Navigating Into the New Year: A Customs Checklist
There’s no doubt that 2020 has been an unforgettable and difficult year. With an unprecedented pandemic disrupting every aspect of our lives to critical capacity issues plaguing the logistics industry (and a lot more), it’s been quite the year.
That said, the new year is right around the corner. To help make 2021 a little easier for our clients, our team at Navegate put together this Customs Checklist to ensure that you and your business can start the new year strong:
1. Check on your vendors
Vendor relationships are more important now than ever before. Are they staying compliant with your agreements and customs regulations? Are you aware of your product’s exact country of origin? Having a close relationship with your vendors can protect you from miscommunication, misclassification, fines, and more.
2. Check on your terms
Do you remember the last time you checked on your shipping terms? Incoterms are easy to overlook, and they’re a common place to spend unnecessary money. Double-check your terms to ensure you’re not paying more than you need to or assuming responsibility where you shouldn’t. And definitely don’t be afraid to renegotiate terms that work better for your business.
3. Check in with your broker
One of the most important things you can do for your business is maintaining a close relationship with your customs broker. You should verify they know how the business has performed this year along with any plans for new products, volume changes, or production changes. Telling them as much as possible in advance can help you plan and keep your import process running smoothly.
4. Re-evaluate pricing
There may be increased landed costs for your business as new tariffs are put into effect. For many businesses, increased duty has caused margins to shrink notably. When trying to make up for lost revenue, it’s important to weigh which costs need to be handled by customers and which ones can be made up elsewhere.
5. Organize documents & storage systems
Your documents are organized and stored safely—not just in a file cabinet, right? For your business to stay customs compliant, you need countless documents and records to be stored, organized, and easily accessible. Overlooking things like proof of payment and proof of delivery, along with the more major shipping documents, can definitely make the end of the year more difficult. Our software Navegate Emerald can definitely help you out with this ability as the platform offers a central storage system and easy document uploading.
6. Check classifications
Having the correct classifications in this crowded logistical climate could save your business millions. It’s also an unpredictable time—when duty changes so rapidly, vendors may not advise the right classifications or have the most updated customs information. Confirming you have the necessary tools to determine correct HTS numbers and always showing how you came to your classification determination will save you time in the long run. Don’t be afraid to ask a trusted broker for help or a second look if you’re unsure.
7. Review duty paid
Once you’ve paid your duty, your work still isn’t done. If you re-export your products or receive damaged goods, you could be entitled to duty drawback, saving you precious money. It’s also important to evaluate your total duty paid to forecast your year and double-checking to ensure you didn’t overpay.
8. Evaluate bond amount
After you’ve looked at your total duty paid, evaluating your bond is the next stop. Bonds need to be 10% over the total duty amount and taxes paid over the last 12 months, so your bond requirement may have increased sometime over the last year. Make sure your bond is sufficient so that you won’t encounter any customs holds or end up paying the high price of single entry bonds.
9. Prepare for changes in the Harmonized Tariff Schedule (HTS)
It’s important that you know the latest HTS changes. The HTS is updated every two years, and the next update is due in January of 2022. The HS is updated every five years, and the next update goes into effect in January of 2022. You can find all the changes to the schedule in a published USITC document online – the changes reflect different classification numbers and modernized wording. For some customers with large product lists, these updates can take some time, so make sure to start early.
10. Stay updated
Unfortunately, tariff uncertainty doesn’t end with 2020 — let alone ever. Other countries consider new tariffs frequently and trade regulations are going into effect all the time. Rely on trustworthy news sources and your customs broker to keep you updated and ready for IMO 2020, the new USMCA, updated Incoterms®, and more.
As the new year approaches, we’re here to help you navigate new changes in the logistics world. If you have any questions or need any help with your end-of-year tasks, don’t hesitate to reach out to our experts.
And to all of our clients and customers, we wish you a happy new year!