The next challenge for cross-border e-commerce – HS2022

Parcel shipments will be delayed at customs if retailers, marketplaces and their logistics partners are not prepared for the arrival of Harmonised System 2022 (HS2022), according to cross-border data specialist Hurricane.

In a month’s time, on 1st January 2022, the World Customs Organisation (WCO) will implement the 7th edition of its Harmonised System, bringing huge changes to how importers and exporters determine and assign HS codes to many of their products.

The Harmonised 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 over 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.

“This is the first HS update since 2017 so is a significant moment for anyone involved in cross-border e-commerce,” said Martin Palmer, Hurricane Commerce’s Chief Content and Compliance Officer. “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.”

HS2022 follows a year of significant regulatory change affecting cross-border e-commerce.

During 2021, there has been 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).

“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,” Palmer added. “The HS2022 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.”

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. Its denied parties service accesses more than 120 global lists including the UN, EU and OFAC.

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.