OPINION: Harmonized System 2022 – the next challenge for cross-border e-commerce

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Parcel shipments will be delayed at customs if postal operators, carriers and their customers are not prepared for the arrival of Harmonized System 2022 (HS 2022), according to cross-border data specialist Hurricane Commerce.

On January 1, 2022, the World Customs Organization (WCO) will implement the 7th  edition of its Harmonized System, bringing sweeping changes to how importers and exporters determine and assign HS codes to many of their products.

The Harmonized System serves as the international basis for customs tariffs and the compilation of international trade statistics in more than 200 countries around the world.

The new HS 2022 edition introduces more than 370 new HS codes and more than 100 deletions, covering a wide range of goods across industries. Among the items affected are e-cigarettes and other vaping products, cameras, drones, lighting and antiques.

Martin Palmer, chief content and compliance officer for Hurricane Commerce, said, “This is the first HS update since 2017 so is a significant moment for anyone involved in cross-border e-commerce. For many retailers and shippers, the data requirements will change in areas including HS codes and duty and VAT rates, as well as having implications for prohibited and restricted goods screening.

“One of the biggest impacts will be around the accuracy of the landed cost of a product – the total amount of sale, transport and delivery to the end customer,” he said.

HS 2022 follows a year of significant regulatory change affecting cross-border e-commerce, including Brexit, the US STOP Act, the European Union’s abolition of the VAT exemption on low-value goods and the introduction of the Import One-Stop Shop (IOSS).

Palmer added, “Customs authorities in the EU and elsewhere around the world are now starting to fully enforce these regulations with tens of thousands of shipments being held up. The HS 2022 changes will have customs clearance implications unless retailers, marketplaces and their logistics partners have ensured their commodity data is complete and accurate.

“The regulatory changes are making cross-border e-commerce a tougher business to be involved in, but for those who harness the best possible AI-driven, real-time data solutions, the growth potential is huge.”

Martin Palmer, chief content and compliance officer for Hurricane Commerce

Winner of the Supplier of the Year category at this year’s Parcel and Postal Technology Awards, Hurricane’s Aura data solution covers the three critical cross-border areas of duty and tax calculation, prohibited and restricted goods screening and denied parties screening.

Meanwhile, the company’s Zephyr bulk clearance data enhancement service provides the real-time checking of the match between an HS6 code and/or product description, the identification of invalid descriptions and the provision of the most likely description, HS6 code and import/export codes.

Palmer added, “Failure to prepare for HS 2022 will inevitably cause pain for cross-border traders and – importantly – their customers, who will be faced with their shipments being held and delayed by customs authorities. This will result in a poor experience and the likelihood that they will think twice about shopping with the same merchant or marketplace again.”

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Dan originally joined Parcel and Postal Technology International in 2014 having spent the early years of his career in the recruitment industry. As online editor, he now produces daily content for the website and supports the editor with the publication of each exciting new issue. When he’s not reporting on the latest technological developments, Dan can be found on the golf course or apprehensively planning his next DIY project.

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