Since the creation of the North American Free Trade Agreement (USMCA) in 1994 — and its subsequent renegotiation in 2018 — trade between the United States and Canada has experienced exponential growth. In 2018, the goods and services traded between the United States and Canada totaled nearly $741.1 billion. With so much trade — an average of almost $2 billion in goods and services exchanged each day — you might be wondering how to maneuver cross-border shipping.
Although the two countries are similar in terms of culture and commerce, Canada and the United States are still separated by a border. American companies cannot group Canadian shipments into their domestic operations, or vice versa. Each nation has its own set of intricate rules and shipping regulations that companies must follow.
Different Shipping Practices Between Canada and the United States
There are many ways shipping practices between Canada and the United States differ, depending on whether the shipment is an import or export from the U.S. or Canada. Each country has its own set of regulations and considerations that must be taken into account.
Shipping From Canada to the United States
At the Canadian border, the United States Customs and Border Protection (CBP) service facilitates the trade of goods and keeps dangerous or illegal items from crossing into the United States. A Canada to US Customs entry can be declared as a Section 321 entry, Informal Entry or Formal Entry:
- Section 321: Shipments valued at $800 or less are usually duty-free and referred to as a Section 321 entry.
- Informal Entry: Informal Entries are valued over $800 but are less than $2,500.
- Formal or Commercial Entry: Formal Entries — also called Commercial Entries — are complex shipments valued over $2,500.
The CBP requires that all formal shipments entering the U.S. from Canada have:
- An Importer ID Number: This is either your IRS business registration number or your social security number.
- Bill of Lading (BOL): A Bill of Lading is required at the time of pick-up and is provided to you by your freight company.
- A Commercial Invoice: A Commercial Invoice shows a description of the shipped product, including their estimated value. Send one copy of the invoice with the BOL and one with the United States-bound freight.
- An Electronic Export Information (EEI) form: If a shipment’s value exceeds $2,500, then the United States Census Bureau requires an EEI form to compile trade information and control exports.
- An Import/Export License: Special Import/Export License might be required if your product or shipment is regulated.
- The USMCA Certificate of Origin: The USMCA Certificate of Origin is used by all countries under USMCA — the United States, Canada and Mexico — and it certifies that a shipment qualifies for the preferential tariff treatment agreed to in the USMCA. The exporter completes the certificate.
Informal entries usually only require a commercial invoice, but a USMCA Certificate of Origin is a good idea as well, as it makes the shipment process easier.
In addition to clearance from the CBP, your shipment may also need to be approved by other government agencies— more than 40 in total — including, but not limited to:
- The Food and Drug Administration (FDA): When sending food products to the U.S, you must register with the FDA and obtain a “Prior Notice” authorization number, or PN Number. Include the PN Number on the invoice, as well as a copy of the FDA confirmation.
- The Fish and Wildlife Service: The Fish and Wildlife Service requires all companies or individuals to obtain an Import/Export License before commercially importing or exporting fish and wildlife shipments. Entities may apply for the Port Exception Permit, which can be issued if the wildlife shipment is intended to minimize loss or deterioration, to ease disproportionate economic hardship or for the purposes of science.
- The Environmental Protection Agency (EPA): The EPA has regulations in place regarding the import and export of pesticides, devices, ozone-depleting substances, chemicals, vehicles, engines, fuels, waste and more.
- The Department of Transportation (DOT): The DOT requires that all hazardous materials be classified according to the Hazardous Materials Table, which has a basic description of the material. Based on this classification, importers and exporter must follow other requirements for packaging, marks and shipping paper. Some types of hazardous materials require additional approval, including explosives.
Shipping From the United States to Canada
Canada is currently the United States’ second-largest trading partner. One of the most significant differences in shipping to Canada versus from Canada is the vast size of the country and the unique shipping considerations required.
Canada is the second-largest country in the world in terms of physical size. While a portion of Canada’s residents and businesses exist in urban areas near the United States border, there are still many businesses and private residences that do not. Due to the geographical distance, some shipments sent from the United States to Canada can be tricky to deliver. This is especially true in today’s marketplace, where there is an increased demand for fast, free shipping for both business-to-business and business-to-consumer shipments that must be available to all customers, not those that live in areas easily services. For this reason, it is crucial your business works with a logistics company that has experience servicing all of Canada.
In addition to a Bill of Lading, Commercial Invoice and applicable Import/Export Licenses, The Canada Border Services Agency (CBSA) requires shipments coming from the United States to include a Canada Customs Invoice (CCI). A CCI must list the date of the shipment, name, address, and telephone number of both the shipper and the consignee, a detailed description of the item or items being shipped and the total estimated value of the shipment.
Because maintaining a Canadian inventory as a U.S. supplier can be costly to your business’ financial bottom line, it is possible for U.S. shippers to file the necessary paperwork and application to become a Non-Resident Importer (NRI). When a United States-based company becomes an NRI, the importing and exporting process is simplified. The NRI becomes both the importer and exporter, assuming responsibility for all taxes, fees and duties owed to Canada. Many Canadian businesses require their United States partners to be an NRI if they do not already have an existing residency in Canada.
Here are some things to keep in mind if you are considering exporting shipments from the U.S. to Canada:
- With more than 36 million people, the Canadian market is full of commerce potential.
- Canada is a bilingual country, so all platforms need to be dual-language. In some cases, this is required by Canadian law.
- Canada has its own currency: The Canadian Dollar. Make sure you are conscious of the currency difference on your platforms and be sure to display the Canadian Dollar where pricing is applicable.
- Northern Canadian weather — specifically during winter months — is different from northern U.S. weather and can impact shipping times.
- In many parts of Canada, “home-delivery” often exists in the form of delivery to a community mailbox — like a parcel locker at the end of a street or neighborhood — where residents travel to pick up their shipments.
- Despite the geographical difficulties, there is a growing marketplace for white glove and other specialized delivery services in Canada as more customers continue to shop for large furniture and home appliances online rather than in-store.
- Due to the cost of customs fees, if you run an e-commerce store, be sure you include the cost of shipping in your website’s shopping cart, so the customer is fully aware of all expenses.
- Apply for Duty Drawback to avoid losing unnecessary money during returns management. When a Canadian shipment is returned to the U.S., the U.S. entity can apply to get that shipping duty back.
Shipping Costs: What You Should Know About Taxes and Tariffs
Many individuals and commercial businesses are surprised by the shipping costs between the U.S. and Canada. One must consider the cost of premium shipment services across the border, as well as applicable taxes and tariffs.
Taxes
There are three kinds of taxes and duties imposed on items imported into Canada:
- The Goods and Services Tax (GST): The GST is a five percent federal tax and applies to all items sold to the Canadian market with the intent for domestic use or consumption.
- The Harmonized Tax (HST): Some provinces in Canada operate under the HST, which is the provincial and general sales tax combined. The resulting total tax amount is the Harmonized Tax.
- The Provincial Sales Tax (PST): Canadian provinces that do not participate in The Harmonized Tax may impose their own local taxes.
Import taxes in the U.S. are based on the Declared Customs Value and differ depending on the U.S. state the product is destined for, as well as the product being shipped.
Tariffs
Tariffs help protect your business. For shipments entering Canada from the United States, the tariff cost is calculated based on the country where a product was manufactured, not where it is purchased. USMCA eliminated tariffs on all Canadian-purchased goods manufactured in the U.S. Still, if a product includes components that were made outside of the United States — like China, for example — then the Canadian customer has to pay tariffs on those components.
Prohibited and Restricted Items
Whether you are shipping to Canada or the United States, there are some items you cannot send. Although the exact list of restricted or prohibited items may vary depending on your logistics provider, many things are forbidden across the board.
Generally speaking, you are not permitted to ship the following items to Canada:
- Base or counterfeit coins
- Firearms and weapons, including ammunition of any kind
- Used motor vehicles
- Used mattresses
- Any hemp products containing THC
- Animals — including living, deceased or mounted — furs and live insects
- Cash and equivalent materials, like coins, currency, endorsed stocks, etc.
- Collectible coins and stamps
- Hazardous materials, hazardous waste and any waste or garbage intended for disposal
- Explosives, fireworks, flares and matches
- Plants, plant materials, plant seeds and cut flowers
- Perishables, such as food products, perishable medications, etc.
- Tobacco and tobacco products, including e-cigarettes that contain nicotine, propylene glycol and other chemicals that can be found on the Canadian Food and Drug controlled substance list
- Lottery tickets or items used for gambling in areas where gambling is illegal
- Samples of medication
- Visa applications
- Packages that improperly packed, wet, leaking or emitting any kind of odor
- Shipments that call for specialized licenses
- Shipments that may damage or delay equipment, other shipments or personnel
The United States has similar restrictions. These are some of the items you cannot ship to the U.S.:
- Drug paraphernalia, including smoking pipes
- Anything containing dog or cat fur
- Hemp products containing THC
- Prescription drugs by an individual U.S. consumer for personal use
- Kinder Surprise Eggs
- Syrian petroleum and petroleum products
- Switchblades, Balisongs, gravity and ballistic knives
- Elephant ivory, items made of rhinoceros horn and other products made from protected species listed in the Endangered Species Act (ESA)
- Living, deceased or mounted animals
- Cash and equivalent materials, like coins, currency, endorsed stocks, etc.
- Fireworks, explosives, flares, flammable goods and matches, including white phosphorus matches
- Plants, seeds and cut flowers
- Dangerous goods and hazardous materials, including corrosives, medical waste, biohazards, etc.
- Lottery tickets or items used for gambling in areas where gambling is illegal
- Used gasoline tanks — regardless if filled or empty — or any used gasoline-powered device or equipment with a fuel tank, full or empty
- Perishables, such as food products, perishable medications, etc.
- Tobacco and all tobacco products
- Any items that require a U.S. Department of State import license or a Canadian Export Permit
- Shipments that may damage or delay equipment, other shipments or personnel
- Packages that improperly packed, wet, leaking or emitting any kind of odor
Please note these are not exhaustive lists. Contact your shipping and logistics provider for more information or further clarification.
Shipping Tips: What You Should Know Before Shipping Between Canada and the U.S.
Cross-border shipments between Canada and the United States require a lot of time and pre-planning. Here are some tips to help you have a better experience:
- Do your research: Make sure you have taken advantage of all available free resources. Both Canada and the United States trade embassies have made shipment and border clearance requirements accessible online.
- Allow for an extended transit time: In winter months, send out your shipment several days early if possible in case there are delays.
- Remember the paperwork: Missing and incomplete documentation is among the top causes for border clearance delays — make sure you fill out all paperwork ahead of time and consult with your broker, if applicable.
- Consider insurance: If you are shipping high-value or fragile items, consider insuring your shipment to be safe.
- Keep records: The Canadian Border Services Agency recommends you keep records of your exports for at least six years following the date of export.
- Use a trusted service: Use a delivery and logistics service with experience in cross-border shipments between the United States and Canada, like Purolator International. An experienced company with knowledge of Canadian procedures will streamline the shipment process and give you valuable peace of mind.
Packaging Tips for Individuals and Non-Commercial Entities
If you are not a commercial business, shipping practices between the United States and Canada differ slightly. You need to take great care of the packaging of your shipment. The Canada Post recommends you follow these tips to ensure safe arrival of your shipment:
- Outer container: Make sure you choose the right outer container, preferably one made of cardboard or tin. It needs to be sturdy enough to withstand shipment. Items not inside an outer container may be subjected to an Unpackaged Items Surcharge.
- Packaging material: Surround your shipped item with bubble wrap, packing peanuts, foam or newspaper — anything to keep it safe.
- Sealing material: Seal all openings of your outer container, including seams, with durable packing tape. Do not use every day or masking tape, string or ribbon, as these may come unattached during shipment.
- Shipping label: Attach a visible and legible shipping label. Make sure the shipping label is applied directly to the largest side of the outer container — away from box closure and seams — and is free of wrinkles. Ideally, the address and postal code should be written in uppercase, print lettering. If your shipped item is smaller than the shipping label, wrap the label around the container edges, but be sure the barcode and address are still visible and flat. This is the key to accurate and timely tracking.
- Allergies: If you are shipping a product that contains common allergens, like peanuts or eggs, make sure you package them accordingly and label the container to minimize the risk for allergic reactions along the shipping route.
- Brace for impact: Your packaging should be secure enough to withstand a drop of one meter — or about 39 inches — onto solid concrete to prevent potential damage.
- Battery shipment: In general, most batteries used in consumer electronics are okay to ship although ideally they should not be inside of a device. However, all battery terminals should be protected with insulating material to prevent short-circuiting.
Let Purolator International Handle Your Cross-Border Shipping
If you are a company that frequently ships cross-border to Canada, Purolator International is here to simplify the process. Purolator International has Canadian roots and more than 20 years of Canadian shipping experience with a strong focus on cross-border shipping.
For import to the United States from Canada, Purolator International offers:
- Purolator Express: Purolator Express provides custom delivery solutions, day-definite deliveries, end-to-end tracking and visibility at all times, a customized returns process and dedicated customer support throughout the process.
- Expedited Forwarding: Expedited Forwarding has next-day, two-day, three-day and three to five business day delivery options, as well as day-definite Elite service so your shipment can reach its destination exactly when you need it to.
For export from the United States to Canada, Purolator International offers Purolator Express and Expedited Forwarding, as well as:
- PuroPost: With PuroPost, you get guaranteed delivery within two to eight days, a fully integrated pricing model, end-to-end tracking and visibility, customized return service and access to dedicated support during the shipment process.
- CanadaOne: CanadaOne offers a customized forwarding network, which allows you the opportunity to consolidate your small packages and freight shipments to reduce shipment costs and border clearance time. CanadaOne has a vast, trusted air network that flies nightly and provides smooth delivery once across the border. CanadaOne can reach almost all commercial and residential addresses in Canada, no matter the distance.
When you choose to work with Purolator International, you are trusting your commercial shipment with an award-winning company that prides itself on maintaining fast transit times while continuously delivering an exceptional customer experience. For you, this means access to PuroTouch Advantage, Purolator International’s answer to superior customer service. PuroTouch Advantage includes access to a dedicated account representative who will manage your entire Canadian account and answer any questions you have about the process.
Cross-border shipping between the United States and Canada can be a complicated process, but it does not have to be. Contact Purolator International online or give us a call at (888) 511-4811 to learn more about what we can do for your shipment needs.