The complexity of classification in cross border
Search by

The complexity of classification in cross border

Posted by Guest Blogger on Oct 1, 2019 10:01:07 AM

The complexity of classification in cross border

Martyn Noble, Hurricane eCommerce

This week I am at Parcel and Post Expo in Amsterdam and as part of our attendance here, we are delighted to announce a new partnership with Escher. In this blog post I want to talk about the what our joint solution delivers, and the problems it can solve for Posts all over the world.

All commodities travelling over international borders need to be classified for Customs clearance using a globally recognised system of numeric codes commonly referred to as HS6 codes. These codes allow Customs Authorities anywhere in the world to recognise in a structured fashion what the commodities are, the materials they are made from, use etc. These codes then drive the duty and VAT (Sales Tax) rates that will be used to calculate the landed cost of the commodities on import.

It sounds simple, but it really isn’t.

An item such as a “Mug” would to most people just be a “Mug”, but in international trade and Customs clearance a “Mug” can be made of many different materials; Porcelain, Stoneware, Pottery, Plastic etc. Each of these individual materials may attract different duty rates with considerable differences between the lowest and highest rates.

Hurricane’s unique, bespoke and multi-lingual Artificial Intelligence (AI) solution simplifies the complex and looks outside of the usual in its classification process.  It has a true understanding of language and the context words are used in.

Not only does it look for the obvious but delves deeper to understand commercial commodity descriptions and differences between countries. In Australia “Thongs” are flip flops but to most of the world “Thongs” has a completely different meaning. Likewise, in the USA, “Pants” conjure up an image of casual wear, whilst in the UK, something not to be seen!

A great example of where Hurricane’s AI works incredibly well is with a product like a cricket bat. Taken separately, these are insects and animals, and cannot be sent by normal post. But Hurricane recognises that together, they mean something very different.

Many Transportation Service Providers (TSP’s) and even postal operators are now demanding accurate commodity descriptions and HS6 codes. Without these, shipments are refused for transport. Some of the major countries are now being more stringent on their rules when importing products.

As of July 2019, the US Customs now refuse items that have no electronic data attached to them and China is giving priority to items that have electronic customs data available. Clear and accurate descriptions is becoming more and more important going forward

The need for more accurate and detailed classification is also becoming a key requirement for imports into the EU due to 2021 VAT changes and the implementation of the so call Mini One Stop Shop system. The EU de minimis for VAT (Sales Tax) is due to be removed, meaning that all shipments will require VAT payment of some form. The emergence of this trend in cross-border trading has meant that there is a need to improve the quality and completeness of information linked to a product included in the electronic data made available for customs. In addition, there has been the creation of fast track lanes in major countries, allowing items with accurate information to flow through smoothly, whereas those without optimised electronic data will face delays in customs clearance, possible penalties and seizure of shipments.

The dreaded BREXIT will also require an additional 200 million shipments a year imported into to the UK to be declared to customs, requiring accurate descriptions, HS codes etc. But this is not just a UK problem as the 27 other member states will require this data for goods travelling to and from the UK.

Denied Party Screening

Denied Party Screening has become an absolute must for international transactions. Facilitating a transaction to an individual or entity that appears on one of the hundreds of lists that exist globally, can result in very serious consequences, including fines and penalties running into millions of dollars, seizure of shipments, debarment from operating in certain countries and even jail time.

Hurricane’s Denied Party system screens the main lists returning results in a simple to understand format, helping you to remain compliant with the constantly changing requirements.

We are incredibly excited about our partnership with Escher, and look forward to working with their great team.

For more information on Hurricane's partnership with Escher click here

 

6b 

Martyn Noble

CEO Hurricane eCommerce

 

Topics: Escher News, Customer Experience, compliance, cross boarder, taxes, duties, Hurricane eCommerce