Changes to Mexico Fulfillment (“Section 321”) and Tariffs

Originally posted on Linkedin: https://www.linkedin.com/posts/hertz_3pl-activity-7277324124102832129-gTbo?

This is the news none of us were expecting today. Ryan Petersen shared a thread overnight confirming that XB Fulfillment notified their customers that they will no longer be able to import apparel into Mexico for them, declaring force majeure on their contracts.

The vast majority of their customers are apparel brands. This has created a nightmare scenario for XB, its competitors, and the many great brands they serve.

At least 30 of the top 100 American brands on Shopify now fulfill from just across the Mexican border, mostly in Tijuana, to avoid US customs duties. From there the goods are handed off to UPS, FedEx, USPS or other last mile networks for final delivery to American households.

The context for these changes is that on Dec 19th Mexican President Claudia Sheinbaum issued a Presidential Decree banned apparel from being imported under the IMMEX program which allows goods to move temporarily into the country without paying duties if they’re intended for re-export.

A boon to U.S. based #3PL but a mess for these wonderful brands who are now scrambling to find new solutions.