8, so be aware of those costs.

Hakan Steele, Starshipit: How do I integrate the Zonos Australia Post preferred duty collection for shipments with items that have different country of origin and manufacturer?

Waseem Abdoolla, Zonos: The easy answer is that you can integrate Zonos, but soon you'll also be able to integrate Starshipit for the exact same offering and keep everything under one umbrella, one roof and one bill. Essentially, it will be a module similar to Starshipit at checkout and it will be able to separate the duties. You can look at the Zonos module now, and Starshipit will replicate the same offering.

Hakan Steele, Starshipit: With the modules we currently have for eCommerce platforms, it will essentially be added into those with live shipping quotes. We are out of time. There is a QR code on screen where you can register your interest for our end-to-end landed-cost solution, so please do that if you are interested.

I know we still have a lot of questions sitting there. We've answered quite a few, but we'll put content together to answer more of them. Apologies that we didn't get to all of them. Morgan, where can people contact you to find out more?

Morgan Hardy, Indirect Tax Solutions: The easiest way to get in touch is through LinkedIn. I'm Morgan Hardy. You can also email me, but LinkedIn is probably easiest. Send me a message and I'm happy to answer questions.

Justin Irvine, The Aggregate Co.: Likewise for me, it's easy to catch me on LinkedIn. Otherwise, you can go through the website at theaggregateco.com. I look forward to helping more people navigate some very fluid times that I don't expect will be changing any time soon.

Hakan Steele, Starshipit: And if you need to speak to Starshipit, speak to us next week. We'll leave it there. We really appreciate you coming along. We'll be putting more content out very soon, hopefully answering the rest of your questions, and the recording will come out shortly as well. Thanks everybody, appreciate your time and have a great day.