Classification Best Practices

As an independent consultant and Licensed Customs Broker my most frequent client requests are for classification help.

There are 3 ways to classify: 1) self classify, 2) consult with commodity manufacturer, 3) request rulings from CBP (imports) or BIS (exports).

HTS and Schedule B best practices include checking and confirming commodity classifications at least annually. Here is some info which will help:

  • Classification is subjective- tariff schedules do not necessarily keep up with technology
  • Customs definitions can differ from industry definitions
  • Different interpretations exist between countries and also between ports within the same country

The basic components of a best in class process are:

  1. Break down items from universe into groups
  2. Research- even if you think you know the correct classification is a good tool
  3. Identify necessary info needed for classification such as materials, dimensions, intended use, etc
  4. Documentation- needed to support your determination
  5. Automation- implementing a software classification tool will improve efficiency and productivity
  6. On-going maintenance and monitoring for changes in HTS binding rulings and in your products is essential

Supporting documentation includes

  • spec sheets, drawings, photos
  • info requests from engineers, scientists, chemists, etc
  • HTS chapter and section notes that apply to your product
  • explanatory notes
  • informed compliance publications
  • customs rulings that apply to your product
  • record keeping (5 years)

contact mitch@adhoclogisticsfor immediate assistance.

Performance Chain Revisited

The logistics industry is heavily dependent on data and technology. The most successful LSPs (Logistics Service Providers) are innovative in their efforts to improve service and productivity to the benefit of both clients and providers. The nuts and bolts of logistics also involves people, so basic front line management skills can improve operations.

Here is a proven method for the toolbox. The links of the performance chain can help with day to day management and problem solving.

Expectations– Are goals and deliverables crystal clear? Don’t assume. Feedback– Information which is specific, timely, and relevant. Not just an annual review. Resources– Time, tools, and staffing to do the job right. Skills/Knowledge– Is training needed? Managers often point to training as the solution to problems. However, if employees know how to do the job training may not be the answer to performance issues. Look to the other links of the chain. Capacity– Does the person have the physical and mental ability to do the job with training? If not, reassign or terminate, and screen new hires more carefully. Incentives– What rewards are most meaningful to the workforce? These include money, benefits, flex time, etc. and will vary for individuals. Incentives are external and provided by the company. Motivation– Internal and personal to each employee. Top performers are self motivated. For others the idea is to bring out their motivation through incentives, training, or simply clearer expectations and feedback.

New to management? The performance chain is a good starting place. Experienced manager? Old dogs can learn new tricks.

Thanks to Jack Zigon for refreshing my memory.

LinkedIn Post

Posted 8/16/2019

Taking the Customs Broker exam ?

In a recent post I gave an example of a tricky question which sometimes appears in the exam. Here is the question and the correct answer (D).

Importations of switchblade knives is permissible by 15 U.S.C 1244 if:

D. The entry will contain, among other documents, a declaration in duplicate stating that the switchblade knife has a blade not exceeding 3 inches in length and is possessed by and is being transported on the person of an individual who has only one arm.

The exam is difficult, with normal passing rates of around 11%. For my prep strategies click here:

Trade War Comment

Mitch’s comment on LinkedIn

Pete Mento • 2ndManaging Director Global Customs and Duties, Crowe LLC1dThe decision to split Section hashtag#301Tariff List 4 so that a portion doesn’t go into effect until well after the holidays was a major concession and a possible significant misstep by the hashtag#WhiteHouse. S

Mitch Kostoulakos, LCB   

I’m not an economist but how about this? Declare victory and call off the trade war. With interest rates at historic lows borrow money and invest in badly needed infrastructure. Maybe avoid recession.

Manage Your Carrier Relationships

LSPs, especially motor carriers, make extensive use of “customer entertainment” to gain and retain market share. Lunches, dinners, and sporting events are a big part of the job for carrier representatives. Developing client relationships makes the time and expense worthwhile for the rep even when business is not actually discussed. Access to decision makers, information to be used in negotiations, opportunity to present logistics solutions, and benefit of the doubt when problems arise are the result of good relationships for the LSP.

For the client the benefits can include good faith negotiations, competitive pricing, industry intelligence, and faster problem solving . It is best, however, to manage the relationship. Keep it professional and not personal.

Business lunches can be productive for both parties. Clients should have an agenda with a few discussion points. Remember, as with any meeting, if you don’t have an agenda you are subject to someone else’s. Mention your agenda when scheduling lunch and you will have your rep’s attention. Consider having lunch brought in so you are on your turf.

Expensive dinners and sporting events are much less productive from a business perspective. Food and drink becomes the main event. Business discussions are limited especially if spouses are in attendance. The game takes precedence at sporting events. Big ticket entertainment turns the relationship from professional to personal. It is best to limit your exposure and partake sparingly if at all.

In summary manage your carrier relationships, Don’t let your providers “reward” you for your business. It makes it much more difficult to change providers or negotiate new deals.

What’s a Schedule B Code?

Posted on LinkedIn:

A recent client project involved research and advice about Schedule B codes used in AES (Automated Export System) filings. Shippers often use Schedule B or Harmonized codes they have been given without understanding what the codes mean. 

 As I usually explain to clients, Schedule B is for export from the US and Harmonized codes are for imports. Both are based on the HTS system in which the first 6 digits are universal.

Importing countries can ( and do) use their own last 4 or 6 digits.  So, since a US export is another country’s import, the Schedule B used for export may not match up exactly to the importing country’s harmonized code. 

As noted in a previous post, codes are updated annually so it is a good business practice to check and verify your data. If you need help contact mitch@