Customs classification involves the assignment of a specific code to each imported or exported product by the customs authorities, an essential process for identifying the type of goods and determining the applicable customs duties.
However, customs classification tends to be tedious and prone to human error, which can lead to costly delays and risks of non-compliance.
This is where the automation of customs classification comes in, a practice made possible by GTM (Global Trade Management) software, and which offers numerous advantages.
In this article, we explore the current challenges of customs classification and how its automation can streamline this meticulous process and facilitate growth in new markets.
Challenges for companies faced with customs classification
Today, companies involved in international trade face a number of challenges related to the customs classification of cross-border trade:
Regulatory compliance
Companies need to ensure that their products are correctly classified according to national and international customs standards set by the World Customs Organization to comply with international trade regulations and avoid sanctions or delays in customs processes.
Incorrect customs classification can lead to errors in duty calculation, financial penalties and delays in the delivery of goods.
Tariff-based cost optimization
Precise customs classification enables companies to better plan how to benefit from reduced customs tariffs or tax exemptions, in order to optimize prices and improve competitiveness on international markets.
For example, the abolition of customs duties on industrial products in Switzerland and free trade agreements are crucial factors for the companies concerned.
Constantly changing regulations
Customs authorities regularly update customs classification codes in response to political, economic and environmental changes, which influences the validity of current product classification.
The HTS system is updated twice a year, with minor revisions and a major revision every five years. In addition, updates to laws and regulations can also impact the classification of your goods.
As a result, companies need to keep abreast of new requirements and customs classification updates in order to comply with current standards.
The benefits of automated customs classification
Given the sheer volume of content on import and export classification, and the duties and taxes required to keep global supply chains running smoothly, manual customs compliance processes are largely insufficient to meet the challenges in this area.
The multitude of names for the different classifications makes it even more difficult to classify goods correctly (HTS code, commodity code, HS code, customs code, static code, CN code, Taric code)...
Automated customs classification is the answer to this problem, offering a plethora of advantages:
1. Simplified customs data management
Reliable customs data from a single source enables companies to reduce the risk of errors and establish a digitized, standardized infrastructure.
Data centralization through GTM software automatically identifies the appropriate tariff code for each product, while avoiding the tedious and labor-intensive processes of manual extraction from multiple sources.
Other capabilities brought about by this centralization include :
- Share your data with your internal teams and service providers.
- Ensure that classification decisions are followed up, and archive your data for auditing purposes.
- Analyze your data to optimize your classification processes.
- Integrate binding tariff information (BTI) certified by the authorities.
- Access constantly updated regulatory content to ensure compliance of your operations.
2. Speeding up customs classification processes
Instead of spending hours manually researching tariff codes and customs regulations for each country, a GTM tool such as the Customs Classification module enables companies to perform this task in a matter of moments from a regularly updated database of national and international classification schemes.
This makes it possible to import all product and component data, and to automate the classification of similar products in the case of products with the same characteristics.
In addition to reducing delivery times, this time-saving allows companies to devote more time to the more complex needs of their customers.
3. Peace of mind in the face of constant regulatory compliance
As already mentioned, government regulations and policies on classification, valuation and free-trade agreements change frequently, as do product codes, duties and taxes.
A GTM solution for customs classification can automatically determine what has changed and update all classifications.
This saves significant time and resources, while simultaneously reducing the risk of compliance errors, delivery delays and penalties.
4. Price optimization based on unambiguous tariffs
Thanks to the eradication of tariff contingencies during automated customs classification, companies are in a better position to anticipate their price positioning and be more competitive on foreign markets.
5. Customized workflow integration
Automated Global Trade Management solutions can be perfectly integrated into each company's specific environment.
For example, you can import all your product and component data directly from your ERP, and classify and validate the code assignment process manually, semi-automatically or automatically using a customizable decision tree.
MyTower GTM Classification Douanière - Simplify and centralize your product classification
MyTower's GTM Customs Classification module simplifies and speeds up the determination of customs codes for products, to ensure compliance of international trade operations.
This solution offers automated classification in compliance with current criteria and regulations, while ensuring traceability for audits.
By automating customs classification, our solution helps speed up cross-border supply chain processes while reducing risks and costs, and facilitating expansion into new markets.
