May 17, 2020

Customs Procedures with Economic Impact

Commodity Codes
Freddie Pierce
3 min
The white paper is available now!
Incorrect product classification can have severe consequences and businesses are well advised to incorporate error-minimizing measures into their risk...


Incorrect product classification can have severe consequences and businesses are well advised to incorporate error-minimizing measures into their risk management strategy. SCM solutions provider AEB (International) dispels the most common myths about product classification requirements, importers’  obligations and available solutions in its latest white paper ‘The five most common myths about commodity codes and product classification’.

Cars, machinery, electronics, chemical products, and even daily consumer goods such as coffee, food, and textiles are all goods moving within the EU. These, and all goods traded with “third countries” outside the EU are assigned to “commodity codes”. They are defined in the Combined Nomenclature (CN), which is even applicable outside the European Union: countries such as Turkey that have bilateral trade agreements with the EU also use the CN.

 Commodity codes represent the key classifier in international trade, and they carry more weight than many suspect: they determine import duties for example, but also import and export restrictions, as well as licensing and documentation requirements, and they also play a key role in the authorisation of simplified customs procedures.

 For many global trading companies, product classification in accordance with the CN and global trade laws and regulations is a tedious and time-consuming task. Manually classifying products requires sifting through a nomenclature of 21 sections, 96 chapters, and over 5,000 subheadings to find the right code. Classifying goods and assigning the right commodity codes is typically a complicated and time-consuming process that requires a high level of expertise.

Although the significance of commodity codes is beyond question, they are frequently disregarded or underappreciated in day-to-day business. AEB’s latest white paper dispels common misconceptions, explains background information and legal requirements, and introduces solutions and business benefits on this complex topic.

Individual numbers and combinations of numbers in the commodity code have specific meanings. In general, exports require an eight-digit commodity code or CN code. This is uniform throughout the EU. Imports are subject to additional regulations based on national law, such as those governing the value-added tax on imports. That’s why imports require a ten-digit (or, in some countries, 11-digit) commodity code known as a customs tariff code.

These eight to eleven digits that make up the commodity code have quite an impact on businesses. Misclassification can mean that companies pay too much import duties – if they’re lucky – or, in the reverse scenario, they may be guilty of tax evasion. Misclassification can also result in unauthorised exports with corresponding penalties and export bans. Clearly, ignorance of the law is no excuse. 

The free white paper also introduces AEB’s classification software, ASSIST4 Classification. The new solution is part of AEB’s Customs Management Suite and facilitates the correct assignment of customs codes, enabling largely automated and fast product classification through self-learning algorithms to ensure correct and compliant export and import management while saving time and costs.

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Jun 21, 2021

Elon Musk's Boring Co. planning wider tunnels for freight

2 min
Elon Musk’s tunnelling firm plans underground freight tunnels with shipping containers moved on “battery-powered freight carriers”, according to reports

Elon Musk’s drilling outfit The Boring Company could be shifting its focus towards subterranean freight and logistics solutions, according to reports. 

A Boring Co. pitch deck seen and shared by Bloomberg depicts plans to construct wider tunnels designed to accommodate shipping containers. 

Founded by Tesla CEO Musk in 2016, the company initially stated its mission was to offer safer, faster point-to-point transport for people, particularly in cities plagued by traffic congestion. It also planned longer tunnels to ferry passengers between popular destinations across the US. 

The Boring Co. completed its first commercial project earlier this year in April. The 1.7m tunnel system is designed to move professionals between convention centres in Las Vegas using Tesla EVs. It says the Las Vegas Convention Centre Loop can cut travel time between venues from 45 minutes to just two. 


Boring Co.'s new freight tunnels

The Boring Co.'s new tunnel designs would allow freight to be transported on purpose built platforms, labelled as “battery-powered freight carriers”. The document shows that, though the containers could technically fit within its current 12-foot tunnels, wider tunnels would be more efficient. Designs for a new tunnel, 21 feet in diameter, show that they can comfortably accommodate two containers side-by-side, with a one-foot gap between them.

The Boring Co.’s new drilling machine, dubbed Prufrock, can tunnel at a rate of one mile per week, which is six times faster than its previous machine, and is designed to ‘porpoise’ - mimicking the marine animal by ‘diving’ below ground and reemerging once the tunnel is complete. 

Tesla’s supply chain woes 

Tesla is facing its own supply chain and logistic issues. The EV manufacturer has raised the price of its vehicles, with CEO Musk confirming the incremental hike was a result of “major supply chain pressure”. Musk replied to a disgruntled Twitter user, confused as to why prices were rising while features were being removed from the cars, saying the “raw materials especially” were a big issue. 

Elon Musk Tweet

Car manufacturing continues to be one of the industries hit hardest by a global shortage in semiconductor chips. While China’s chip manufacturing levels hit an all-time high in May, and the US is proposing a 25% tax credit for chip manufacturers, demand still outstrips supply. Automakers including Volkswagen and Audi have again said they expect reduced vehicle output in the next quarter due to a lack of semiconductors, with more factory downtime likely

Top Image credit: The Boring Company / @boringcompany

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