Harmonized system code classification using supervised contrastive learning with sentence BERT and multiple negative ranking loss

Purpose International trade transactions, extracted from customs declarations, include several fields, among which the product description and the product category are the most important. The product category, also referred to as the Harmonised System Code (HS code), serves as a pivotal component for determining tax rates and administrative purposes. A predictive tool designed for product categories or HS codes becomes an important resource aiding traders in their decision to choose a suitable code. This tool is instrumental in preventing misclassification arising from the ambiguities present in product nomenclature, thus mitigating the challenges associated with code interpretation. Moreover, deploying this tool would streamline the validation process for government officers dealing with extensive transactions, optimising their workload and enhancing tax revenue collection within this domain. Design/methodology/approach This study introduces a methodology focused on the generation of sentence embeddings for trade transactions, employing Sentence BERT (SBERT) framework in conjunction with the Multiple Negative Ranking (MNR) Loss function following a contrastive learning paradigm. The procedure involves the construction of pairwise samples, including anchors and positive transactions. The proposed method is evaluated using two publicly available real-world datasets, specifically the India Import 2016 and United States Import 2018 datasets, to fine-tune the SBERT model. Several configurations involving pooling strategies, loss functions, and training parameters are explored within the experimental setup. The acquired representations serve as inputs for traditional machine learning algorithms employed in predicting the product categories within trade transactions. Findings Encoding trade transactions utilising SBERT with MNR loss facilitates the creation of enhanced embeddings that exhibit improved representational capacity. These fixed-length embeddings serve as adaptable inputs for training machine learning models, including support vector machine (SVM) and random forest, intended for downstream tasks of HS code classification. Empirical evidence supports the superior performance of our proposed approach compared to fine-tuning transformer-based models in the domain of trade transaction classification. Originality/value Our approach generates more representative sentence embeddings by creating the network architectures from scratch with the SBERT framework. Instead of exploiting a data augmentation method generally used in contrastive learning for measuring the similarity between the samples, we arranged positive samples following a supervised paradigm and determined loss through distance learning metrics. This process involves continuous updating of the Siamese or bi-encoder network to produce embeddings derived from commodity transactions. This strategy aims to ensure that similar concepts of transactions within the same class converge closer within the feature embedding space, thereby improving the performance of downstream tasks.