Ecommerce sellers to Canada often inquire as to alternative shipping options within Canada. We have created this post to assist with these inquiries we get on this subject.Read More
The common elements of shipping within Canada or internationally from Canada include:
Note: When shipping Internationally, the majority of packages are shipped via air (versus ground for domestic shipments). As a result, international packages are often subject to a higher chargeable weight than for the same size shipment shipped domestically.
In addition to the standard information required for shipping domestically, international shipments require you to declare your items for import to the destination country (and, for some shipments, Export Canada declaration). This can take different forms, such as a CN22 for postal shipments or an “Invoice for Customs”. When Shipping Internationally, you’ll also need to know:
Note: Jet Worldwide’s logistics team has been providing international transport for over 35 years. Our focus is finding international logistics solutions for companies shipping to and from Canada and North America. It is our mission to connect people, parcels and businesses around the world!
In most cases, a simple description of the item or items you want to ship will do the trick, but you’ll want to get more specific to avoid complications and delays. Additionally, if it is an obscure item that – for example – may be specific to your industry, it can be helpful to describe how the item is used. Even better, there is a globally recognized system to describe your item called the Harmonized System Code. This is a language our friends at customs understand!
The Harmonized System Code is: “An international [reference] developed by the World Customs Organization, which is arranged in six-digit codes allowing all participating countries to classify traded goods on a common basis.” - wto.org
HS Codes determine duty, admissibility, and whether or not a shipment should be physically examined.
Find the HS Code you’re looking for, so that you can best describe your item. We recommend checking in with your international customer before shipping – as they will be the actual importer of the goods – to confirm the most appropriate HS Code to be applied.
When shipping Internationally, one of the first questions you might ask yourself is "What value should I declare?" The declared value, along with the HS Code, are the biggest factors in assessing duty and the import process. Over-declared values result in needless costs and under-declared values could lead to significant delays and fines.
Note: Customs generally requires a unit value for each item being sent.
Transaction Value and Landed Costs
When you’re asked for the value of your item (or items), usually, you’re being asked for the item’s Transaction Value or Declared Value. Meaning, the actual cost of the item that you bought or are selling. If you sell your product for $200 and want to ship it, the Transaction Value is $200. Remember to always use the correct Currency Code.
With regards to assessing duty and taxes on an item, customs will use what is called the CIF Value (meaning Cost plus Insurance plus Freight charges). This is also known as the Landed Cost, and it is the sum of the Transaction Value, plus the Cost of Insurance, plus the Cost of Shipping.
Let’s take our example of the item sold for $200 Canadian dollars: we know the Transaction Value is $200, now, let’s say the Cost of Insurance is $10 and the Cost of Shipping is $40. Add those up. And you get a CIF Value, or Landed Cost, of $250.
Transaction Value: $200
+ Cost of Insurance: $10
+ Cost of Shipping: $40
= CIF Value (Landed Cost): CAD$250
If the Transaction Value includes the cost of insurance and shipping, you should include that the Transaction Value is the CIF Value.
When you’re shipping by courier or post, the Cost of Shipping is often unknown. In that case, most customs will apply a standard cost per kg rate. Know that this cost could be more or less than the actual Cost of Shipping.
Similarly to the HS Code, before you start your International Shipping, we recommend you consult with the receiver about what value is being declared. Learn more about methods of valuation.
When it comes to samples or gifts, you might think these items have a $0 Transaction Value, because they are “free” or “priceless”, but customs will demand that each item has an actual value. To come up with an appropriate dollar amount, you can start by looking at the transaction value of identical or similar items. If that isn’t possible, or if you’re looking to ship specific high value commodities, there are a few other methods you can consider, but for those, we recommend you get in touch with an experienced specialized carrier like Jet Worldwide.
Canadian businesses who are selling products internationally via online platforms such as Shopify, eBay, need to understand duty and VAT (value added tax) costs as well as their shipping costs. Low value orders may qualify for duty free entry to some countries but Value Added Tax often must be prepaid using an approved shipping platform. The United Kingdom requires prepayment of VAT for online orders shipped to the UK. Similarly, online orders to the European Union from Canada require prepayment of value added tax to EU countries.
More Canadian businesses are selling independently via platforms such as Shopify. Shopify has arranged for shipping discounts with major carriers including Canada Post. The important aspects of shipping via Shopify and other platforms is integration (usually via an API or app), tracking, and ... of course... price.
Say you sell an item on your website that you originally purchased from a supplier and you want to ship to your customer in Germany. Most of the time, you’d be right to assume that the Country of Origin of the item is Canada, that is, if you don’t know where the product - or its parts - were made. But what if you knew where the product was made? And why does this matter? Depending on the Country of Origin, goods can actually benefit from one of Canada’s duty Free Trade Agreements.
For international customs clearance purposes, the country of origin refers to the country of manufacture. For example, Jet Worldwide helps a company that makes specialty guitars. These Canada-made guitars have been shipped for Duty Free clearance to Europe, Australia and the US thanks to Canada’s Free Trade Agreements.
All goods exported from Canada are subject to customs clearance to assess admissibility, duty and taxes. By default, the receiver - or importer of the goods - will be charged the applicable duty and taxes (known as Delivery Duty Unpaid or DDU*). See trade terms and default EXW* below.
However, the shipper or exporter of the goods can choose to pay the duty and taxes on behalf of the receiver by selecting a Delivery Duty Paid option (known as DDP* or DTP*). A delivery duty paid option is a service offered by private carriers, but not Canada Post.
How is duty calculated?
Duty is generally a percentage typically applied to the CIF Value or Landed Cost of your item based on the item’s description (as discussed above).
Once duty has been assigned, there is usually a Value Added Tax to pay. This tax can be as high as 20% (as it is in most European countries, for example). Often, tax regiments often allow business (if goods are not for final consumption) to claim back back the the value added tax.
In addition to the Duty Fee and Value Added Tax, there are often Import Fees that will be charged to the receiver. If a customs broker is needed, there is also a Brokerage Fee.
When a common parcel carrier is used, customs entry is usually included, but they often charge a fee of around 2.5% to 3% (with a minimum charge) of the amount they pay on behalf of the receiver This is often referred to as the is known as Carrier Disbursement or Administrative Fee.
Export Clearance, or, as it’s often referred to, Export Declaration is sometimes required when exporting or shipping from Canada.
When shipping goods from Canada valued over CAD$2000 (or otherwise restricted), Canadian Customs and Statistics Canada requires shippers (exporters) to declare the export via CERS. If you’re an individual looking to ship over CAD$2000 worth of goods, you’ll have to register with customs as an exporter.
When shipping from Canada to the USA, a Canadian Export Declaration is not required.
When you are exporting, the default method of shipping is Ex Works (or EXW*), meaning the receiver/ importer will be responsible for all import fees, duty and taxes. Keep this in mind when sending that sample or warranty part to your customer as they may not appreciate having to pay the import fees. See our blog on shipping terms.
The disadvantage of paying import fees on behalf of the receiver is that the bulk of the import fees are often from a value added tax that the importing business may otherwise be able to claim back.
*DDU, DDP and EXW are terms known as Incoterms®, a registered trademark of the International Chamber of Commerce/ICC. It is useful to at least understand the existence of Incoterms and visit ICC’s website if further explanation is needed.
Canada has trade agreements with most of the world's major economies. The good news is that Canada’s newest Free Trade Agreements make declaring a Country of Origin much easier by allowing the Certification of Origin to be included on the shipping paperwork. See our blog on Canada's Free Trade Agreements.
The ability to ship Canada Origin goods to over 30 major economies duty free is a major competitive advantage for Canadian Companies. If you’re a Small Business Shipping Internationally, getting familiar with the available Free Trade Agreements can make it easier to reach foreign markets and can save your international customer import duty (and ultimately lower the cost of your product).
Getting quote for International Shipping
Jet Worldwide gives access to all companies seeking shipping quotes logistics support for parcels pallets, and online orders. For a quote, please provide:
For a quote for shipping online orders, provide details including shipping volume, item(s) being shipped, average value and weight of each parcel. The more details the better :).
Evidenced by our industry leading blog, Jet Worldwide has the expertise to assist Canadian companies with innovative international shipping and logistics solutions.
Disclaimer: The information in this post is for general information only and is not intended to, constitute legal and/or tax advice. Producers, shippers, exporters, importers should confirm their processes with their customs brokers, carriers and regulating authorities. All liability with respect to actions taken or not taken based on the contents of this site are hereby expressly disclaimed. The content on this posting is provided “as is”; no representations are made that the content is error-free.