Shipping with HS and HTS Codes
- February 8, 2021
- Posted by: Management inSites
- Categories: Blog Posts, Foreign, Global, Insites, international business, Logistics, Subsidiary
If your organization intends to ship or receive items to or from overseas, it is important to understand an integral part of the international shipping process: the Harmonized System (HS) and Harmonized Tariff Schedule (HTS), which were developed by the World Customs Organization. The codes associated with these systems are used to classify and define internationally traded goods.
A traded good must be assigned a code in order to be imported or exported internationally. According to Datamyne, “these codes are important because they not only determine the tariff/duty rate of the traded product, but they also keep a record of international trade statistics that are used in nearly 200 countries.” HTS is used specifically for the United States, while HS is used elsewhere throughout the world. Before understanding how to differentiate between the two, and why, it would be best to begin with a general understanding of how the codes work.
Here we will use the example on the Datamyne site to dive deeper. Let’s assume our parent company is shipping Certified Organic, roasted, caffeinated coffee. The HTS code for such an item would be 0901.21.0035 :
- The first two digits indicate the “Chapter”, or the most inclusive group of classifications. 09 indicates that it is Coffee, Tea, Mate and Spices
- The following two digits are the “Heading.” So, 01 indicates that the product is Coffee, whether or not roasted or decaffeinated; coffee husks and skins; coffee substitutes containing coffee
- The next two digits are the “Subheading” for HS codes. Here, the 21 specifically tells us that the item is Coffee, Roasted, Not Decaffeinated. (Decaffeinated roasted coffee would have a different Sub Heading number assigned to it (specifically 12).)
- The following two digits are the “Subheading” which determines the duty. In this instance, we have 00, which shows that there’s no distinction for this particular product.
- Finally, we come to the last two digits, which are uniquely for HTS codes (since HS codes only have 8 digits in total). These last digits further define what the product is. In this case, the 35 shows that the roasted, caffeinated coffee is also Certified Organic.
HS codes (used internationally) have eight numbers, while HTS codes have 10. Often, but not always, the first eight digits are the same between the two systems. However, one can never know in which cases the two codes will overlap for those first eight digits, so a search for the entire code is necessary when going from one system to the other.
Why would I need to know both codes?
If your parent company is accustomed to shipping throughout the world (exclusive of the United States) it would typically work with HS codes. But once it begins shipping to the U.S., it would have to re-categorize all of its outbound products with HTS codes.
How do I find the HTS and HS codes?
You can search for the HS code by inputting information about the item into the European Customs Portal. When searching for the HTS code, you can do the same on the Harmonized Tariff Schedule site. As you become more familiar with the codes, you will see how close they are to each other, and how the HTS codes generally just provide one more layer of description to the product.
While the process of determining your HS and HTS codes might seem tedious, being precise about it is essential. The codes provided to customs determine the duties that must be paid. Furthermore, incorrect HTS codes on a shipment can significantly delay when the freight is released from customs. Doing your homework beforehand will save a lot of time and money in the long run. And as the manufacturer, it is your responsibility to check and make sure the HS and HTS codes being used are correct. Never assume that what is suggested by a customs broker or another party is right. Always look for yourself to ensure the codes being used are the most suitable. After all, as the producer, you know your products better than anyone else!
Shipping with HS and HTS Codes
- February 8, 2021
- Posted by: Management inSites
- Categories: Blog Posts, Foreign, Global, Insites, international business, Logistics, Subsidiary
In our previous post on the topic, we covered some important things to remember when setting up your company in the U.S. market. Beyond operations, sales, and marketing, a manager would be remiss not to focus on how cultural differences might impact the success of a subsidiary.
The U.S. is not homogenous
Unlike several other countries, the U.S. is vast – and not just in its size. Americans tend to break up the country into its East and West coasts, and the Midwest. But there are even more segments, like the South, Pacific Northwest, the Northeast, Florida, and Texas – all of which differ greatly from each other. There are several big cities, countless medium-sized markets, and even more rural or suburban areas. Interacting with people living in big cities will differ greatly from interacting with people in smaller towns. While it would be unwise to generalize, it is best to understand the culture of the part of the U.S. in which you are doing business before having expectations.
Patience is not always a strength among Americans
When in negotiations or conducting business, Americans tend to want to just get the deal done. While many other cultures take their time, get to know everyone involved, and move along at a comfortable pace, those in the U.S. do not always see a need to drag things out. Get ready for what looks like impatience, when in reality it is just a desire to be efficient and effective.
Don’t plan on in-person meetings
At least not all the time. The tendency for Europeans and Asians to conduct most business in person is not the same in the U.S. Phone calls, emails, and now even video conference calls are the norm. Businesspeople like to work efficiently, and don’t gather in person unless it is necessary. First meetings, larger negotiations, and important topics are generally discussed in-person. Otherwise, don’t be offended or surprised if many of your interactions are taking place remotely.
Open-minded over traditions
A positive aspect of Americans in general is their ability to have an open mind. Many other cultures rely heavily on traditions, and act in certain ways because history dictates that they should. That is not the case in the U.S. Americans tend to welcome new ideas and concepts perhaps more freely than their foreign counterparts.
That being said, Europeans tend to rely on strongly forged bonds in which trust is paramount. Loyalty is key. Americans tend to be looser and more pragmatic when it comes to doing business. They don’t necessarily need to have known someone for years to begin working with them. At the end of the day, it’s about getting the deal done.