If you are shipping from Canada to US, probably you want to know the mode of shipping, how to ship hazmat, documentation, cost or bilateral trade agreements between Canada and US, amongst others.
So this guide will make the entire process easy and simple for you.
Keep reading to learn more.
- Cheapest Way of Shipping from Canada to US
- How to Calculate Cost of Shipping from Canada to US
- Documents you need when Shipping from Canada to US
- Time It Takes to Ship from Canada to USA
- Payable Taxes and Duties when Shipping from Canada to USA
- Handling Customs Clearance when Shipping from Canada to US
- Courier Services to use in Shipping from Canada to US
- Best Time to Ship from Canada to USA
- Hazmat Shipping from Canada to USA
- Truck Shipping from Canada to USA
- Ocean Freight/Sea Freight from Canada to USA
- Air Freight from Canada to USA
- Labeling Requirements when Shipping from Canada to USA
- Quality Standards to Considering during Shipping from Canada to USA
- Goods to Ship from Canada to USA
- Benefits of using Canada Freight Forwarder to Ship from Canada to USA
- How Door to Door Shipping from Canada to US Work
- Prohibited and Restricted Goods to Ship from Canada to USA
- How LCL Shipping from Canada to US compare to FCL Shipping from Canada to USA
- How Drop Shipping from Canada to USA Works
- Incoterms to use when Shipping from Canada to USA
- How Bilateral Trade Agreement between Canada and US Affect Cost of Shipping?
Cheapest Way of Shipping from Canada to US
Canada US Border
The cheapest way to ship your package from Canada to the US vary based on the weight, size and address from and to (destination).
Such information will tell you the possible cost of shipping hence one picks whether they want a cheaper or expensive but efficient option.
You can then use one of the trustworthy and biggest courier services such as USPS, UPS, FedEx, Flat rate export among others.
While FedEx is an expensive option, Flat rate export is a cheaper option.
You can also use a shipping mode that proves to be cheaper like LCL shipping.
LCL sea freight is cheaper but takes longer to reach US.
Air freight is faster but expensive.
The pricing for FCL sea freight is done at a flat rate irrespective of the content/size.
Express is suitable for fast shipping of small size packages.
It is not pricey as air freight.
How to Calculate Cost of Shipping from Canada to US
The cost of shipping from Canada to US will depend on the timeframe, delivery distance, weight, package size and the courier service chosen.
For instance, the cost of shipping a 5-pound package could be around $30for standard services and to approximately $170 for next day overnight services.
You can use a shipping cost calculator to get an estimate of the cost of shipping your product.
You key in the destination and shipment information and get an estimated cost.
FedEx, UPS, USPS, Canada Post and other courier services have their shipping cost calculators that you can access from their websites.
FedEx Shipping Cost Estimation
FedEx Shipping Cost Estimate
However, you can look at the below factors:
The cost of shipping increases with a higher package value.
The value is high due to the need to insure your products during transit.
When your package is lost or damaged while shipping, the insurance covers these issues.
The package is measured to determine its weight.
The weight is then compared against a set DIM.
They take the higher value which is used to calculate the shipping rate.
That said, a higher package weight translates to a higher shipping cost.
The distance from the loading point in Canada to the pickup point in the US determines how much the shipping cost will be.
The longer the distance, the higher the shipping cost.
Carriers often use DIM of the specified package to determine the shipping rates.
You calculate by multiplying the width, length and height and then dividing by the DIM value.
You can choose to use one among the several courier services in Canada such as FedEx, Canada Post, UPS, and others.
However, there are expensive ones such as FedEx and cheaper ones such as Flat rate export.
The shipping cost will depend on which courier service you chose to ship your products.
Mode of Shipping
There are different modes of shipping your packages from Canada to US.
The most expensive modes are Air freight while Ocean freight are cheaper for the same packages/goods.
If you are using air freight from Canada to the US and you pick express shipping, you will pay an average price of $329 (50 kg/0.2 cbm). And, this is for a door-to-door shipping.
Note: Do not forget to include insurance cost as it protects you in case your goods are damaged or lost.
Some of the ways of doing this is through your third-party insurance agent or freight forwarder.
The insurance costs are usually around 0.3 – 9.5% of your Commercial Invoice Value.
Documents you need when Shipping from Canada to US
To ship your products smoothly from Canada to US without fines or confiscation at the border, there are a number of documents that you must produce.
You have to ensure that you have these documents at the US customs before you pick your goods.
They are often prepared by different parties such as custom brokers or freight forwarders.
Below are the documents you need:
This document must always be there.
It is provided by the courier (UPS, DHL, FedEx, Canada Post etc.
Bill of Lading helps the carrier know about the destination of the specific parcel.
On it, you list the goods that are carried in the shipment.
Among the details are the contact information, weight, size, and contact information.
Freighters can create 3-part BOL (1 part for the driver, shipper and consignee on the other end).
Each person then signs their specific space on the document.
Bill of lading
It is needed for every non-document shipment.
Commercial invoice includes a full description and value of the shipped goods.
You need 3 copies of this document and it is included with shipment labels.
Rather than outside of the box, commercial invoice is included inside the pouch mainly for customs purposes.
One copy goes with the Bill of Lading while the other goes with freight heading into America.
iii. CUSMA Certificate of Origin
Certificate of origin
Certificate of origin document shows the origin of the shipment.
It ensures accurate collection of custom duties according to the regulations set by2020 Canada – United States- Mexico Agreement.
It includes the information of the exporter, importer, producer, date, tariff classification, and commodity classification.
iv. Canada Customs Invoice
You need one copy to accompany the freight from where it is picked to the place it clears customs.
Another copy is attached to the Bill of Lading.
You can write PARS CLEARANCE on the Customs Invoice if border clearance is shown on the Bill of Lading.
v. Airway Bill
This document often accompanies goods shipped by a Canadian carrier to avail detailed information about the shipment as well as allow it to be tracked.
Every person involved in the shipment gets a copy of Airway Bill to document it.
It is however better to have a BOL than AWB because it has less protection.
vi. Import/Export License
These documents are important for regulated commodities/products such as alcohol, tobacco, firearms etc.
America has to issue an import permit to the person handling the goods from Canada majorly for clearance purposes.
Often, this document varies depending on the goods a person is receiving from Canada.
Export license is a legal document that allows a Canadian shipping company to transport packages/goods to the US.
A company cannot be allowed to move products from Canada to the US without this document.
vii. Packing List
Instead of a commercial invoice, you can use a packing list.
A packing list has an itemized shipment that includes how the goods are packaged, safety handling instruction and weight.
It can be crucial as a bank payment document requirement, and shipping companies can use it make their Bill of Lading.
Time It Takes to Ship from Canada to USA
The time taken to ship from Canada to US vary by the service level chosen and courier option.
Just as there are more economical and slower services which take up to 7 business days, there are carriers that take a day to make deliveries.
Also, the time depends on the shipping mode chosen.
You can choose shipping express, Air freight shipping, or Sea freight shipping.
Transit time is also impacted by the season, shipment size, and location.
If you were using either Air, Sea/Ocean, or Express freight, you will look at the shipping modes and days taken.
Sea Freight (LCL) for port-to-port or door-to-door
Sea Freight (FCL) for port-to-port or door-to-door
Air freight for port-to-port or door-to-door
Express Freight for door-to-door
Payable Taxes and Duties when Shipping from Canada to USA
When you ship from Canada to the US, you have to pay custom duties before your cargo/goods are released into the US.
Usually, these costs are significant which is why you have to research early before you are caught unawares.
Below are the taxes and duties that a shipper has to pay when shipping goods from Canada to the US:
1. Import Tax (Custom Duty)
You have to pay for import tax (customs duty) on the goods you move from Canada to the US.
The customs duty varies by product type or country of origin.
You can use the HTS Code/Products Harmonized system to calculate the exact rate due.
Typically, the minimum threshold for import tax is $800.
All goods valued below this value are not subject to duty.
2. Import Duty
To determine the import duty value, you must check the commodity code then apply the import duty rate for this code.
The specified tax is due on the cost of the goods without shipping.
Handling Customs Clearance when Shipping from Canada to US
Customs clearance is not as complex as people are made to believe.
When a shipment arrives at the customs, you have to follow the below process:
1) A Custom Officer will look at the Paperwork for the Shipment
Every international shipment must have a commercial invoice listing the shipper and receiver’s contact information.
In addition are the airway bill number and export date.
Also, it will have a description of the product and the total value.
2) Customs Officer will Check to See if any Duties or Taxes Apply to your Shipment.
The values will depend on the laws of the importing country, their value and type of goods.
If the customs officer finds that the value of the goods is above the tax threshold then they check whether the duties and taxes have been paid for.
3) If the Import Duties and Taxes haven’t been Paid, Customs will Demand Payment.
If a shipment is tagged as Deliver Duty Paid, it means that payment of duties and taxes have been paid for.
There are express couriers that can process the payment for you through their custom brokers.
When you pay for the label, customs brokers get services at a fixed price.
If the shipment is tagged as Deliver Duty Unpaid, customs have to forward the package to an independent customs broker to collect the needed amount.
Since brokers are independent and they charge a different fee structure, the costs can be very expensive.
Fees such as storage, brokerage, and late payment fees can apply, making it hard to tell customers what their final payment will be.
i. After confirmation that the outstanding taxes and duties have been paid, the shipment can be released and continuous onto the final destination.
Once you have all the paperwork and know how to handle duties and taxes, clearing customs should not be a problem.
Courier Services to use in Shipping from Canada to US
Most clients prefer shipping their packages using courier services because they get detailed trafficking information.
FedEx Shipping from Canada to US
FedEx has excellent tracking capabilities, reliable delivery times, and offers support in finding the right custom documents.
It also has overnight tracking and shipping features/capabilities.
Shipping from Canada to US using UPS
UPS is the worlds largest courier company.
They are the most reliable offering several services within and outside Canada.
They have UPS Express Early for delivery in 1 day and UPS Worldwide Express Plus for delivery in 2-3 business days.
Canada Post from Canada to USA
All the packages sent through Canada Postare often handed over to USPS once the shipment crosses the border.
It is one of the largest courier services in Canada with efficient service and great rates.
Dwarka Courier Service
It is one the best courier and cargo services as it provides cheaper and secure way to send packages to the US.
Dwarka offers door-to-door service express delivery and pick-up line from home to the US.
This courier company is highly reliable with excellent tracking capabilities.
You can track your shipment as it moves from Canada to the US.
A Canadian courier company providing very efficient services and competitive pricing.
Purolator offers guaranteed shipping times such as Express 9 and 10.30 AM.
At times Purolator cooperates with other shipping companies like UPS where it handles the delivery to the border while UPS takes it to the final destination.
Due to the reliability of these two courier companies, using a third party to complete the delivery is very safe.
DHL is a huge company offering courier and shipping services.
DHL Express is a good option when shipping packages directly from Canada to the US.
USPS offers not only tracking but also insurance services for your goods from Canada to the US.
It offers USPS tracking numbers that customers can use to track their goods as they are transported to their final destinations.
Best Time to Ship from Canada to USA
The best time to ship from Canada to USA is during the middle of the month.
During this time, carriers struggle to fill their vessels hence they lower their prices.
Carriers are capable of introducing increases to shipping charges referred to as General Rate Increases (GRI) especially at the beginning of the month.
That said, you should book during the latter two weeks of the month as you save money.
Note: take note of the peak seasons both in Canada and the US when shipping your goods.
Freight rates, especially air freight rates and FCL sea freight are affected by seasonal factors.
Times when there are big events such as Holiday Shopping Season in the Fall months, the shipping costs are very high.
Avoid shipping during these times unless you are willing to pay high costs.
Hazmat Shipping from Canada to USA
Hazmat (Hazardous materials) are among the most expensive, regulation-heavy or complicated products to ship.
There are several rules and regulations needed to transport them because they pose a danger to the environment, property and people.
If you are found to have willfully ignore the hazmat shipping regulations, you can get fines or legal action.
Hazmat include explosives, radioactive materials, toxic materials and gases to minor products like nail polish, sprays, and liquor that could pose a handling and shipping risk.
When shipping from Canada to US:
i. Classify the Hazmat material. You have to fill a safety data sheet that will guide the person handling the product.
ii. Choose the right courier to handle your package
iii. Select the most appropriate packaging
There are laws for how you can package your hazmat products.
For instance, you can packaged dangerous liquids in a drum, aluminum, steel, or plastic drum.
It all depends on the specific type of liquid.
iv. You can mark and label your package
Marking our Hazmat depends on ID number, class of products, weight and other properties of the product.
Ensure that you follow the right regulations when marking, labelling and even placarding.
Something as little as the orientation of your arrow is very important, otherwise your package may not be shipped to the final destination.
v. Preparation of shipment papers
Ensure that you have filled all of the appropriate shipment documents otherwise your shipment may be delayed.
vi. Comply with the additional courier requirements
Ensure that you follow all of the requirements of your courier service.
DHL, UPS, FedEx, and USPS all ship hazardous materials.
Truck Shipping from Canada to USA
Truck shipping involves the use of road.
You transport large volumes of cargo, can fill a container.
Courier companies pick up cargo from Canada and take them to the US.
Less than Truckload (LTL) Shipping from Canada to USA
LTL is used in the transportation of relatively small freight.
You can equally use it when freight does not require the use of a full trailer.
It is preferable when the freight weighs between 150 – 15,000 pounds.
When a person is shipping LTL, the shipper pays for a part of the standard truck trailer their freight occupies while the remaining shippers and their shipment fill the unoccupied space.
Benefits of LTL:
LTL carriers often give tracking capabilities via the Bill of Lading number, pick up date range, shipment reference number, PO number, PRO number and others.
With LTL you get access to special services like inside pickup, liftgates or delivery.
LTL shipments has increased security.
The LTL shipments are packaged onto pallets before they are loaded onto a truck.
As compared to shipments with several smaller handling units, a one-well packaged pallet is more secure.
LTL shipping reduces costs.
One only pays for the part of the trailer used when shipping.
The other occupants of the trailer’s space cover the remaining cost.
Full Truck Load (FTL) Services from Canada to USA
FTL takes a whole trailer which is why it is chosen for large shipments.
It is equally suitable for time sensitive freight and when the good’s weight make them more cost effective.
Overall, it has a shorter transit time.
Benefits of Truck Freight from Canada to USA
- There are shorter transit times depending on the destinations
- There is wide range of transportation from LTL to FTL
- Door-to-door delivery without bulk breaking
- Weather delays are shorter
- More cost-effective
- There is increased security for shipments
- There is tracking capabilities
- There is more flexibility to where the goods can be delivered due to availability of roads
Limitations of Truck Freight from Canada to USA
- It is not as fast as air freight
- It is not as cheap as ocean freight
- There is high energy consumption
- There is extreme vulnerability to external factors such as bad weather/climate
- There is limited carrying capacity
Ocean Freight/Sea Freight from Canada to USA
Ocean/Sea Freight shipping includes LCLs and FCLs.
No matter the destination or size of shipment, Ocean/Sea Freight from Canada to US is the best shipping alternative.
Benefits of Ocean Freight from Canada to USA
- There is more flexibility on the type of cargo or amount you can ship due to the ship’s size
- It is more reliable as whether conditions do not affect the departure and arrival times
- It is suitable for longer distances and heavier items/goods
- It can safely carry hazardous and dangerous goods from Canada to the US
- It is economical as it offers the most competitive freight charges/costs to its shippers, especially over long distances.
- It is environmentally friendly
Limitations of Ocean Freight from Canada to USA
- It is a slower form of shipping option for your goods/packages
- It is less secure because there is increased opportunity for theft or damage
- There is limitation to places they can deliver the goods to
Ports in Canada
i. Port of Vancouver (the port code is CAVAN)
ii. Port of Montreal (the port code is CAMTR).
iii. Toronto Port (the port code is CATOR)
iv. Port of Saint John
v. Port of Halifax
vi. Port of Prince Rupert
vii. Port of Nanaimo
Ports in USA
America has around 360 commercial ports serving America.
Below are some of the ports that you can use for shipping your goods from Canada to the US:
i. Port of Virginia
ii. South Carolina Ports
iii. Port of Houston (Port Code USHOU)
iv. Port of Virginia
v. Port of Seattle Tacoma NW Seaport Alliance
vi. Georgia Ports
vii. Port of New York (Port Code is USNYC)
viii. Port of New Jersey
ix. Port of Long Beach
x. Port of Los Angeles (Port Code is USLAX)
- Shipping Companies from Canada to USA
Air Freight from Canada to USA
Air freight form Canada to USA is suitable for low-volume and high-value shipments.
It is the most reliable to meet quick shipping objectives.
Benefits of Air Freight from Canada to USA
- It is suitable for packages/goods that weigh less, around 100kgs.
- It is the fastest means of shipping your goods to Canada from USA. They move at 900km/hour. Shipment takes a few hours.
- Air fresh shipments are highly reliable. Airlines have dependable arrival and departure times hence one receives their packages at set times.
- Air freight shipments are easy to track. You can easily track your air freight shipment because you can look at the flight information and number of when the flight leaves and arrives at destination.
- Airfreight shipments are very secure. One does not have to worry about their goods getting damaged or stolen. It is often mostly used for high-value shipments which require safety. The goods also undergo very minimal handling making them safer. Back at the airport, there are tight safety controls over the cargo and the goods are cleared within a short time reducing the risk of damages/theft.
- There is reduced cost for insurance, warehousing, and packaging.
Limitations of Air Freight from Canada to USA
- Air freight from Canada to USA is very expensive that it is not suitable for low-value commodities.
- They are less likely to ship very large packages because of the weight. It has a small carrying capacity.
- Highly unreliable due to the unpredictable weather changes. Flights can be easily cancelled due to bad weather.
- High risk. A minor glitch can cause significant losses.
International Air Ports in Canada
There are several international Air ports in Canada that offer shipping services such as:
- Toronto Pearson International Airport
- Vancouver International Airport
- Winnipeg International Airport
- Victoria International Airport
- Thunder Bay International
- Halifax Stanfield International Airport
- Gander International Airport
- Montreal Pierre Elliott Trudeau International Airport (YUL),
- Ottawa McDonald-Cartier International Airport (YOW)
- Calgary International Airport
- International Air Ports in USA
The following are the International Airports in USA:
- Hartsfield–Jackson Atlanta International Airport
- Los Angeles International Airport
- O’Hare International Airport
- Dallas/Fort Worth International Airport
- John F. Kennedy International Airport
- Denver International Airport
- San Francisco International Airport
- Seattle–Tacoma International Airport
- Miami International Airport
- Orlando International Airport
- Cleveland Airport
Airlines to use during Air Freight from Canada to USA
You can use these airlines for Air freight from Canada to the US:
- Air Canada
- United Flights
- Delta flights
- Alaska Airlines
- American airlines
Labeling Requirements when Shipping from Canada to USA
Canada has rolled out a number of requirements mandating the labelling of some products or that some information be communicated on the packages and labels.
Labelling requirements are outlined under provincial laws, and Canadian federal regulations, laws, and policies.
Sadly, the labelling requirements are all not found in one place.
Health Canada requires under the Consumer Products Safety Act, Hazardous Product Act and Regulations of Narcotics and Controlled and Restricted Drugs that products have to be labelled appropriately.
Labelling HAZMAT for shipping
Hazardous Products Labelling
All hazardous products have to be labelled with a warning sign.
They could be dangerous, inhalation hazard, radioactive, corrosive, poisonous, oxidizer, flammable, or combustible.
Every label has to represent a hazard of the material contained in the package.
The label will be affixed to or printed on the surface of the package close to the proper shipping name marking.
Importers are not allowed to label any misleading information that can result in negative effects on the human body and health.
Importers must provide accurate information as labels on the already packaged consumer products thus helping with making informed decisions.
The label contains the accurate information about the quantity of the pre-packaged product.
This label must also contain the information about the age, quality, quantity, size, performance, geographic origin, composition, and material content.
You should ensure that you attach a legible and visible shipping label.
The shipping label is directly applied to the largest side of the container’s outer part.
This label is applied away from package seams and closure.
The postal code and address have to be written print lettering and upper case.
You can wrap a label around the edges of a counter if the shipped item is smaller than the shipping label.
Even so, the address the barcode of the item has to be flat and visible.
Quality Standards to Considering during Shipping from Canada to USA
Below are the quality standards that shippers/companies have to adhere to when shipping from Canada to US:
- ISO Container Standards; this standard ensures that the containers have the right dimensions to appropriately fit the goods they are intended to carry.
- I.R. Certification
- CSC Certification
- National ambient air quality standards and objectives
- Canada-Wide Standards
Goods to Ship from Canada to USA
Below are the goods you can ship from Canada to the US:
- Food, chocolate and candies
- Personal belongings/personal effects
- Sold/permanent goods
- Temporary imports
Benefits of using Canada Freight Forwarder to Ship from Canada to USA
There are several Freight Forwarders in Canada.
When you ship with Canada Freight Forwarder from Canada to USA, you can enjoy the following benefits:
With a freight forwarder, a shipper can reroute goods much easier via other carriers or port of loadings.
A shipper is therefore not tied down to a particular carrier for their popular routes.
For instance, if there are market changes and other carriers offer better packages for the customer then the shipper can take advantage of those rates.
When dealing with a freight forwarder, a shipper can deal with one point of contact to ship goods door-to-door rather than port-to-port.
They offer trade-related services such as:
- Managing the inventory so the right amount of goods is transported
- Insurance for all shipped products
- Handling documentation for shipments like Bill of Lading and Bank Papers.
Canadian freight forwarders offer value-added services that gives the shippers comfort and peace of mind.
They offer credit terms and purchase order track mechanisms.
Rather than shippers paying for goods before they reach their destinations, they are granted credit so they pay for freight cargo when they arrive.
Freight forwarders offer competitive costs and this depends on the services a company needs.
It is possible to lower prices to particular company making special arrangements with other companies.
They bring all of the shipments to form a single unit thus lowering the freight charges.
How Door to Door Shipping from Canada to US Work
Freight forwarding companies in Canada can handle door to door shipping from Canada to US.
Their work is to collect goods from the source (Canada) and deliver them to the final destination (US).
It is an excellent shipping process because it is easy to track.
Door to Door shipping eliminates the use of several intermediaries during the shipping process.
For this service, DAP is the most appropriate.
It does not cover for taxes and duties are applicable.
Some of the door-to-door services are:
Shipping a consignment as per a client’s instructions
Customs clearance in Canada and the US and this includes custom fees.
Sadly, custom duties and taxes are exempt.
Collecting the goods from the stated address in Canada.
This could be a place for household items or a factory for the manufactured goods.
Lastly, delivery is done to your door step
Prohibited and Restricted Goods to Ship from Canada to USA
To avoid having your shipments returned back to you at your expense, ensure that you know the prohibited and restricted goods to ship from Canada to US.
Make sure that your products comply with the Canadian laws and regulations and that you have the needed proper information and documents before shipping.
Below is a list of the prohibited and restricted goods to ship from Canada to US:
- Prescription drugs
- Merchandise from embargoed countries and more
- Alcoholic beverages
- Drug paraphernalia
- Tobacco products
- Any animal or animal products
- Human remains
- Lottery tickets
- Paraphernalia/illegal products
- Batteries (must be certified in Hazmat for receiver and shipper)
- Some toys
These are items that require a special license from the federal agency before the item is allowed into the country.
- iPad allowed but only by DHL
- Laptops allowed in case of DHL
- Cellphones are completed prohibited for air shipments. However, they can be allowed but in small quantities.
- Supplements allowed in small quantity
- Hand sanitizers are not allowed due to the alcohol content
- Maple syrup although people ask for lacey form. Allowed in small quantities
- Nail polish allowed only without alcohol
How LCL Shipping from Canada to US compare to FCL Shipping from Canada to USA
LCL (Less than Container Load) is an ocean freight method where small consignments share a single container.
You can ship small consignments from a wide variety of different businesses using LCL.
Every important custom check is done in Canada before the packages are loaded into the ship for dispatch.
A Full Container Load (FCL) usually has a single consignment loaded into the container without really filling it.
FCL charges the whole container, while LCL charges a client the space occupied in the container.
Since FCL is exclusive to a single cargo, the transit time is short.
There is no need to make any stops along the hub. On the other, LCL shipping takes longer because it involves going through several different hubs to pick or drop cargo.
Although LCL are safe, they are not as safe as FCLs.
LCL does not seal its containers because different shippers pack their goods in a single container.
FCL is safe because you seal it once packaging the products and are not opened until they reach the destination.
How Drop Shipping from Canada to USA Works
Drop shipping is a particular type of supply chain where a seller does not have a physical inventory of the items to be sold.
Drop shipping from Canada to the US opens an entire world of potential clients.
However, there is increased cost of shipping.
A client/buyer from America places an order for a specific product in Canada from an online-third-party store/seller.
The third- party store/seller in Canada sends the order to its dropshipping supplier/manufacturer/wholesaler.
The dropshipping supplier then prepares the customer’s order and ships it directly to the client in the US.
While the third-party store owner/online seller is tasked with marketing and selling the product, they are unable to determine stock availability, product quality or shipping.
Drop shipping has several benefits; staff employment, no storage costs or no stock expenses.
Drop shippers make the difference between the wholesale price and selling price following a deduction of the shipping costs.
With a reliable website and mailing information, a drop shipper is set.
One does not need a physical store.
However, they must have a company profile together with details which can be used as shipping addresses.
Drop shipping is legal; one does not force a seller to share their private information.
The goods that are shipped often have the address of the online seller.
It is mirrors blind shipping.
Drop shipping is often utilized in transactions involving expensive products that involve large stock capital.
In Canada, drop shipping is common on eBay, Amazon and other online sites.
The downsides to drop shipping are the prevalent online scammers who make clients not to trust drop shippers.
Similarly, stock unavailability could be a serious problem prompting delays in shipping.
Customers may shift away from such sellers giving bad reviews.
How drop shipping works
Incoterms to use when Shipping from Canada to USA
Incoterms refers to International Commercial terms.
These terms are often utilized as the standard operating procedure between the seller and the buyer to reduce instances of confusing when trading.
Incoterms state the duty of every party in a commercial transaction.
For instance, who pays for the insurance/transportation or freight?
The ICC is tasked with the role of publishing these terms.
And, they revise them every decade.
Incoterms do the following:
i. Detail the transportation cost of the goods and parties bearing the cost within Canada and across to the US.
ii. The destination of the goods that are to be shipped to the US.
iii. Import and export declaration of goods and the party responsible for it.
iv. The insurance cost is detailed for the seller and buyer where applicable
· DAT– Delivered at Terminal
The moment the seller has unloaded the packages at their destination and are placed at the hands of the buyer.
Here the buyer takes up the transportation risk.
Buyer pays the tariff and imports custom clearance, while the seller completes the export customs clearance.
· DDP – Delivered Duty Paid
This means that the customer/shipping company has paid for all of the custom taxes, duties and licenses and the shipment can be picked.
It carries the greatest risk to the seller.
There could be potential unexpected delays at customs, costs related to storage, incurring additional taxes and duties.
· DDU–Delivered Duty Unpaid
It means that the customer/shipping company has not paid for the custom expenses.
· DAP – Delivered At Place
The client/buyer is responsible for unloading the goods at the agreed upon location in the buyer’s home nation.
· CFR – Cost and Freight
The seller delivers the packages/goods to the vessel.
The seller however assumes the transportation costs to the port of destination.
Once the goods have been delivered from the seller to the buyer and they are safely on board, the risk of damage and loss is transferred in a similar manner.
· CIF – Cost, Insurance and Freight
It is similar to CFR only that there is an additional insurance cost.
· CPT –Carriage Paid To
According to this term, the carriage is paid by the seller.
The seller organizes the transportation of goods to a set destination mutually agreed by the buyer.
Also, the buyer insures the products.
· CIP –Carriage and Insurance Paid To
Here the seller carries the cost of insurance.
· FAS – Free Alongside Ship
This is to mean that the seller delivers the goods alongside the vessel to the shipment point.
Alongside the ship and once delivered, all risks and costs are that of the buyer.
The seller usually completes the export customs clearance.
Free on board meaning that the sellers deliver the products to and the boarding of the ship.
Typically, the buyer will choose the ship and then pay the freight.
The risks and costs pass from the seller to the buyer the moment the goods have been placed on board the ship.
As such, the covers the Terminal Handling Charge (THC).
· FCA – Free Carrier
Under this term, carriage is organized and paid for by the buyer.
It is applicable to any mode of transportation and captures sales contract where the client/buyer is responsible for the shipping.
Around 40% of all incoterms transactions globally operate under the FCA.
Ex-Works is where the seller transfers the goods to the buyer’s representative at the seller’s factory/warehouse.
The moment the buyer’s representative signs off, all cost and risk is transferred to the buyer.
It is utilized for routed export transactions in America.
This is where the buyer is tasked with arranging the transportation and the seller gives relevant shipping documents to the buyer’s freight carrier or forwarder.
A buyer prepares the goods for export.
Here, the buyer is responsible for clearing the shipment for export.
How Bilateral Trade Agreement between Canada and US Affect Cost of Shipping?
The USMCA trade deal between Canada and US alongside Mexico lowered the cost of shipping.
Canada raised the shipment value from C$20 – C$40 but also provides duty-free shipments up to C$150.
USMCA removed tariffs on every Canadian-purchased good manufactured in the US.
As such, if a client buys a US made product from Canada and is shipped to US, the client will not pay the tariffs making the cost lower.
Now we would like to hear from you.
What is you experience when shipping from Canada to US?
For any inquiry or questions, contact BanSar team now.