Product Classifications: A Comprehensive Guide

Learning TTB Permit Validity

As you may already be aware, the Alcohol and Tobacco Tax and Trade Bureau (TTB) requires all US importers to submit a valid TTB permit number at the time of entry filing for non-exempt alcohol imports.
Unless an exemption exists, the permit number is mandatory in the LPCO screen number field for PG14 Type ‘TZ3’. Importers can only submit one TZ3 record per PGA entry line.
Effective October 29^th, TTB officials began issuing warnings if the submitted alcohol permit is not valid at the time of entry to assist importers in providing more accurate information to Customs.
Click here for additional information regarding TTB PGA Data – Alcohol Importer Permit Validations (CSMS #53781960).

Are Product Classifications Classified Information?

In September, U.S. Customs and Border Protection (CBP) issued HQ H290535 in response to a ruling request filed by an importer in 2017 regarding the potential risk of providing Harmonized Tariff Schedule of the United States (HTSUS) subheadings to customers.
The importer had asked whether the practice of recommending HTSUS subheadings is permissible without a Customs broker’s license. According to the CBP ruling:
- Providing subheadings for a Customs entry does constitute “Customs Business” and does require a Customs broker’s license.
- Supplying HTSUS to the six-digit level is not Customs business since the six-digit level is insufficient for Customs entry; and therefore, it does not require a Customs broker’s license.
To learn more about the inquiry and/or ruling, click here.
Classification questions can be daunting, which is exactly why we have developed our best-in-class(ification) system— Shapiro’s Classification Advisory Module (CAM). Ask us more about the benefits of CAM today!

King of the Road

“Trailers for sale or rent,” warbled Roger Miller in 1965 while singing his hit, ‘King of the Road’…and 53-foot trailers are in the news again in 2022, gentle readers!
Following the long buying binge through early summer 2022, US warehouses are swollen with cargo; and where do you put that cargo you bought too early or arrived too late…? In trailers, of course! This continues to propel the need and use of drop-and-hook trailer programs and pools across the country. Suddenly, the rather humble line and shape of a giant rectangle is a sex symbol—Ooo la la!
Demand for 53-footers is popping, with September orders up 47% from August as FTL/LTL carriers, truck brokers, and shippers all look to stock up.
Unfortunately, the cost of these sex symbols is rising rapidly—in part due to tariffs on steel and steel products. The average cost of a new 53 has eclipsed $60,000, with used trailers fetching as much as $40,000 a pop!
Most truckers also enjoy using trailers for…you guessed it, trucking! Current conditions are not great for the industry, with spot rates down 17% year-over-year (YoY) and smaller firms struggling with inflation overall—most especially fuel inflation.
Speaking of fuel, the cost of diesel rose 50 cents a gallon in October, though it dipped modestly in the final week of the month. We sit at $1.59 more per gallon YoY versus 2021.
Taking a closer look at the drayage segment, prices are fairly stable, but the industry lost some ground on coverage in several ports. It still requires 5-day notice on average to secure dray power in Seattle, New York, and Norfolk. The worst gateways for drayage? Yup, it’s still Memphis or any hub in Missouri. You better pre-dispatch there or you’ll find that you cannot locate that shirt on your back after paying your storage fees in KC or dealing with all the hooey in old St. Looey.

Odds, Ends, and Global Trends

Liverpool—long famous as the home of the Beatles—is now becoming infamous for dock labor strife. Stevedores are planning their fourth walk-out in the last 60 days, which is scheduled to take place from November 14 – 21. There is little reason for optimism in these long-stalled negotiations.
Richard Mitchell, a director for port owners Peel Group, said, “our latest and final offer represents an average increase of 11%–significantly higher than any other UK port.” Mitchell also noted that The Continuing Story of Bungalow Bill has long been his favorite Beatles song.
The port of Chittagong has finally released a vessel chartered by Hapag Lloyd—the Hansa Rendsburg—after holding it hostage for 36 days due to some very poor pier parallel parking wiping out a gantry crane.
Vessel owner, L&B Hansa Feederschiffe, was forced to pay $364,000 to free the Rendsburg, which also lost $720,000 while sitting idle. Interestingly, Chittagong port officials met L&B Hansa at midnight, required a bag of cash, and then handed over the vessel! For World Series fans, the $1.084 million loss is precisely what the Phillies pay Bryce Harper to play in 6.8 games (not a joke, sports fans!).
The Vietnamese government has the aspiration to become a major player in the steamship business. By exempting import taxes and greatly reducing cargo handling fees for goods carried by Vietnamese carriers, they hope to entice domestic companies to set sail from one of the planet’s hottest export markets. The government set the following lofty goals: 10% of the nation’s imports and exports shipping on VN-owned vessels by 2026 and 20% by 2030. Somebody should pull Vietnam to the side, and tell it about blank sailings, suspended services, and 75% rate declines in six months…not it!
It’s not an idle threat, but it is an idling threat. Watch the steamship lines mothball, drydock, or even “park” inactive containerships. According to Alphaliner, some 1.2 million TEUs, or about 5% of global capacity sits idle as of October 24^th; and they expect that number to grow dramatically in the coming months. This is troubling news for service reliability—and for you shippers who want to pay $19.95 for a Shanghai to New York 40’. Additionally, this is troubling news for sailors and seafarers who, like this author, absolutely hate, despise, abhor, detest, loathe, abominate, and even execrate the smell of mothballs.

Air Headlines

94% percent of United Airlines pilots have rejected a proposed new contract, with a spokesperson for the union stating that the offer fell short of the “industry-leading contract United pilots have earned and deserved.” An unnamed industry pundit quipped, “perhaps the pilots have not read about Covid’s impact on the airline industry?”
In October, global air cargo volumes slipped 8% YoY, while also losing three percentage points for chargeable volume compared to pre-pandemic 2019. Fortunately for airlines’ freight profits, overall cargo capacity remains 7% lower than 2019—which has staved off the massive rate erosion seen in the ocean freight markets.
Unfortunately for air cargo fat cats, the recovery in passenger travel and the expected delivery of new freighters should continue to increase total capacity; and this, combined with the woeful state of shipping demand, can only put intense pressure on airfreight rates. Based on the current costs of passenger travel, many people are locating appliance boxes, poking a bunch of holes in said boxes, and shipping themselves as air cargo. This is dangerous and dumb… like so much of what is happening in 2022!
Airlines and cargo handling companies are struggling mightily to attract and maintain staff for the hard work that occurs on the ground. Many air cargo enterprises are so badly short-staffed that realized transits are up as much as 50%; and the human bottleneck actually keeps rates inflated, since it badly affects overall industry efficiency.