Shipping terms and codes

From HS codes to Incoterms®, there are lots of industry terms to get your head around. Learn what they mean and how to find the ones that apply to your shipment. 

What is an HS code?

HS code is short for Harmonized Commodity Description and Coding System. It's a list of numbers used by customs to classify a product. Find out why they're important and where you can get one.

Why are they important?

An HS code consists of at least six digits and is used by customs to classify the product being shipped. That way it can accurately calculate taxes and duties and apply any necessary restrictions.

If you don’t include the HS code on the commercial invoice and other shipping documents, you risk the receiver paying the wrong tax and could possibly delay the shipment.

How do I get one?

You can get one on your country’s government website. You can also use the HS code search tools online – just type in a detailed goods description and you’ll get your code.  

Say you’re shipping women’s short sleeved T-shirts made of 100% cotton – the HS code will be as follows:

Category: Textiles and Articles (62)
Subcategory: T-shirts, singlets and other vests (11)
Material: Cotton (42)
The HS code: 621142

With this number, customs authorities all over the world are able to identify the contents of your package.

What are Incoterms®?

Incoterms® is short for International Commercial Terms. They’re a set of 11 rules that define who's responsible for a shipment throughout the shipping process.

Why does my shipment need Incoterms®?

Incoterms® define the point in the shipping process when the responsibilities for a shipment (such as risk, costs and insurance) shift from sender to receiver.

Before goods are shipped, the sender and receiver agree on the Incoterms®, which specify who pays for what shipping costs. This lowers the risk of costly misunderstandings later – such as the sender failing to insure the goods, or the receiver having to pay carrier fees upon delivery.

Where can I find them on shipping documents?

You can find or write the Incoterms® on the commercial invoice. They’re required for every shipment.

2010 and 2020 editions

Incoterms® are developed by the International Chamber of Commerce (ICC), which releases a new edition around every 10 years.

The latest edition is Incoterms® 2020, however the previous edition from 2010 still remains valid and in use. Senders and receivers can use a rule from either version, as long as they agree on the same rule and specify the edition.