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Logistics 101 - HS Code and Its Importance in Cross-border Delivery

HS Code and Its Importance in Cross-border Delivery

Phuc Le
May 5, 2023

What do a pack of gum, a luxury car, and a shipment of live lobsters have in common? They all have an HS Code! These magical codes may seem like a jumbled mess of numbers and letters, but they hold the key to seamless cross-border delivery. From ensuring compliance with international trade regulations to facilitating the movement of goods around the globe, the HS Code is a crucial component of the international shipping industry. So, whether you're a seasoned importer/exporter or just getting started in the game, understanding the importance of HS Codes is essential for anyone looking to navigate the complex world of cross-border delivery.

What is HS code?

HS code stands for Harmonized System Code. It is an internationally standardized system of names and numbers to classify traded products. It was developed and maintained by the World Customs Organization (WCO), an independent intergovernmental organization with over 200 member countries.

The structure of Harmonized System (HS) Code

The HS code consists of six digits, which are divided into 21 sections, 96 chapters, and thousands of headings and subheadings. The first two digits indicate the section and chapter, the next two digits indicate the heading, and the last two digits indicate the subheading. For example, the HS code for fresh apples is 0808.10, where 08 is the chapter for edible fruit and nuts, 08 is the heading for apples, pears and quinces, and 10 is the subheading for fresh apples.

The HS code is used by customs authorities, statistical agencies, and other government regulatory bodies to monitor and control the import and export of commodities. It helps to determine the tariffs, quotas, rules of origin, trade agreements, transport charges, and statistics of international trade.

How HS code emerged in the world

HS code emerged in the world

The HS code was introduced in 1988 as a result of the efforts of the WCO to harmonize the customs nomenclature of different countries. Before that, there were various regional and national systems that were not compatible with each other. The HS code aimed to facilitate the international trade by providing a common language for the classification of products.

Since its inception, the HS code has undergone several revisions to reflect the changes in technology, trade patterns, and product development. The latest revision was implemented in 2017, which added new codes for products such as smart phones, drones, LED lamps, and 3D printers. The next revision is expected to take place in 2022.

The HS code is used by almost every country in the world for their customs procedures and trade statistics. According to the WCO, more than 98% of the merchandise in international trade is classified in terms of the HS code.

The HS code is also used by other organizations and agencies for various purposes. For example:

  • The World Trade Organization (WTO) uses the HS code to negotiate and monitor trade agreements and disputes among its members.
  • The United Nations (UN) uses the HS code to compile and publish international trade statistics and indicators.
  • The International Trade Centre (ITC) uses the HS code to provide market analysis and trade information for businesses and policymakers.
  • The World Bank uses the HS code to measure and compare the trade performance and competitiveness of different countries.

How useful is HS code, really?

Using HS code for cross-border eCommerce can bring you many benefits, such as:

  • Simplifying customs clearance: By providing the correct HS code for your products, you can help customs authorities to identify your products quickly and accurately. This can reduce delays, errors, and penalties at customs. It can also help you to comply with the rules and regulations of different countries and regions.
  • Reducing costs: By using HS code, you can calculate the duty rate and taxes for your products before shipping them. This can help you to avoid unexpected charges and fees at customs. It can also help you to optimize your pricing strategy and profit margin.
  • Improving customer satisfaction: By using HS code, you can provide your customers with clear and transparent information about your products and their delivery status. This can help you to build trust and loyalty with your customers. It can also help you to reduce disputes and returns.
  • Enhancing market research: By using HS code, you can access trade statistics and data for your products and their markets. This can help you to identify new opportunities, trends, and demands for your products. It can also help you to benchmark your performance against your competitors.

How does it affect your shipping and delivery processes?

If you are selling or buying products across borders, you need to know the HS code of your products. This will help you to:

  • Comply with the customs regulations and requirements of your destination country.
  • Calculate the correct duties and taxes that you or your customers have to pay.
  • Avoid delays, fines, or penalties due to incorrect or missing information.
  • Optimize your shipping costs and delivery time by choosing the most suitable mode of transport and carrier.
  • Access preferential tariffs or exemptions under various trade agreements or schemes.

To find out the HS code of your products, you can use online tools or consult with your local customs authority or trade expert. You should also check with your shipping provider or platform if they can assist you with the HS code declaration.

International shipping cargo

HS code tidbits that might surprise you…

  • Did you know that there is a HS code for edible frogs? Yes, you read that right. If you want to import or export some tasty amphibians, you will need to use the code 0208.40 for "Frogs' legs". Bon appétit!
  • How about some human hair? Whether you need it for wigs, extensions, or some other creepy purpose, you will have to use the code 0501.00 for "Human hair, unworked, whether or not washed or scoured; waste of human hair". Just don't ask where it came from.
  • Maybe you are a fan of snails, but not the edible kind. Maybe you like to collect them, race them, or just watch them slime around. In that case, you will need the code 0511.99 for "Snails, other than sea snails". But be careful, some countries may not allow you to bring your slimy friends across the border.
  • If you are more into arts and crafts, you might be interested in some whale teeth or bones. You can use them to make jewelry, sculptures, or even weapons. But before you do that, you will have to use the code 0508.00 for "Coral and similar materials, unworked or simply prepared but not otherwise worked; shells of molluscs, crustaceans or echinoderms and cuttlebone, unworked or simply prepared but not cut to shape; powder and waste thereof". That's a mouthful.
  • Finally, if you are looking for something more exotic, you might want to check out the code 9705.00 for "Collections and collectors' pieces of zoological, botanical, mineralogical, anatomical, historical, archaeological, palaeontological, ethnographic or numismatic interest". This is where you can find anything from dinosaur eggs to shrunken heads to meteorites. But be prepared to pay a lot of money and deal with a lot of paperwork.

These are just some of the interesting real life and up to date data and facts about HS code. There are many more to discover, if you have the time and curiosity. Just remember to always use the correct HS code for your products, or you might end up in trouble with customs. Happy trading!

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