Cross-border trade comes with its share of ever-changing regulations. Get ready for disrupted customs procedures in the EU next year!
In March 2023, the EU will introduce the second release of its Import Control System 2 (ICS2), coming two years after the first release. With the high volume of goods imported into its single market, accounting for around 15 % of the world’s trade in goods, the EU decided to upgrade security protocols with the ICS2, split into three phases.
The ICS2 requires carriers transporting packages into or through the EU to provide a complete set of data on the goods prior to arrival. This new customs security model will impact not only carriers but all businesses shipping to the EU. Vague item descriptions on customs forms won’t be accepted anymore, and HS codes will be required on all customs forms. This means that businesses lacking the technology to assign HS codes correctly and quickly will face a whole new set of challenges. Keep reading to get a clear understanding of the ICS2, your obligations from March 2023, and how Eurora can help you get ready on time.
Why should I care about the second release of ICS2?
No matter if you are a carrier, retailer, postal operator, or logistics provider, you will be impacted by the ICS2 if you ship to the EU. Although air carriers, postal operators, and express couriers are legally responsible for complying with the second release of ICS2, retailers are strongly recommended to get familiar with the new requirements. As of March 1, 2023, HS codes will be required on customs forms for all EU-bound goods. If retailers do not provide HS codes with their shipments, the carrier or logistics provider will have to assign them. This is an additional challenge for the carrier who won’t know the products and may unintentionally use incorrect HS codes.
With this in mind, retailers should assign the correct descriptions and HS codes on their packages themselves, so they can avoid delivery delays and errors. This is especially critical if the retailer pre-collects duty and tax from his customers. If customs receive the wrong HS code from the carrier, the retailer’s customer can be wrongly asked to pay additional taxes. In addition, retailers must make sure they can provide accurate item descriptions. Vague item descriptions on customs forms such as “gifts,” “clothing,” and “electronics,” will no longer be considered acceptable descriptions.
What exactly is ICS2?
ICS2 is a new and updated customs electronic import system. It will manage the advanced safety and security risk analysis for all goods entering the EU, and it is gradually replacing the Import Control system (ICS). The main goal of ICS2 is to allow customs authorities to better identify high-risk consignments and intervene at the most appropriate point in the supply chain, as well as strengthen the protection of internal market against security and safety threats.
The rollout of ICS2 is performed in 3 phases:
- Release 1 – March 15, 2021: Air Mail/express shipments (pre-loading)
- Release 2 – March 1, 2023: Air general cargo and Mail/express shipments (full)
- Release 3 – March 1, 2024: Maritime, Road, and Rail
Each release affects different economic operators and models of transport. These economic operators will begin declaring their goods to ICS2 depending on the type of services they provide. The first release focused on pre-loading data for air express carriers and postal operators and the second release focuses on transport of all goods by air (complete dataset). The third release coming in 2024 is aimed at operators carrying goods on maritime and inland waterways and roads and railways.
What do I need to do from March 1, 2023?
From March 1, 2023, all air carriers, freight forwarders, express courier services, and postal operators transporting goods to or through the EU by air must digitally submit a minimum set of data to EU customs before loading goods onto the aircraft. In addition, they must submit a complete set of data before the goods arrive in the EU.
More parties will be involved to gather the necessary data. To have goods clearing customs without a hitch after March 1, 2023, here is what the supply chain should look like:
- The retailer prepares his EU shipment and includes detailed product descriptions and HS codes
- The forwarder receives the shipment along with its filed shipment details and forms
- The freight forwarder either submits shipment data to ICS2 or passes it to the air carrier with the package.
- The air carrier confirms he has all the information needed for the shipment or that the data is already submitted to ICS2.
However, if the carrier does not have enough information to submit to ICS2, problems will arise. The carrier will have to either reach out to the retailer and ask what the package contains or open it. Then the carrier will have to assign descriptions and HS codes himself. In case the data is not provided to the customs authorities, the goods will not be processed for customs clearance. This can lead to delays in the supply chain and sanctions for non-compliance with the regulations.
How can Eurora help me with the new ICS2 requirements?
The new ICS2 requirements highlight something we already know: HS codes are the backbone of cross-border trade compliance. Whether you are a retailer or a carrier, allocating HS codes with the highest accuracy is vital to keep trading with the EU after March 1, 2023. However, HS codes are the weak point of many businesses that do not have the necessary technology in-house. If this is your case, outsourcing the assignment of HS codes is the best way out.
With Eurora’s HS Code allocation service, you can get the correct HS/HTS code for your goods and parcels in real-time. We support up to 10 digits country-specific nomenclatures and we use the power of AI technology to assign the correct HS codes in no time. Our platform can process up to 5,000 requests per second with 98% accuracy – the highest level of accuracy, speed, and automation available in the market. As there are more than 15,000 10-digit commodity codes in the EU alone, it is impossible to match this speed and cost with manual or hybrid methods, most used today.
Do you want to be ready on time for the second release of ICS2? Get in touch with us today!