HS codes supercharged— Map your product catalog to any tariff system with AI
FedEx and UPS could be saving billions.
Part 2 of a series that looks at how product data can power more than just ecommerce. This week: logistics companies. For previous posts — Disney & product data.
In November 1996, Japanese toy-maker Bandai released a ‘virtual reality pet’ called Tamagotchi (pronounced TAH-MAH-GOH-CHEE). It was designed to be a pet that simulated all the needs of a real house pet, but without the accompanying mess. Though the creator of the Tamagotchi won an Ig Nobel Prize for inventing it, there was no question that the toy was an instant hit. After test marketing in California and Hawaii, the first official shipments to American consumers went out on May 1st, 1997.
Observe the timeline closely. In the late nineties, it took 6 months for a toy craze to travel from one shore to the other.
Fast forward to 2017.
Enter fidget spinners.
The first notable mention of fidget spinners was a Forbes article published on Dec 23rd, 2016 by James Plafke titled ‘Fidget Spinners Are The Must-Have Office Toy For 2017’. Less than 30 days later, they were an international craze.
People wanted to buy fidget spinners immediately, no matter where they were in the world, for approximately the same price as anywhere else in the world.
Influencers were reviewing them on YouTube channels and high demand was pushing it to the top spot for bestselling toys on Amazon. Chinese factories had swung into motion and started flooding the market. Toys R Us had to fly in fidget spinners from China rather than wait for ship cargo.
But moving faster means the need for faster systems.
So how does product data help?
Happy customs brokers, faster supply chains, better savings — it’s all about the UPC Lookup
As online retail has exploded, so has the number of SKUs being shipped around and the omnichannel demands on 3PL companies.
Companies are shipping a bigger variety of products to more places at a much faster rate.
Real-time pricing information and product metadata
Freight classification depends on the item being shipped and accurate product information is vital for customs brokers to ensure that companies don’t overpay or get fined due to wrong classification. Add to that the costs of reclassification and logistics companies are looking at a high expense operation. Very often, products have been arbitrarily classified into a general catch-all classification which results in higher rates than the actual product classification would have.
In United States, the Harmonized Tariff Schedule (HTS) classifies a good based on its name, use, and/or material used in the construction and assigns a ten-digit classification code number. So if a bag being imported is made of faux leather rather than real leather, then it would require a duty of 5.3% vs 9% for a real leather bag. Additionally, assigning the wrong classification code can lead to penalties of up to 48% of the good’s value.
In order for customs brokers and trade compliance systems to ensure high accuracy, the information provided needs to be correct, up-to-date and structured.
Enter product data feeds.
Product data feeds are about more than just automation. Information sent via multiple vendors in different formats can be hard to manage. A source-of-truth database that can deliver product data in a fixed format can simplify operations.
Information via Semantics3’s UPC API can provide brokers with a simple and standardised set of product information including detailed description, product images and latest prices from various retailers. Brokers then have to spend less energy understanding the information and more on classifying the product accurately for customs boards of different countries.
Cleanup existing data
While our Data APIs can provide you with standardised data, our AI-powered APIs can improve your existing data. For example our Feature Enhancement API can extract features from unorganized text fields, standardize the data and finally, normalize the data.
Higher accuracy in feature enhancement, and by product classification by extension, means improved performance even for associated systems such as Trade Compliance softwares.
Handling multiple classification systems
Different countries have different custom trade classification systems. To complicate things even more, organizations like the United Nations have their own codes such as UPSPSC for the UN Development Programme (UNDP).
Semantics3’s AI-driven Categorization API can use inputs like name, brand, manufacturer, and description to map products to the Semantics3 Master Category Tree. Using this as a baseline, companies can map their products onto any target category tree, including target country HS, UNSPSC and tariff code taxonomies, as well as your own internal product taxonomy.
You can also do the reverse and easily look up GTINs or UPCs to ensure that they are mapped to the correct UNSPSC and HS Codes (tariff codes) to minimize fines.
Artificial Intelligence for Tariff Compliance — a win-win deal
Complying with the international network of tariff rules, import duties, and regulations is hard work. It requires many hours of manual labor, referencing charts, tables and memory, and it can cost your company millions of dollars a year in fines and lost revenue.
In this age of international ecommerce, getting goods out to any country in record time is going to be the next battlefield for retailers, traders and arbitrators — the last thing that you need to be doing is working more paperwork to get your goods through customs.
Our Artificial Intelligence-driven APIs can help with that.
Liked what you read?
Checkout our Tariff compliance solutions at semantics3.com
Published at: June 13, 2017