No CommentsFriday, the US President agreed to reopen the US federal government for three weeks, while negotiations continue following the historic 35-day government shutdown.
Naturally, we’ll be feeling the repercussions of the shutdown for months, if not the entirety of 2019. Amazon sellers will feel those consequences too, especially those importing goods from overseas.
Here’s how the US government shutdown may affect your Amazon business, and what you can do to prepare and protect yourself.
1 – Clearing customs may take more time.
“A government shutdown affects more than just [Customs & Border Protection] import operations. Other agencies — such as the Food and Drug Administration, the Environmental Protection Agency, the Consumer Product Safety Commission, the United States Department of Agriculture, etc. — also have their import monitoring or import documentation processing operations affected. In fact, a shutdown of these activities could lead to cargo processing delays, as these agencies have “release and hold” authority over shipments independent of CBP. CBP may use its discretion to process some cargo in the interim.”
Despite the reopening of the government, there will still be a backlog of goods and services needing to go through customs. At this time of year, with Chinese New Year approaching and sellers replenishing the stock they sold over the US holiday season, no doubt a ton of goods are trying to come through customs.
Stay Informed
Rolando, who heads up Jungle Scout’s Jungle Stix brand, recently received the following letter from Flexport, one of our business partners. Check out what they had to say:
“Hi Rolando,
Flexport would like to provide an update regarding the extreme congestion affecting shipments at the Ports of Los Angeles and Long Beach, as well as The Port Authority of New York/New Jersey.
We are seeing customers experience significant shipment delays due to these extraordinary circumstances. While we’re doing everything we can to mitigate potential delays and their associated fees for our customers, here is some information to help provide context for any impact you may experience.
Congestion is typically expected after peak season, as terminals work through the backlog caused by peak season along with labor shortages, extreme weather conditions, and holiday port closures. But congestion has worsened this year, in large part due to increased import volume in anticipation of U.S. tariff hikes and Chinese New Year preparations.
Ocean carriers have responded to the increased import volume, adding 30+ additional vessels to better accommodate the market demand. Due to an increased number of vessels servicing these ports, there has been an increase in dwell time for some vessels, as they anchor offshore awaiting to be brought into port.
The influx of additional volume arriving into the Ports of Los Angeles and Long Beach, as well as The Port Authority of New York/New Jersey, has caused long drayage wait times and chassis shortages, making it difficult to pick up containers within the allotted free times. In addition, the lack of yard space at these ports is also burying containers, resulting in abnormal operations for container pick-ups, inland rail transfers, and empty container returns.
Due to the delays caused by the heightened congestion, there is the potential for additional fees to be assessed on your import shipments. We are working hard to limit additional fees such as trucker waiting time, congestion fees, and demurrage charges. Unfortunately, these complications are industry wide and are limiting our ability to recover containers in a timely manner.
Please be advised that your Flexport Operations Team is working hard to service your shipments. If you have any questions, please do not hesitate to reach out.”
At this time of year, because of post-holiday season restocking, delays are normal. However, the government shutdown and Chinese New Year has delayed shipments even further.
Regardless, you should prepare yourself for extended wait times.
What you can do, as an Amazon seller?
- Work closely with your vendor and/or freight forwarder to remain updated on the status of your shipment(s).
- Make sure you have all of your paperwork in order, in case customs needs additional information.
- If you need new products and inventory, order now to avoid any additional delays.
2 – Tax returns and tax processing are unlikely to be delayed.
As an Amazon seller, the concept of getting a tax return is probably foreign to you. If you’re like me, you’re writing checks to the IRS, rather than receiving them.
Nevertheless, for those expecting returns, tax forms will still be processed even though the IRS is understaffed due to the shutdown.
“Tax process is largely automated for tax returns filed electronically and for refunds delivered by direct deposit, according to industry insiders. Only returns that trigger a review during the automated process could face delays.”
So instead of filing the traditional, paper forms, file your taxes electronically. That way, your information will be entered into the database automatically.
What you can do, as an Amazon seller?
- Amazon just sent out 1099-Ss last week; download and verify your information.
- Get your receipts and 1099-S in order, and send it to a professional to process.
3 – US government shutdowns do not affect USPS.
This one was a surprise to me. Taxpayer dollars do not fund the US Postal Service. What?!
It turns out that businesses relying on USPS for shipping and logistics are ahead of the game. Their postman will still show up to deliver products to their customers.
No surprise when it comes to private companies though. FedEx, UPS, and the like, will, of course, continue to operate normally too.
But, that doesn’t mean these businesses are walking away completely unscathed. The slow down at customs will affect USPS, UPS, DHL, and FedEx as well.
What you can do, as an Amazon seller?
- If you use Amazon’s ‘fulfilled by merchant’ model, get your products to the post office as soon as possible.
- To ensure their products arrive on time, Amazon uses multiple services. By using the FBA network, you’re ensuring that your customers will receive their purchases on time too.
- Because customs was shutdown for so long, expect shipments to arrive later than expected (same as above).
4 – Consumer spending will probably slow down.
As of this writing, roughly 800,000 government employees have missed two paychecks. Many have been relying on temporary solutions to cover their living expenses.
And even though furloughed funds will be dispersed soon, most of that money is spoken for. Overdue bills, rent, mortgages, loan payments, etc. Not many will be able to use it for luxuries and non-necessities. For that reason, those sectors will probably feel the effects of the slow down more than others.
What you can do, as an Amazon seller?
- Budget and place orders accordingly.
- Make sure you’re not overspending on advertising.
- Use the slowdown to optimize your listings.
- Send out promotional material now, to help you rank.
5 – Trademarks and patents will continue to be processed.
If you’ve submitted a trademark or patent application to the US Patent office, don’t worry. The government shutdown shouldn’t affect your petition, since the US Patent office funds itself through the fees it collects. Therefore, the shutdown won’t have any effect on how quickly you’ll be told of your filing’s status.
What you can do, as an Amazon seller?
- Enhanced Brand Content is still one of the best ways to get your product noticed on Amazon. And in order to gain access to Enhanced Brand Content, you must file a trademark on your brand.
- The trademark process can be difficult. To increase your chances of filing successfully, take a look at the Jungle Scout Market to find professional assistance. A freelance trademark expert could make the difference between a win and a loss.
Conclusion
Had the shutdown continued, this article probably would have been a bit of a downer. Fortunately, things are looking up!
True, there may be some residual headaches. Odds are that the slowdowns at customs will continue to result in longer shipping times. And the reduction in consumer spending could hurt our bottom lines for a month or two. But, overall, it could have been much worse.
Continue to follow the blog to get the latest updates on how international politics are affecting your Amazon FBA business.
