An export declaration is a requirement all exporters from Canada should be aware along with the new CERS online portal reporting system. All exporters must become familiar with CERS processing for export declarations from Canada.
Canada's new free trade agreements have made is easier for businesses to take advantage of preferential duty free status for smaller transactions. Many goods of qualifying origin from over 40 countries can be shipped to Canada duty free with greatly simplified origin declarations.
Quick answer: Incoterms are standard three-letter shipping terms from the ICC that fix who pays freight, insurance, duty, and import taxes. The most common choice is DDP, where the seller pays duty and tax, versus DAP (formerly DDU), where the buyer pays. DDU and DAT are retired: use DAP and DPU under Incoterms 2020.
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For most international shippers, the terms of sale seem clear at first: after payment, the goods ship, and the buyer pays any applicable duty and taxes. Sounds simple, but ignoring the detail of Incoterms for international shipping can lead to unexpected costs and stuck customs clearances.
There are a full range of costs to consider beyond the cost of goods themself. These include packaging, pickup, inland transport to export gateway, loading, unloading, import duty and taxes, brokerage fees and local transport from port to final destination. And who is responsible for insurance or if goods are damaged in transit?
For most parcel shipments, it is simply a matter of who will pay the duty and taxes. Carriers often use the terms DDP (delivery duty paid) and DDU (delivery duty unpaid).
Note: Incoterms is a registered trademark of the ICC. In this post we also use "shipping terms" and "conditions of sale" to convey the same concepts.
Shipping terms are the backbone of global trade. They clarify obligations for buyers and sellers: who pays for insurance, who clears customs, and where risk transfers. Here is the fast comparison shippers ask about most.
The most common confusion is the difference between Delivered Duty Paid and Delivered at Place, the term that replaced Delivered Duty Unpaid.
| Feature | DDP (Delivered Duty Paid) | DAP (Delivered at Place), formerly DDU |
|---|---|---|
| Customs duties | Paid by the seller | Paid by the buyer |
| Import taxes (VAT or GST) | Paid by the seller | Paid by the buyer |
| Best for | Customer experience, with no surprise fees | B2B shipments where the buyer reclaims tax |
Note on DDU: "Delivered Duty Unpaid" was officially retired in Incoterms 2010 and replaced by DAP. DDU is still used informally to describe the same process.
Need help navigating these terms? Contact our team for an initial consultation.
Incoterms 2020 defines 11 rules in two groups. Click a term to expand its definition.
Rules for any mode of transport
The seller makes the goods available at their own premises. The buyer bears all costs and risks, including export clearance, from that point. This is the minimum obligation on the seller. EXW is not the same as DDU or DAP.
The seller delivers the goods to the carrier or a party nominated by the buyer at the seller premises or another named place, and clears the goods for export. Risk passes at that point. Under Incoterms 2020 the buyer may instruct the carrier to issue an on-board bill of lading to the seller, which helps with letters of credit.
The seller pays for carriage to the named destination, but risk transfers to the buyer as soon as the goods are handed to the first carrier. The seller clears goods for export, not import.
Similar to CPT, but the seller also contracts insurance for the buyer risk during carriage. Under Incoterms 2020, CIP requires the higher Institute Cargo Clauses (A) all-risks cover, for at least 110 percent of the contract value.
The seller delivers when the goods are placed at the buyer disposal at the named destination, ready for unloading. The buyer pays import duties and taxes. DAP replaced DDU in Incoterms 2010.
The seller delivers when the goods are unloaded from the arriving transport and placed at the buyer disposal at the named place. The seller bears all risk to and including unloading. DPU replaced DAT in Incoterms 2020, since delivery can be any place, not only a terminal.
This places the maximum obligation on the seller, who pays shipping, insurance, and all import duties and taxes. The buyer simply receives the package. Note that the seller cannot always reclaim import VAT in this scenario.
Rules for sea and inland waterway transport only
The seller delivers when the goods are placed alongside the vessel at the named port of shipment. The buyer bears costs and risk from that point.
Used for sea freight. The seller delivers the goods on board the vessel, and risk of loss or damage passes to the buyer once the goods are on board. The buyer bears all costs from that moment.
The seller pays cost and freight to the destination port, but risk passes to the buyer once the goods are on board. The seller has no insurance obligation.
CFR plus seller-paid insurance to the destination port, at the Institute Cargo Clauses (C) minimum cover. CIF applies to sea and inland waterway transport only. For containerized cargo the ICC recommends CIP instead.
The ICC revises these rules roughly every decade. Incoterms 2020 took effect on 1 January 2020 and remains current. The key changes shippers should know:
| Change | Incoterms 2010 | Incoterms 2020 |
|---|---|---|
| Terminal delivery term | DAT (Delivered at Terminal) | DPU (Delivered at Place Unloaded) |
| CIP insurance | Institute Cargo Clauses (C), minimum | Institute Cargo Clauses (A), all-risks, at least 110 percent of value |
| CIF insurance | Institute Cargo Clauses (C) | Institute Cargo Clauses (C), unchanged |
| FCA and bill of lading | No on-board bill-of-lading mechanism | Buyer may instruct the carrier to issue an on-board bill of lading to the seller |
| Own means of transport | Not explicit | Recognized for FCA, DAP, DPU, and DDP |
Corrections noted: DAT no longer exists; it is DPU under Incoterms 2020. EXW is not the same as DDU, and it is not the carrier default. These were fixed from the earlier version of this post.
The ICC has indicated a further revision, working title Incoterms 2030, is in preparation but not yet published, so Incoterms 2020 remains the version to cite in 2026.
Terms of sale communicate a binding agreement on the delivery of goods. While you are not legally required to quote a term when selling internationally, doing so clarifies responsibilities and avoids costly misunderstandings.
What is not included? Incoterms define logistics responsibilities. They do not define payment terms, transfer of title or ownership, or protection against fraud or defective goods.
Information gain, from Jet Worldwide file data: across the international parcels Jet Worldwide handled in the last 12 months, about [JET-PROPRIETARY-PERCENT]% of receiver-billed disputes traced back to a commercial invoice that named no Incoterm at all, which defaults the duty and tax bill to the receiver. (Placeholder: insert a real Jet Worldwide operational figure before publishing.)
Cost, Insurance, and Freight (CIF) is a specific Incoterm used for sea transport. Confusingly, "CIF value" is also a valuation method used by customs.
We recommend itemizing these costs on the commercial invoice to avoid overpaying duties.
DDP gives a smoother customer experience for e-commerce, but it has a hidden drawback around VAT. Import VAT commonly runs between 5 and 27 percent worldwide, most often 15 to 25 percent. If you ship DDP:
For business-to-consumer online orders, DDP is usually preferred, to prevent the customer refusing the package over unexpected fees.
If you do not specify a term on your invoice, the default for carriers such as FedEx, UPS, and DHL is DAP, formerly called DDU. This means:
If the invoice does not state shipping terms, the import fees are automatically charged to the importer or receiver.
Correction noted: an earlier version described EXW as the carrier default. The express-carrier default is DAP (formerly DDU), not EXW.
Under DDP (Delivered Duty Paid) the seller pays customs duties and import taxes. Under DAP (Delivered at Place, formerly DDU) the buyer pays them. DDP suits business-to-consumer orders for a no-surprise experience; DAP suits business-to-business shipments where the buyer can reclaim import VAT.
No. DDU (Delivered Duty Unpaid) was retired in Incoterms 2010 and replaced by DAP. The industry still uses the word DDU informally, but the current term is DAP.
No. DAT (Delivered at Terminal) was renamed DPU (Delivered at Place Unloaded) in Incoterms 2020, to reflect that delivery can occur at any place, not only a terminal.
No. EXW (Ex Works) places the minimum obligation on the seller: the buyer collects the goods at the seller premises and handles export clearance and everything after. DDU, now DAP, is a delivered term where the seller carries the goods to the destination and the buyer pays import charges.
For express carriers such as FedEx, UPS, and DHL the default is DAP, formerly called DDU. The seller pays the transport and the receiver is billed for duties, taxes, and carrier disbursement fees.
CIF as an Incoterm applies to sea and inland waterway transport and means the seller pays cost, insurance, and freight to the destination port. CIF value is a customs valuation basis, cost plus insurance plus freight, used to calculate duty even when a different term was used.
Disclaimer: Jet Worldwide content is for general information only. Incoterms are a registered trademark of the ICC; for legally binding definitions, reference the ICC directly, especially for high-value contracts.
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Learn about duties and taxes that apply to shipments from Arizona to Canada. Explore duty-free thresholds and preferential duty-free imports under the CUSMA FREE TRADE agreement.
The cheapest way for individuals to send small packages and personal items to Canada is usually via the US Postal Service (USPS). FedEx and UPS ground are good options for heavier shipments but do not include customs entry preparation.
Shipments from Arizona to Canada are subject to import duty and taxes. However, goods may qualify for duty-free import if the value is less than $150 CAD (around $110 USD). If the items qualify as being US origin under CUSMA, they can qualify for preferential duty-free import.
Read more about Canadian import fees.
Merely shipping from the USA does not automatically grant duty-free import to Canada. They may benefit from duty-free status if they are low value or qualify as USA origin under USMCA. All shipments over $40 CAD are subject to sales tax even if they are otherwise duty-free.
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Before deciding on a carrier, first determine the best mode of shipping. Postal, Ground Courier, Air Courier, Truck, Rail
USPS is the best option for casual shippers, sending gifts and the occasional online order you may receive from Canada.
Ground courier shipments are cost effective for heavier packages and when a fast transit is not needed. Transit times from Arizona to Canada vary but average around 1 week. Ground shipping does not include customs entry preparation fee.
FedEx and UPS are well known options. Transit times average between 1-4 business days. Contact our team for our lowest spot quote for shipments over 10 kilograms and for commercial shipping rates
Both less than truck load and full truck load are the best option for palletized freight. Contact our team for rates.
All goods importing to Canada from the United States must clear customs. Canadian customs processes are very similar to the United States and adhere to World Trade Organization or WTO principles. This includes similar tariff classification (or HS codes), declared value, and country of origin. The country of origin is particularly important if you wish to take advantage of the CUSMA free trade agreement.
American companies can register to become a nonresident importer or NRI. Essentially, you can act as your own distributor to Canada without involving a middleman. By becoming a nonresident importer, you can ship to your Canadian customers without having to involve them in clearance formalities. Read more about becoming a Canadian nonresident importer.
Jet Worldwide can provide your company a Canadian address to where your returns can ship to. This includes Amazon removal orders. Your returns can then be consolidated and shipped via ground carrier or trucking back to Arizona contact our team for details.
The challenge with Canadian returns is often the low volume. We address this issue by offering low cost warehousing and processes. In short, we don't overthink it.
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Companies can consolidate their orders via a single customs entry by becoming a non-resident importer. The process involves shipping via LTL or full truckload, a single clearance in Canada, followed by domestic distribution.
Read more about valuation for non-resident imports to Canada.
Electronic Export Information (EEI) forms are generally not required for most shipments destined to Canada via exception code 30.36. The exemption does not apply for shipments otherwise requiring an export permit or ultimately destined for a third country.
The CBSA CARM portal requires importers to assign a customs broker and submit a surety bond or deposit. Learn more about CARM.
Note: The one North American Free Trade Agreement between the United States. Canada, and Mexico is alternatively referred to as USMCA, CUSMA, T-Mec -respectively. One agreement three names. The CUSMA facilitates the movement, release, and clearance of goods via a simplified framework and standardized customs procedures. Trade facilitation includes fewer clearance formalities for express shipments valued under CA$3,300 to Canada.
READ MORE: Understanding a Certificate of Origin and When it is Needed
For low-value shipments (under CAD $3,300 to Canada), a certifying statement can be added to the commercial invoice or any shipping document.
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Dutiable and taxable items mailed to Canada are subject to a handling fee of around CA$10 per parcel. Canada Post collects the fees on behalf of the CBSA and accepts payment online.
Gifts between individuals can be considered duty and tax-exempt if they are not otherwise restricted and are valued under CA$60. To qualify as tax-exempt, the gift must be sent to the recipient personally and include a card or notice indicating that it is a gift. Advertising material and alcohol cannot be cleared as tax-exempt gifts.
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