Trade globalization and modern manufacturing processes result in many businesses involved in an international supply chain of goods. A given manufacturer frequently obtains assembly components from suppliers located in various countries and each of the suppliers, in turn, may obtain subcomponents from suppliers in other countries, and so on. It is the norm that products may have subcomponents made in various countries. Coupled with the prevalence of ‘just-in-time’ inventory management, timely international shipping of parts is a critical aspect of maintaining orderly and efficient supply chain management. Facilitating importation of such shipments is critical to modern manufacturing processes and providing an efficient global trade economy.
However, importing goods of a shipment is a complicated process involving many regulations that vary from country to country. For example, many countries restrict the type of goods that can be imported under the auspices of international trade agreements or unilateral regulation by the importing country. Special permits may be required for importing particular goods to a particular consignee. Finally, each country has different documentation requirements that must be met and these typically based on the type of good being imported (e.g., machine products, textiles, agricultural goods). To facilitate processing, most countries have adopted an international goods classification scheme for categorizing goods. The scheme provides a classification number along with a description of the goods. The importing country assigns a duty rate based on the classification of the goods. Thus, the duty rate in conjunction with the value of the goods (and other factors) allows calculation of the duties and taxes to be paid to customs for the imported goods.
Although a basic business function, determining the cost of importing goods (i.e., costs other than the purchase prices of the goods) is a complicated process. Obtaining an accurate cost of importing goods has been, and still is, a difficult endeavor, frequently filled with estimates. Because ascertaining an accurate cost prior to shipping is so difficult, initial estimates are often used and the final cost is ‘trued up’ after the goods are imported and the actual cost of importation is determined afterwards.
The cost of importing goods is often referred to as the ‘landed cost’ of a shipment. This involves the total cost of delivering the goods from origination (shipper) to destination (consignee) and comprises transportation (shipping) costs and various duties and taxes. The transportation costs are associated with transferring, loading, and unloading the goods along the route (frequently involving costs associated with air or marine transportation, portage, short term storage, transfers, local shipping, etc.). The other major components of landed cost are the regulatory costs of duties and taxes that are dependent on the destination country. These costs may include various value added taxes (VAT), import duties, custom (tariff) charges, and surcharges assessed based on the type and value of good. For example, a raw product and a processed product of the same basic material (e.g., spooled wool fiber versus woven wool fabric) are taxed and tariffed differently. Alternatively, a single consumer product, such as a wrist watch, may be tariffed and taxed as multiple commodity items, e.g., a watch band, watch works, and watch case. As expected, taxes for a jeweled, gold-metal watch case are less than taxes for a plain, steel-metal watch case.
It is readily evident that consistent assessment of tariffs and duties requires a well-defined international goods classification scheme. That is the purpose of the Harmonized System of Goods. Manufacturers, transporters, exporters, importers, customs officials, statisticians, and others use the system for classifying goods for international trade under a single commodity code. The system contains approximately 5,000 headings and subheadings of goods, generally organized by industry segments. While the scheme is international in nature and authority, the treatment for goods of a given classification is national in nature and varies by each importing country. Some countries may define sublevels of classifications. Determining the duties and tariffs associated with a shipment (a process called ‘rating’) requires knowledge of not only the importing country's regulatory requirements, but the rules of how that country applies the international classification system.
Once the shipment has been rated (and assuming none of the items are restricted from importation), the required duties and tariffs must be paid to the appropriate governmental agencies, typically the Customs Office. Information for each good being imported must be detailed to the Customs Office in a document called a Declaration. The creation of the Declaration can be divided into two activities. In the first activity, the carrier typically communicates information regarding the shipment to a broker. The information includes description of the items, values, quantities, shipper, etc. In many instances, the carrier obtains this information from the shipper when the shipment originates. The second activity involves the broker classifying each of the items in the shipment that generates the amount due for the duties and taxes. Once completed, the Declaration can be communicated to the Customs Office by either party along with the amount due. Once the amount due is collected by the Customs Office and has reviewed the Declaration, the Customs Office issues a “customs clearance” to the carrier indicating that delivery to the consignee may proceed. Usually, if goods have arrived at that importing port or terminal, the imported goods are temporarily stored until clearance is obtained, and then local delivery of the goods continues. To minimize storage costs and delays, it is desirable to provide accurate and complete information to the Customs Office to facilitate a timely clearance response for a shipment.
Rating is based on a “Declaration” indicating the goods shipped. The Declaration includes, among other information, the quantity of items, their description, part number, and value. The items may be further decomposed into ‘commodities’ correlating with internationally recognized commodities for customs processing and which are identified by tariff codes. For example, an imported wristwatch may be listed as commodities comprising a watchband, case, and watch mechanism. The Declaration provided by the originator may detail the commodities and associated tariff codes, and if provided, this simplifies customs processing. Frequently, the item description provided by the shipper does not directly comport to an international commodity description, or if it does, no tariff codes are provided. This significantly complicates rating as the carrier or customs broker must determine the appropriate commodities and tariff codes for the identified goods.
Often, a shipper exports the same type of goods to a given importer over time. The absence of a tariff code on the initial shipment may often necessitate research and determination of the tariff code by the carrier or customs broker. However on subsequent shipments, once the carrier has determined the tariff code, it would be preferable for the carrier to utilize previously obtained knowledge of tariff codes to quickly determine the tariff code on subsequent shipments.
It is well recognized that computer systems are well adapted for handling complex logistics operations. For the carrier(s) shipping the goods, the myriad regulations, which also vary from country to country, present a complicated logistics operation that could benefit from the application of computer systems. Specialized brokerage agents exist in various countries to facilitate importation of goods and these agents may use computerized systems to assist them. However, each of these systems typically is developed for the specific importing country.
For example, U.S. Pat. No. 6,460,020, Universal Shopping Center for International Operation, discloses an integrated system that allows the selection and purchase of goods internationally and computes the associated taxes and fees given the commodity code of the goods being shipped, but it does not disclose a system facilitating brokerage operations independent of the purchase of the goods. Nor does it disclose how the integrated system is adapted to interact with each of the different countries' regulations or how the Custom's clearance status impacts handling shipments at the point of entry.
Similarly, the prior art disclosed in PCT Application WO 00/70519, titled Network Accessible Quotation and Shipping System, based on U.S. Patent Application 60/134,593; Ser. Nos. 09/464,543; and 09/464,537, discloses using the tariff code to calculate duties and taxes, but does not disclose how the system is adapted to interact with each of the country's Customs Offices nor how the customs clearance status affects the shipper's processing of the shipment or package.
The aforementioned systems determine duties and taxes based on knowledge of the tariff code, which in turn point to the appropriate databases. However, complete and accurate tariff codes for all items in a shipment are not always provided to a carrier. Frequently, an originator provides only a description and part number of the goods shipped. The part number has no global significance, and the description may not comport with internationally recognized goods descriptions. Since the carrier may be responsible for navigating the maze of regulatory requirements and determining the taxes, duties, and fees, the carrier has a need to readily determine the appropriate tariff code for the commodities being shipped.
Thus, there is a need for a system performing brokerage operations for international shipments that accommodates shipments, where the originator provides less than complete tariff codes identifying the goods. While such a system for a single importing country could be implemented on a single, large scale computer system, this system would have to be scalable to accommodate additional countries, or such as system would have to be replicated for each importing country. For example, a system designed to manage a carrier's shipments between the United States and Canada would not necessarily have the capacity to manage a carrier's shipments also involving the United States and Germany. Such a computer system would be required to maintain the rules and associated data (comprising rates, fees, duties, etc.) for each importing country. It is obvious that every time a country's regulations change (e.g., new rules or altering duties, etc.), the system would have to be modified to reflect those changes. Depending on the regulatory changes and how a brokerage computer system is structured, the regulatory changes could require altering existing data values or altering procedures for processing a shipment. Consequently, there is a need for a flexible, efficient, and scaleable computing system to facilitate management of international trade to provide rating and clearance status information.