At TariffTel, we specialise in helping businesses navigate these complexities by providing comprehensive, accurate customs classification solutions. Alongside expert advice from classification specialists, our robust TariffTel system means you take the guess work out of classification and your business can save time, money and hassle when it comes to shipping products internationally.

The high price of assumption in customs classification

Goods classification is more than just ticking a box. Every product shipped across borders needs to be assigned a specific tariff code. These codes dictate the customs duties payable, any restrictions, and the documentation required. Read more about codes and their importance here.

The main problem we see many businesses face is assuming they can simply assign codes based on a quick assumption of what their product is. That approach is rife with risk. A slight misinterpretation or a rushed classification could have significant consequences, ranging from overpaying on duties to facing penalties for non-compliance.

We recently spent time looking at some common misclassification mistakes where assumptions are easily made about seemingly simple products. Take camping products for instance, or school equipment.

Here’s where having a solid customs classification solution, like the one we offer at TariffTel, comes into play. Nothing is taken for granted and classifications are made based on accurate product data that takes every detail of a product’s composition into account.

The benefits of implementing a robust, trusted classification solution far outweigh any initial minor upheaval in introducing a new approach within an organisation.

As David James, Group Supply Chain Director at boohoo Group PLC, can testify, “This solution was transformative for boohoo group, we capture all the data required from suppliers for classification that produces the full 10 digit US HTS code. This innovation has ensured the smooth flow of goods through US Customs and since the distribution centre opened we have had zero shipment delays on products entering the US.”

Read more directly about boohoo’s use of TariffTel.

Here are the five key benefits our customers tell us they experienced when they introduced TariffTel

1. Preventing costly mistakes

One of the biggest challenges in customs compliance is ensuring that products are correctly classified from the outset. Making assumptions about product classification can lead to costly mistakes. For example, an incorrect HS code can result in paying too much or too little in duties, which may trigger audits, penalties, or shipping delays.

A reliable customs classification solution takes the guesswork out of the process. At TariffTel, our system is designed to meticulously analyse product details, ensuring the right HS code is applied. This level of accuracy helps you avoid costly errors and ensures compliance with international trade regulations.

2. Staying on top of changing regulations

Global trade regulations are constantly evolving. Customs classifications and duty rates can change frequently based on international agreements, national policies, or economic shifts. Relying on outdated assumptions or manual methods to classify products could leave you non-compliant and lead to penalties and fines.

Our experts monitor these changes so you don’t have to. Our solution is continuously updated with the latest regulations, and updates to tariff codes keeping your business in line with the most current requirements. That means you can rest assured that your classifications will always be accurate and up to date.

3. Saving time and streamlining operations

Manual customs classification can be a time-consuming process, especially for businesses dealing with a large number of products or frequent shipments. Often, we see businesses using spreadsheets to record tariff codes and master product data which means manual errors are common and teams often mistrust the data they rely on to classify, not having the assurance it is kept fully up to date. To be accurate in classification, each product needs to be meticulously analysed and documented to avoid errors.

With TariffTel’s automated customs classification system, you can streamline this entire process. We have delved into the intricate terms associated with products, and designed our Item Types to be user-friendly. We eliminate the need for extensive research when classifying. By reducing research time and the need for manual input, our system not only saves time but also boosts productivity by allowing teams to focus on core business activities rather than getting bogged down in administrative work. This ensures your classification is accurate, done quickly and that you adhere to regulatory standards.

4. Reducing compliance risks and penalties

Customs compliance is a strict field, and non-compliance is often met with hefty fines or penalties. This could range from monetary fines to shipment delays or even confiscation of goods in extreme cases. The consequences of non-compliance can damage a company’s reputation and relationships with partners and customers.

Using an expert customs classification solution minimises these risks. A proactive approach helps prevent unwanted surprises during customs checks, giving you peace of mind that your classifications are accurate. A big part of this is maintaining a comprehensive audit trail. With TariffTel, every classification decision, consultation, and document generation is logged and tracked, providing transparency and accountability for compliance purposes.

5. Building a competitive advantage

Accurate customs classification doesn’t just help with compliance—it can also offer a competitive edge. With the correct codes and knowledge of applicable trade agreements, your business may be able to reduce duties, take advantage of preferential tariffs, or streamline your shipping processes. This can improve your pricing and margins, making your products more competitive in global markets.

TariffTel’s system is designed to identify these opportunities, ensuring that your business isn’t just compliant but also optimally positioned to benefit from international trade regulations.

Customs compliance can feel overwhelming, but it doesn’t have to be. By leveraging the right expertise and a trusted solution like TariffTel, you can simplify the process, avoid costly errors, and ensure your business is fully compliant with the ever-changing landscape of international trade. Don’t make the mistake of assuming anything about your products again to determine tariff codes, speak to our team to find out more about how TariffTel takes the guesswork out of the process.

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Here, our Head of Technology Tim Ingram-Smith, outlines the successful practices he sees many organisations adopt to optimise the classification operation.

Know the trade environment

Goods that cross borders not only need to be classified with the correct tariff code to assign duty payments, but also require a customs declarations form. Trade compliance managers have an end-to-end role in managing this process, from the origin of goods, to the delivery of goods to the consumer. They facilitate the points where the goods pass from one jurisdiction to another.

National governments, and supra-national organisations like the European Union, stipulate or negotiate special trade agreements, duty rates, quotas and flat-out sanctions across a whole range of criteria and your goods may be subject to sanctions. It pays to know the whole trading environment you’re operating in.

For each item you need to be sure of its Country of Origin and Country of Manufacture. For example, an electric-corded nail gun coming into the UK from the EU attracts a duty rate of 0%, but if the same products comes from China, it is assigned a 2% duty rate.

Know all the parts of every product

All manufactured goods are composed of constituent parts, likely made of different components, possibly made in different countries.

It’s worth creating a ‘product map’ which shows the raw materials that make up each item. For example, in the UK Trade and Cooperation Agreement with the EU, automotive components which originate outside the UK should be less than 45% of the price of the final vehicle (Source: UK-EU Trade Agreement).

As well as origin of goods, you’ll need to be aware of the InCoTerms that apply. International Commercial Terms are a set of short codes that signal the agreement being called into play when goods cross a border. For example, if your documentation says ‘DDP’ that means ‘Delivered Duty Paid’ which in turn means that the buyer can be sure, and is contractually accepting, that when they take delivery of the items from the transportation agent, that the duty has already been paid. Incoterms are common with big companies across Global Value Chains.

It’s crucial to be aware of the end-to-end journey of your goods from component manufacturer to assembly, transportation and import into destination country. This is where a solution like TariffTel can assist. TariffTel has a Vendor Portal where your suppliers can enter the relevant details about the products they are manufacturing. They know your products best after all!

Plan your paperwork

It’s a good idea to get your paperwork in order before your goods hit the customs queue. There are many questions to be completed on cross-border documentation, many of which can be handled electronically for more advanced countries.

You need to understand what your products are made of, as you may need to answer audit questions around, for example, deforestation rules or animal welfare. Have a read of our top tips for creating a good goods description.

Let’s face it, trade compliance can be complex, and ever evolving. Tariff arrangements don’t stand still and special arrangements and government announcements can happen at any time, whether beneficial to your product set or detrimental. TariffTel keeps business on top of any changes sending alerts whenever the duty changes on an item change, this immediate notification is crucial to ensure continual compliance with regulations. It also pays to keep your ear to the ground with special programs, preferential tariffs and trade agreements.

You can hear more from Tim in this video series from key takeaways from the Customs Compliance Conference.

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We have supported many businesses in expanding into new overseas markets and one of the those businesses is fashion retailer, boohoo Group. In 2022, boohoo Group’s aim was to boost sales in the US and streamline the delivery of its fashion products to their new US distribution centre from the UK.  Our TariffTel system supported them in their new approach to customs classification, prioritising customs compliance and accuracy. The results speak for themselves.

Customs challenges when expanding into new markets

In 2022, boohoo Group’s orders to the US faced a lengthy delivery time of 8 to 10 days and the team used a legacy system to assign tariff codes which relied on traditional, paper-based processes and decentralised data systems.​

Their goal was to ensure the smooth and quick entry of millions of units into the US. Their first challenge was to quickly and accurately classify thousands of SKU’s, a complicated task given they stored only partial product master data. Further difficulty lay with the complexities of the US customs controls which vary significantly to the UK. ​

Boohoo group set out to transform their approach to customs classification with TariffTel.

Why TariffTel?

Boohoo group chose TariffTel as the system provided a centralised approach to assigning US tariff codes, capturing and storing essential product data which is crucial for accurate classification.

The TariffTel team had less than four months to classify thousands of SKU’s from various suppliers.​ TariffTel engaged suppliers for specific information, including size, weight, fabric composition, product images, and supporting documentation.

TariffTel was able to facilitate a level of digital transformation that allowed boohoo group to achieve a more efficient and compliant process in classification.​ The system enabled boohoo group to accurately classify and ship all necessary SKUs to the US from the UK in the four month timeframe. ​

The team achieved a 100% compliance record on 20,000 SKUs, transforming the way US operations and classifications were conducted. The initiative reduced transit times, enabling boohoo group to fulfil demand more precisely in the growing US market.

As a result of the new approach, boohoo group can now trust the 100% accuracy of its product master data, thanks to quality assurance checks and supplier integration. ​This digital transformation now serves as a benchmark for expansion into other overseas markets.​

David James, Group Supply Chain Director at boohoo Group PLC, says of the work, “This solution was transformative for boohoo group, we capture all the data required from suppliers for classification that produces the full 10 digit US HTS code. This innovation has ensured the smooth flow of goods through US Customs and since the distribution centre opened we have had zero shipment delays on products entering the US.”

Find out why compliance matters to boohoo group and other businesses in our blog on on the consequences of misclassification.

TariffTel’s combination of customs data and our unrivalled team expertise create a precision solution for every business prioritising trade efficiency and growth.

If you want to find out more about a tariff code solution that’s right for your business or want to learn how your business could benefit from TariffTel, get in touch with our team.

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Our Head of Infrastructure and Technology, Tim Ingram-Smith, will be lifting the hood on the range of integrations that exist today across the end to end purchase-to-pay lifecycle. He’ll explore the main mechanisms in use and development areas where organisations are investing for better compliance and more efficient processes. Tim’s session will take place on 7th March at 10.10am. If you’re attending, please come and say hello to our team, and if you’re interested in signing up, the details are here. 

Why is integration crucial for customs teams?

As the world becomes increasingly connected, integration is critical for modern businesses. In customs ,having the right data available at the right time is crucial to avoid classification delays and ultimately fines. The range of integrations available today is mind blowing, meaning that businesses of all shapes and sizes can take full advantage of being integrated, leveraging their data and reducing user replication across systems.

Technology is the enabler for greater accountability, efficiency and ultimately, cost savings. Expert-led classification solutions such as TariffTel that uphold the highest standards in classification, can play a vital role in enabling customs teams to more quickly and confidently assign the correct tariff code to all goods shipping internationally. Teams should not underestimate the necessary skill and resource that is required to get tariff codes right. The accuracy of these codes directly affects the amount businesses have to pay for importing or exporting goods. Incorrectly assigned codes can result in businesses paying more than necessary, affecting their competitiveness and profit margins.

Why is it important that every tariff code is correct?

Accurate HS codes facilitate the smooth and swift movement of goods across borders. Correct classification enables customs authorities to quickly assess and process shipments. On the other hand, incorrect codes may result in shipment delays, leading to dissatisfied customers, increased operational costs, and lost business opportunities.

Assigning tariff codes can be complex. Customs regulations and procedures vary from country to country and customs teams need to familiar with the different requirements. By correctly identifying and applying HS codes, businesses can ensure compliance with specific requirements and avoid potential delays and penalties due to customs complications.

Find out more about the consequences of misclassification and why it pays to get it right.

Find us at the Customs Compliance Conference

Our team will be on hand throughout the two days getting involved in sessions, please come and say hello. We have a stand at the coffee break-out area where we will be showing demos and talking about the challenges and solutions with customs technologies.

By understanding the importance of accurate HS codes and implementing appropriate technology solutions to mitigate risks and assign the correct codes, businesses can ensure smooth cross-border trade and maintain their competitive edge in the global marketplace in 2024 and beyond.

Read more about supporting customs classification teams and mitigating risk and also the importance of compliance in trade.

Interested to hear more about how our easy to use TariffTel solution can support your trade operations. Get in touch.

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Here, we delve into the importance of getting tariff codes correct for every product shipped whether its 100 SKUs or 10,000 SKUs, and explore the potentially detrimental effects of incorrect classification for businesses exporting internationally. Read on to find out why accurate classification should be a priority for your business in 2024.

Understanding HS Codes

Harmonized System (HS) codes are internationally recognised numerical codes that identify specific products, goods, and commodities being traded. These codes provide a standardised approach to classifying goods and are utilised by customs authorities worldwide to determine appropriate tariffs and regulations.

The importance of accurate HS Codes

There are a number of key benefits in determining the correct tariff code for your goods, both with financial and operational significance.

1) Tariff Determination: HS codes play a crucial role in calculating import duties and tariffs imposed by customs authorities. The accuracy of these codes directly affects the amount businesses have to pay for importing or exporting goods. Incorrectly assigned codes can result in businesses paying more than necessary, affecting their competitiveness and profit margins.

2) Customs Compliance: Customs regulations and procedures vary from country to country. By correctly identifying and applying HS codes, businesses can ensure compliance with specific requirements and avoid potential delays and penalties due to customs complications.

3) Supply Chain Efficiency: Accurate HS codes facilitate the smooth and swift movement of goods across borders. Correct classification enables customs authorities to quickly assess and process shipments. On the other hand, incorrect codes may result in shipment delays, leading to dissatisfied customers, increased operational costs, and lost business opportunities.

Consequences of incorrect HS Codes

When goods are assigned incorrect HS codes the consequences can be severe and impact a business’ entire logistics operations.

1) Shipment Delays: Misclassification of goods can trigger delays at customs checkpoints. Incorrect HS codes may raise red flags, leading to additional inspections, queries, and the need for clarifications. These delays can disrupt supply chains, impact customer satisfaction, and potentially harm business relationships.

2) Financial Losses: Inaccurate HS codes may result in businesses paying incorrect import duties or being charged higher tariffs. Such financial losses can have a significant impact on profitability, especially for small and medium-sized enterprises (SMEs).

3) Regulatory Non-Compliance: Failing to accurately classify goods and provide correct HS codes can lead to non-compliance with import/export regulations. This non-compliance can result in fines, penalties, or even legal action by customs authorities. Repeat offenses may damage a business’s reputation and hamper its future export activities.

How to mitigate the risks of incorrect HS Codes

Expert tariff code knowledge, team training and the support of an automated HS code classification solution like TariffTel can all streamline the process and reduce the risk of human error in classification. International trade is complex, and so knowledge in this area is crucial to accurately classify goods and avoid costly mistakes. The expert team behind out TariffTel solution means that even the most complex of classifications can be resolved quickly with their unrivalled understanding of the Harmonized System.

Accurate classification of goods using the correct HS codes is an essential component of successful international export operations. Businesses that prioritise getting HS codes right reap numerous benefits, including efficient supply chains, cost savings, and regulatory compliance. Conversely, failure to correctly classify goods can lead to shipment delays, financial penalties, and overall dissatisfaction among customers.

By understanding the importance of accurate HS codes and implementing appropriate measures to mitigate risks, businesses can ensure smooth cross-border trade and maintain their competitive edge in the global marketplace in 2024 and beyond.

Read more about supporting customs classification teams and mitigating risk and also the importance of compliance in trade.

Interested to hear more about how our easy to use TariffTel solution can support your trade operations. Get in touch.

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If you’re involved in international trade, you’ll know the significance of compliance in shipping goods across borders cannot be overstated and that navigating different countries’ customs procedures is complex and time-consuming. Beyond being a regulatory obligation, compliance is the keystone that ensures a smooth, efficient, and risk-free international shipping experience.

There is a digital revolution taking place right now in compliance which is changing the way we operate. Where some businesses still operate customs classification by manual processes, many forward-looking businesses have invested in solutions such as TariffTel in a bid to expel the grey areas arising from manual inputs and are increasingly looking to augment their capabilities and accuracy with technology that can support the whole business. Customs classification is important for all businesses who import and export goods internationally, affecting many different departments in a business from sales to warehousing, all those who contribute to ensuring stock arrives on shelves or machine parts are available in the warehouse at the right time. Hold ups in shipment can mean extra costs and missed potential sales so compliance in assigning the correct HS codes and ensuring goods arrive at their destination on time has never been more critical. Business critical in fact.

This blog delves into why compliance is now no longer just a tick-box exercise for businesses, but a necessity to get right every time, when it comes to global shipping operations. We look into why upholding a rigorous stance on compliance serves as a protective shield against potential shipping roadblocks.

Understanding the complexity of international shipping

As businesses expand beyond their domestic borders, they encounter the intricate web of international shipping and customs regulations. Each country presents its own set of import and export rules, duties, tariffs, and documentation prerequisites. Successfully manoeuvring through this intricate landscape requires a careful and diligent approach to compliance. A single misstep can set off a chain reaction of delays, penalties, or even the seizure of goods. Embracing and prioritising compliance is without question a strategic imperative, enabling companies to navigate this complexity smoothly whilst ensuring business continuity, and safeguarding reputation.

It’s important to note that compliance isn’t solely confined to customs and border control agencies. It extends its reach throughout the entire shipping process, encompassing elements such as precise documentation and transparent declarations. Neglecting these vital aspects can cause disruptions in supply chains, leading to delivery delays and potential revenue loss.

Risks of non-compliance

By embracing compliance, companies not only ensure regulatory alignment but also build a robust shield against potential risks.

Financial:
Non-compliance with international trade regulations can cast a shadow over a company’s whole global operations, potentially bringing about financial setbacks or damaging a company’s reputation. Among these risks, financial penalties and fines act as deterrents and fines can be back-dated for 3 years to make up for under-payment of duties owed, for example. Governments and regulatory bodies across countries enforce compliance through fines, which can escalate quickly depending on the severity of the violation. Such penalties can mean that funds are diverted from elsewhere in the business such as growth initiatives or employee development.

Delays and disruptions:
Delays and disruptions emerge as another critical risk arising from non-compliance. Customs and border control agencies play a pivotal role in international trade, with the power to halt goods for inspection or verification of documentation. Non-compliant shipments are susceptible to longer processing times, leading to shipment delays that can fall through the supply chain. Consequently, production schedules may be thrown off track, triggering a domino effect on downstream processes and customer commitments.

Confiscation of goods:
The threat of goods confiscation looms as a tangible risk, particularly for companies that overlook or deliberately sidestep trade regulations. Customs authorities possess the authority to seize and hold goods that fail to comply with custom regulations. This can be financially disastrous, as the company not only loses the value of the confiscated goods but also incurs additional costs associated with storage, retrieval, and potential legal proceedings. It can also impact supplier relations.

Loss of market access:
Another risk is the potential loss of market access. Non-compliance can trigger trade restrictions or bans that restrict a company’s entry into certain markets. This not only limits growth opportunities but also weakens the company’s global footprint. Similarly, the removal of trade privileges can be a severe blow to companies that rely on preferential tariffs or trade agreements to remain competitive.

Brand reputation:
The ethical consumer of today has high expectations for businesses they buy from and being compliant is something they look for in their ethics and values. Businesses that prioritise compliance are seen as responsible and trustworthy, fostering brand loyalty and customer advocacy.

Navigating trade compliance

Compliance and customs classification go hand in hand in today’s trading environment. Where once assigning HS codes may have been siloed to a small team, it now expands to many areas of a business. It involves a more collaborative approach and is considered a business-critical function for large enterprises as well as expanding businesses trading internationally and with growth in their sights.

Having the right technology solution in place to accurately document, manage and assign HS codes across all areas of the business involved in the supply chain ensures a more streamlined approach where compliance is at the centre. A solution like TariffTel is an advanced customs classification solution, ensuring accurate and compliant HS code assignment every time and is trusted by leading businesses such as M&S, boohoo, Primark and ASDA. TariffTel empowers businesses to make informed decisions about their global trade operations and confidently navigate the intricate world of compliance.

To book a demo and find out more about TariffTel please contact our expert team.

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The TariffTel team were at the Institute of Export and International Trade Membercon 2023 event in Liverpool which brought together industry leaders and visionaries to discuss all the challenges and issues they’re seeing today in global trade. It was a chance to hear from experts on important topics such as freeports, green trade and export controls and a time to collaborate, ask questions and learn from success stories from businesses that have overcome hurdles when exporting and importing goods internationally.

Our Head of Sales, Darren Wareing, was invited to be involved in a panel discussion on ‘Managing the costs of international trade’, which was a jam-packed session, clearly appealing to many business leaders and supply chain executives who face increasing costs relating to export controls across their supply chain. As part of the panel, compliance in customs procedures, including assigning correct HS codes to goods at the start of their journey in the supply chain, was a big focus. The costs of non-compliance are significant, and whilst the process of getting things right is complex, the panel discussed the resources that are available to businesses to make things simpler and quicker.

Having expertise within your team plays an important part in meeting compliance standards. A well-trained, knowledgeable team can support your business in understanding the terminology, processes and requirements involved, but technology and automated product classification solutions like TariffTel, can transform operations and ensure compliance is met for every single product. This is particularly true when managing large numbers of SKUs each month.

As Darren said, “The reality of penalty fines and delayed shipments if HS codes are wrong, or you have incorrect paperwork on customs declarations, are not worth contemplating. HMRC can issue fines for incorrect classification, especially if duty has been under declared and under paid. If a shipment is held at customs because the paperwork or customs entry isn’t correct, then demurrage or storage costs can be incurred. This is much worse at the port of entry. A British retailer had ocean containers held in the US due to border control difficulties. US customs required extra details about product composition and manufacturer documentation. This resulted in very high demurrage costs plus loss of sales, and reputational damage.”

Another complication is that HS codes can change regularly according to updates to the Harmonised System that standardises numerical methods of classifying traded products and is used by customs authorities worldwide. This means using out-dated HS codes can be more common than people think. Find out more on the intricacies of HS codes.

Business can safeguard against this by working with a platform that automatically updates these changes as and when they happen, like TariffTel. Also, by tapping into the valuable resource of the teams behind the technology who work hard to keep systems updated. These teams have a wealth of knowledge and experience to help businesses understand even the most complex of classifications.

There was also discussion about customs systems not marrying up with each other that can cause added confusion for businesses trying to navigate the correct approach. For example, in the past, some businesses have experienced problems with Export Health Certifications (EHC) and the tariff book not matching up. For food exporters this presents a problem that the panel agreed needed to be addressed by HMRC.

The panel then moved on to discussions around supply chain efficiency and the role of technology in managing international trade costs. Darren explained, “Data is everywhere and in various forms. This unfortunately creates data silos which are an operational overhead with teams having to go to many systems and sources to manually create reports. It’s inefficient, time consuming, and not always reliable.

The key is to centralise your data from single verified sources, rather than from multiple sources, department or people. Make sure you reference the data and don’t duplicate anywhere else. By using robust integrations, such as industry standard API’s, you can enable rapid data exchanges between all parties and avoid disparate systems, giving you one single version of the truth.”

Membercon2023 proved a great event to discuss and debate the complexities of global trade. For anyone who missed the event, or who attended and would like to pick up discussions on what a trusted customs classification solution such as TariffTel can achieve for your business, please get in touch. We are happy to share how we support long-standing customers such as M&S, Primark and ASDA with their customs classification, ensuring compliance and visibility across export controls and procedures.

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