Business & Investment

The US vaporizing industry looks for an answer when postal services end delivery

The US e-vapor industry faces major challenges that have nothing to do with selling to minors, concerns about health risks, and black market knockoffs. It has to do with putting the product in the hands of the consumer.

On Thursday, the United States Postal Service’s ban on the shipment of all vaping products mandated by Congress at the end of last year came into effect. Post office exit combined with existing delivery ban by FedEx Corp.NYSE: FDX), UPS Inc. (NYSE: UPS) And DH Le Commerce Solutions, the e-commerce unit of the German company Deutsche Post DHL (OTC US: DPSGY)Leaves the vaping industry with limited options to bring its products to market.

The bans imposed by the four carriers affect not only online sales to consumers, but also business-to-business transactions between manufacturers, distributors and retailers. According to the American Vaping Association (AVA), an industry-funded pro-vaping advocacy group, there are about 10 million regular vapors in the United States. The group estimates that 2.5 to 3.5 million consumers are ordering vaping products online. There is no data on the size of B2B transactions.

For postal services that serve all US addresses, whether B2B or business-to-business channels, the vaping supply chain needs to develop new transportation strategies to remain viable. New models are already born. Founded by Michael Wittenberg, an experienced logistics veteran in the steam-breathing industry, Vape Freight provides B2B customers with a portfolio of services ranging from small packages to LTL and container shipping.

On Monday, the regional courier LSO, which has been shipping vaping products for some time, vowed to step up operations in 10 state territories, including all zip codes in Texas, where the company is based. Austin-based carriers said in a statement that shipping vaping products to homes is similar to delivering apparel, food and wine, health and beauty aides, and other legitimate products. Said. The main difference from offering products like wine and vaping is that they require an adult signature.

“I think it’s puzzling why other carriers chose not to support the vapor-breathing market,” LSO CEO Richard Metzeler said in a statement. Metzeler said it “worries me” why carriers treat vaping products differently than legitimate products that require adult sign-off. “Do you know? Maybe they will then ban the delivery of wine,” he added.

Metzeler said in an email that he didn’t know the carriers in other areas that transport vaping products, but some local shipping companies may. Executives from the two largest geographic carriers, OnTrac and LaserShip, did not respond to requests for comment. American Securities LLC, a private equity firm that is the parent company of LaserShip, plans to purchase OnTrac for a $ 1.3 billion transaction, and many will lay the foundation for the first national parcel delivery service cut out of its regional network. I’m looking forward to it.

Postal services allow a limited number of e-cigarette transactions between consumers unless they are of commercial nature. A company can apply to an agency for permission to sell to other companies. However, AVA founder and president Gregory Conley states that the Vaping industry complies with the same daunting requirements that apply to cigarette and smokeless tobacco companies in B2B spaces.

For example, the applicant must provide the names and addresses of all the companies to which they ship, and provide a list of customer licenses. According to Conley, if a company adds a customer or an existing customer changes their address, the application must be updated and approved by the post office before shipping the product to the new address. Luggage must be brought to the post office and each baggage must be processed at the store.

The document hung on the industry wall last December after President Donald Trump signed a 5,000-page comprehensive spending bill, including a law called the E-cigarette Online Sales Prevention Act for Children. The wording of the law requires the post office to ban all shipments of vaping products, with a limited exception. The vapor-breathing industry was also brought under the 2009 All-Cigarette Anti-Smuggling (PACT) Act, which aims to combat the online sale of tax-exempt cigarettes.

Under that law, cigarettes and smokeless tobacco could no longer be mailed, and online sellers had to register with the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and the tax authorities of each state. The PACT Act established standards for private sector carriers to transport tobacco products to homes and businesses, and created strict tax collection and reporting rules with heavy penalties for violations.

The postal ban on vaping products was originally planned to come into effect at the end of March. However, the process was delayed after a flood of government agencies with thousands of comments on the rules proposed at the time.

In March, FedEx announced that it would withdraw from the vaping-delivery business. UPS filed a lawsuit a month later informing affected customers that they would not ship vaping products in or to the United States due to the “increased complexity” of shipping those products. rice field. The DHL unit was out of business long before that.

AVA’s Conley suggested that the regulatory environment surrounding the delivery of vaping products is “too vague” for companies to continue their business in this area.

The US vaporizing industry looks for an answer when postal services end delivery The US vaporizing industry looks for an answer when postal services end delivery

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