As if the foot soldiers of global trade needed more complications this holiday season, many logistics managers and customs brokers are starting to brace for a mini Y2K moment come Jan. 1.
That’s when changes will take effect to the official nomenclature for hundreds of product groups used to classify imports and exports. So-called Harmonized System numbers — known as HS codes — exist on more than 5,000 product categories developed by the World Customs Organization, an intergovernmental group in Brussels that updates them every five years or so.
In 2022, the biggest changes are coming for electrical machinery and parts, wood, textiles, fish and organic chemicals.
More than 350 global HS codes are getting updated, and some 1,500 harmonized U.S. tariff codes are subject to revisions, according to a recent webinar from Flexport. The categories are important, if a little wonky, because most items of international commerce falls into one and they can determine tariff levels.
Some codes are disappearing. After a respectable run through the 1970s and ‘80s, answering machines are about to lose their HS code. Made obsolete by voicemail, they rank 5,296th among 5,832 U.S. imports this year, according to Flexport data.
Globes — those spinning spheres that taught geography to schoolkids of the 1970s — will have their number (4905.10) retired, too.
“The trade in globes is not quite what it used to be,” Marcus Eeman, a global customs manager with Flexport, lamented about the U.S.’s 4,025th-biggest import.
Chemical Weapons?
Some new HS codes will appear, like one for pomace oil, a lower-grade form of olive oil.
Among the more intriguing additions, Flexport says there’ll be a “new code created for petroleum resins and other organic chemical compounds used in the manufacture of chemical weapons.” That should make it easier for authorities to track which countries are importing it and potentially using them illegally.
Other categories are getting renamed. Lamps will no longer fall under “lamps,” they’ll be classified as “luminaires.” There will be new subheadings for popular gadgets like smart phones, high-speed digital cameras and flat panel displays.
Economies preparing for the changes include the U.S., China, the European Union, Canada and Australia. The U.K., meanwhile, is still “finding their footing with Brexit and we expect them to get their act together by the end of the year,” Eeman said.
For all the changes to take effect on Jan. 1 in the U.S., there will need to be a presidential proclamation published in the Federal Register with the required 30 days of advanced notice.
So it’s worth looking out for that in coming days.
“My fear is that Dec. 1 will come and the presidential proclamation will be published and that’s when people will start to scramble,” said Tom Gould, Flexport’s vice president of global customs. “Then Jan. 1 will hit and you’ll have a bunch of people that have products that they need to import but they don’t know the classification, because the code that they’ve used in the past is no longer a valid code.’’
— Brendan Murray in London
(Editor’s note: Supply Lines wishes its readers in the U.S. a Happy Thanksgiving — we will return to your inboxes on Monday Nov. 29.)
Charted Territory
Not Getting Worse
Some supply gauges show summer strains easing slightly
Sources: Bloomberg Economics, ISM, BLS, Census Bureau
Measuring the strains. The supply crunch that’s helped drive inflation to multi-decade highs shows some signs of easing in the U.S. — but it’s still getting worse in Europe. That’s the takeaway from the latest readings on Bloomberg Economics’ new set of supply indicators. The U.S. measure declined in October, while remaining at a historically elevated level, suggesting shortages are becoming less severe.
Today’s Must Reads
- Extension rejected | The union representing about 15,000 dockworkers at the U.S.’s largest ports declined an offer by employers to extend existing labor contracts for a year, setting the stage for heated negotiations.
- Retail worry | Mall staples Gap and Nordstrom tumbled after reporting disappointing results, adding to a series of worrisome retail earnings and renewing concerns over the global supply-chain crisis.
- More chips | Samsung Electronics unveiled plans to invest $17 billion in a new advanced chip plant in Texas that will add more than 2,000 jobs, a marquee project that will fortify the U.S. semiconductor industry.
- Some improvement | President Joe Biden said that bottlenecks in the U.S. supply chain are seeing relief after his administration moved to improve operations at ports — promising that Americans will have no trouble buying food and gifts in the holiday season that begins this week.
- Brexit backlash | Britain’s biggest business lobby group urged Boris Johnson’s government to back down in its dispute with the European Union over Northern Ireland, telling him not to follow through on his threat to suspend parts of the Brexit divorce deal he signed with the bloc.
- Faux turkey | As real meat prices continue to soar due to supply-chain disruptions and the highest inflation in decades, fake meat has become an increasingly accessible alternative, just in time for Thanksgiving dinner.
- Recovery power | India’s economy showed steady signs of strengthening in October as services, manufacturing and exports kept it on course to post the world’s fastest economic growth.
On the Bloomberg Terminal
- WTO trip | The Biden administration is facing increased pressure to fulfill its commitment to a global waiver on Covid-19 vaccine intellectual-property protections as countries gear up for a renewed discussion on the proposal at a World Trade Organization meeting next week, Bloomberg Law reports.
- Supply jam | High sourcing exposure to Asia puts Nike, Adidas, Kohl’s and Gap on Bloomberg Intelligence’s list of retailers most at risk amid supply-chain constraints that could extend through 2022.
- Use the AHOY function to track global commodities trade flows.
- Click HERE for automated stories about supply chains.
- See BNEF for BloombergNEF’s analysis of clean energy, advanced transport, digital industry, innovative materials, and commodities.
- Click VRUS on the terminal for news and data on the coronavirus and here for maps and charts.
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