Financial Modeling and Cost Accounting for Shoes

Importing Shoes : HTS Shoe Import Duty and Shoe Tariffs

When shoes are made overseas they need to be transported to their final market.  Transportation is the act of moving it, but today I want to talk about importing shoes and import duty.  We wish it was so easy just to put the shoes on a boat and sail them here!  so easy! right?  Nope.

A standard Shipping Container
A standard Shipping Container

Once your shoe production run is finished the shoes are placed into an ocean freight container.  You have seen these giant boxes.  They are exactly the size of a 40 foot trailer on a semi truck. The standard size is 40 feet by 8 feet by 8 feet and holds about 5000 pairs.  There is the half size  20 footer and the Extra Large 40 foot High Cube (about 1 foot taller than the standard 40.
This is the standard shipping method  FCL (full container load) vs.  LCL less than container load or as loss freight.  Try to avoid LCL as it’s more expensive and takes longer and merchandise is not protected as well as when sealed in a metal shipping container.
Once your shoes are in the container they will be trucked to the freight harbor and delivered. This is handed by the Freight forwarder or the factories Freight forwarder.  The Freight forwarder is the company that arranges shipping and handles the export and import documentation.   They are responsible for passing the shipping documents to Customs officials of the exporting and importing countries. The forwarder contacts the shipping lines and schedules your container to meet the vessel traveling to your import harbor.
Because ocean shipping from china to the USA takes 15 to 20 days the forwarder has time to get your import documents processed before your shipment lands.

Shoe import duty depends on the country of origin and the destination country.   I’m going to talk about the import duty regulations for importing shoes from China to the USA.  The rules to classify shoes are common while each importing country may have different duties.

Footwear Import Duty course
Footwear Import Duty Regulation Course

Minimize Import Duty Charges 
and Avoid Costly Errors
To avoid customs clearance delays and costly fees, footwear designers, developers, and brand managers must understand the import duty regulations for shoes. 

Shipping shoes from China

For a shoe to be imported first it must be  “Classified” this tells the US government what you want to import and tell you what the import duty is.  A large shoe company will have an inhouse import specialist that will review the shoes  and assign the classifications.  It’s very important for you to know the duty classification as the duty must be added to your shoe price.  We call this “landing” or the “Landed Price”  This includes all the freight charges and the importing duty.
A quick word about the shipping.  This isn’t hard to hard calculate.  The container rate, document fees and inland transport divided into the number of shoes in the container.  For a full container load of 500 pairs  in a 40 foot container  the shipping from China to the West coast of the USA is around $.75 cents per pair..

How to import your shoes Your shoes must be “Classified” according to the HTS or the USA “Harmonized Tariff Schedule” This is a huge book over 8 inches thick!  But you can use the PDF HERE or look the search from the USA HTS web site. to classify your shoes.  There are many sections for shoes, it’s complicated and can be a little daunting but I’m here to help.  For the common shoes types there are only a few HTS codes you need to know.    Now some the rules may seem a little nuts but that’s how it goes.    Why do Snowboarding boots have ZERO duty?   Because the Senator from Vermont knows Jake Burton and they figured it out.

 
Play Video about Minimize Import Duty Charges and Avoid Costly Errors To avoid customs clearance delays and costly fees, footwear designers, developers, and brand managers must understand the import duty regulations for shoes. This online course will teach you the footwear classification rules, important HTS codes, and tariff regulations.

This online course will teach you the footwear classification rules, important HTS codes, and tariff regulations.

The Shoe Dog will tell you all about! 

Once you shoe is classified you can assign it’s HTS code to the shipping documents so the US customs officials can send you the bill.  Actually your freight forwarder will add this to your customs clearance invoice.   The HTS is a 10 digit code – like this  6402.19.05.30

6402.19.05.30 is for Men’s Golf shoes Imported at 6%  You can check for yourself here.

Leather Duty Men's shoe 8.5% What is the Duty on a leather shoe
Leather Duty Men’s shoe 8.5%

Shoe classification are based on material, function, gender, size, construction and it’s value. When reviewing a shoe you need to consider it’s majority material (over 51%).  Is it natural leather? or made from R/P “Rubber plastic”.    Leather shoes are 8.5% to 10% Duty (based on the FOB price).   So a suede leather skate shoe would be 8.5%.

 
A High Duty Textile Shoe 20% +.90 Ouch!
A High Duty Textile Shoe 20% +.90 Ouch!

The same design made from  R/P or synthetic materials would be 20% +.90 cents if it’s price is less than USD $12.50!   Or it’s more than $12.50 just 20%.

If you are a shoe designer, developer or Product manager need to know this stuff!   Maybe adding $.05 cents to a shoe price can save you +.90 cents in duty.

 

As a shoe designer or Product manager you should sit down with your import classification specialist and get to know how this works in detail.  When planning your product line designing duty efficient shoes can save your company big bucks and deliver less duty payments to the US government and more value to your customers!

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