Are you looking for ways to reduce costs when moving your goods across borders? Proper use of ocean tariff classification to reduce customs costs is one of the main ways to reduce fees.
By becoming familiar with tariff classification and its relation with customs duties, you can optimize your international trade-related expenses and your overall supply chain efficiency. Let’s explore what it is and how it can be used to reduce import and export costs for global trade.
Overview of Tariff Classification
Tariff classification consists of assigning categories to different types of goods based on the Harmonized System (HS) codes, which dictate the duties and taxes each product type owes based on its classification.
Understanding and knowledge of these categories is essential in global trade. Correct classification ensures you avoid penalties, shipment rejection, and other customs issues. You can also take advantage of ocean tariff classification to reduce customs costs.
At EP Logistics, we offer expert guidance through our customs brokerage services to ensure that your shipments are compliant at all times and to help you reduce costs in customs-related operations.
Financial Benefits of Accurate Tariff Classification
With proper tariff classification, not only you avoid penalties, but you can also gain savings by ensuring you are only paying for the right type of goods you handle. Besides, there are other benefits such as:
- Getting Customs duty reduction
- Avoid overpayment
- Import tax minimization by aligning with preferential trade agreements
- Redirect saved resources to other areas of the business
As a trusted logistics company, at EP Logistics we oversee the correct classification of your goods to ensure your shipments stay compliant, and we also look for every opportunity available that allows for tariff savings.
Minimizing Customs Disputes
Poor tariff classification leads to errors that damage your profits and the efficiency of your operations, slowing down your whole supply chain.
Ensuring product classification accuracy is critical to avoid issues such as:
- Customs disputes
- Shipment confiscation or holds
- Delays
- Potential fines
- Unexpected expenses to resolve the situation
Strategies for accurate product classification to lower customs expenses:
Here are some effective and proven strategies you can implement for better product classification, avoiding error penalties, and helping you lower customs expenses:
- Auditing your processes and shipments often
- Periodically verifying HS codes
- Using customs valuation methods that align with regulatory standards
- Leveraging free trade agreements to reduce tariffs on imported goods
- Implementing tariff engineering to minimize import duties in global shipping
- Utilizing Foreign-Trade Zones (FTZs) to defer or eliminate import tariffs
- Assessing the impact of product origin on applicable customs duties
- Optimizing Harmonized System (HS) codes for cost-effective international freight
- Partnering with a trusted customs brokerage provider, like EP Logistics
By planning and implementing these strategies, you can avoid costly errors due to incorrect tariff classification.
Working with experienced customs brokers and a 3PL who incorporates strategies for cross-border freight into their services, like EP Logistics, will offer you the peace of mind and guidance needed to ensure the smooth passing of your goods through customs.
Tools for Tariff Classification
Let’s now explore the most common tools and resources you can use to ensure a proper classification of your goods to better take advantage of ocean tariff classification to reduce customs costs:
- Harmonized Tariff Schedule (HTS). This resource helps you identify and understand the HS codes.
- Trade compliance software. These tools can automate some parts of the classification process.
- FTZ Foreign Trade Zones Using them gives you access to duty deferral.
- Considering the importance of C TPAT. Participating in programs like these will give you access to great benefits.
With EP Logistics experience of over 20 years dealing with imports, exports, and customs requirements and regulations, you can rest assured our customs brokerage services efficiently handle every aspect of tariff classification, ensuring the maximum savings available.
Common Challenges in Tariff Classification
Being aware of the possible challenges related to tariff classification will allow you to plan and double-check your processes and documents to avoid common classification errors.
Some of the most common ones are:
- Customs paperwork mistakes.
- Incorrect duty assessments.
- Misclassification leads to higher supply chain cost optimization challenges stemming from misclassification.
- Failing to account for preferential trade agreements or duty drawback programs.
Our brokers at EP Logistics help you ensure that the correct classification of your goods is done, overcoming these challenges and avoiding delays, penalties, and headaches.
Real-World Examples of Cost Savings
With global commerce growing exponentially each day and increased customer expectations, taking advantage of proper ocean tariff classification to reduce customs costs, and maximize your profits so you can stay ahead of the competition.
Here are some examples of how a business can use ocean tariff classification to reduce customs costs in real life:
Case Study 1: Electronics Importer
An electronics company imports finished goods taking advantage of FTZ and storing them for 36 days.
While in the FTZ, no duty was collected, deferring it for 36 days, paying only for what was removed at the time from the warehouse. This allows the company to plan, direct, and defer resources as needed.
Case Study 2: Automotive Parts Supplier
An automotive parts supplier uses bonded shipments and reclassifies some of their products through HS code optimization, and with the help of EP Logistics brokers, implemented resulting in significant savings trade compliance strategies into their operations to enhance efficiency and reduce costs significantly.
Role of Experts in Tariff Classification
You might be wondering why you need a customs broker and whether it’s better to hire a freight forwarder or a customs broker—or handle all the customs requirements and regulations on your own.
Working with an experienced customs broker is usually the best option as moving your goods across borders involves many operations, attention to detail, getting familiar with international laws, codes, and much more.
A customs broker will:
- Take the hassle of knowing all regulatory rules and requirements away.
- Minimize the risks of customs duty reduction errors.
- Avoid penalties, shipment holds, and delays.
- Ensure all your required documentation and paperwork is complete, correct, and timely filed.
- Provide expert guidance in operations.
- Allow for faster response to overcome challenges.
Our EP Logistics customs brokers offer you over 20 years of experience managing tariff classifications, assisting with filling and filing of paperwork, and ensuring every shipment stays compliant with the U.S. and Mexico Customs agencies.
Choosing EP Logistics as your trusted customs brokerage partner
At EP Logistics, our goal is to make the process of moving your goods across the border easy and hassle-free, while optimizing your operations and reducing your import and export costs.
We focus on ocean freight and ocean tariff classification to reduce customs costs, proper filling and filing of your documentation, HS code optimization, and implementation of trade compliance strategies.
Contact EP Logistics today and learn more about how our customized solutions can help you save on customs costs while enhancing your supply chain operations for efficiency and profit maximization.
