Why automate customs classification?

Customs classification involves assigning a specific code to each product imported or exported by customs authorities. This process is essential 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, which offers numerous benefits.

In this article, we will explore the current challenges of customs classification and how its automation can streamline this meticulous process and facilitate growth in new markets.

The Challenges for Businesses Facing Customs Classification

Currently, businesses engaged in international trade face several challenges related to the customs classification of cross-border exchanges:

Regulatory Compliance

Businesses must ensure that their products are correctly classified according to national and international customs standards established by the World Customs Organization to comply with international trade regulations and avoid sanctions or delays in customs processes.

Incorrect customs classification can result in errors in calculating customs duties, financial penalties, and delays in the delivery of goods.

Cost Optimization Based on Customs Tariffs

Accurate customs classification allows businesses to better anticipate how to benefit from reduced tariffs or tax exemptions to optimize pricing and improve competitiveness in international markets.

For example, the elimination of customs duties on industrial products in Switzerland and free trade agreements are crucial elements to consider for affected businesses.

Constantly Evolving Regulations

Customs authorities regularly update customs classification codes in response to political, economic, and environmental changes, which affects the validity of the current product classification.

The HTS system is updated twice a year with minor revisions and a major revision every five years. Additionally, updates to laws and regulations can also impact the classification of your goods.

As a result, businesses must stay informed about new requirements and updates to customs classification to comply with current standards.

The Advantages of Automated Customs Classification

Given the considerable volume of content on the classification of imports and exports, and the necessary duties and taxes to ensure the smooth operation of global supply chains, manual customs compliance processes are largely insufficient to meet the challenges in this field.

The multitude of names for different classifications further complicates the task of correctly classifying goods (HTS code, commodity code, HS code, customs code, static code, NC code, Taric code)...

Automating customs classification addresses this issue by offering a plethora of advantages:

1. Simplification of Customs Data Management

Reliable customs data from a single source allows businesses to reduce the risk of errors and establish a digitized and standardized infrastructure.

Centralizing data through GTM software allows for the automatic identification of the appropriate tariff code for each product while avoiding the tedious and labor-intensive processes of manually extracting from multiple sources.

Other capabilities provided by this centralization include:

  • Sharing your data with internal teams and service providers.
  • Ensuring that classification decisions are followed and archiving your data for audits.
  • Analyzing your data to optimize your classification processes.
  • Integrating binding tariff information (BTI) certified by authorities.
  • Accessing constantly updated regulatory content to ensure operational compliance.

2. Acceleration of Customs Classification Processes

Instead of spending hours manually searching for tariff codes and customs regulations for each country, a GTM tool like the customs classification module allows businesses to perform this task in a few moments from a regularly updated database of national and international classification schemes.

It is thus possible to import all product and component data and automate the classification of similar products in the case of items with the same characteristics.

In addition to reducing delivery times, this time saving allows businesses to devote more time to the more complex needs of their customers.

3. Peace of Mind Regarding Constantly Changing Regulatory Compliance

As previously mentioned, regulations and government policies related to classification, valuation, and free trade agreements frequently change, 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 Customs Tariffs

By eliminating tariff surprises during automated customs classification, businesses are better positioned to anticipate their pricing strategy and be more competitive in foreign markets.

5. Customized Integration into Workflow

Automated Global Trade Management solutions can seamlessly integrate into each company's specific environment.

For example, it is possible to 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 Customs Classification - Simplify and Centralize the Classification of Your Products

MyTower's GTM Customs Classification module simplifies and accelerates the determination of product customs codes to ensure the compliance of international trade operations.

This solution offers automated classification in accordance with current criteria and regulations while ensuring traceability for audits.

By automating customs classification, our solution helps accelerate cross-border supply chain processes while reducing risks and costs and facilitating expansion into new markets.