Understanding Cross-Border Freight From the U.S. to Canada
According to the United States Bureau of Transportation Statistics, cross-border freight between the United States and Canada increased by 26.3% between March 2021 and 2022. Trucking was the dominant mode of transport, accounting for $38.4 billion. These statistics show that cross-border freight companies are vital to our economy and essential to ensuring we get the products we use every day.
Because millions of end-users rely on cross-border shipping companies, these companies must be aware of the federal regulations and requirements surrounding their shipments. Even if one mistake is made during the shipping process, it could result in delays and unsatisfied end-users.
In this article, we’ll explain the basics of shipping from the United States to Canada, covering factors influencing cost, shipping and handling regulations, shipping methods, and common challenges.
Factors That Influence Cost
- Distance & Location: The distance between the origin and the destination significantly affects freight costs. As you’ve probably guessed, longer distances mean higher costs. Delivery locations that are remote or hard to access will also further drive up costs.
- Freight Type: Freight type can also influence cost. Hazardous materials or any items requiring special handling, such as refrigeration, will typically result in higher costs. The weight and volume of the shipment also directly impact freight costs, with heavier and larger shipments being more expensive.
- Customs & Duties: Cross-border shipments are subject to customs clearance procedures and applicable duties or taxes based on the type and value of goods shipped. These costs can vary and must be factored into the overall shipping costs. Filling out the paperwork properly and complying with Canadian regulations will help avoid fees.
- Transportation Mode/Method: Each transportation mode, whether air, sea, or road, impacts costs. For example, air freight is typically faster but more expensive than road or rail.
- Fuel Costs: Fluctuations in fuel prices can significantly affect shipping costs, especially for long-haul trucking and air freight.
- Service Level: If the freight is expedited, the shipping costs will be higher.
- Exchange Rates: Currency fluctuations between the U.S. and Canadian dollar can also impact the shipping cost and final invoice amount.
Shipping & Handling Regulations
Every country has different shipping and handling regulations. Failure to comply with these guidelines can result in costly delays and fines.
Canada has a comprehensive document that covers exactly what exporters are required to do. Canadian regulations outline:
- All exporters must work with a qualified importer with a business number (BN) from the Canada Revenue Agency (CRA).
- All exporters must determine if an export declaration and/or permit is required and submit a declaration via the Canadian Export Reporting System or G7 Electronic Data Interchange Export Reporting system. CERS is recommended if you’re not sure which one to choose.
- Exporters must classify the goods to determine what tariffs are required.
- Exporters must provide a proof of report number (issued by CERS or G7-EDI) to the carrier.
- The carrier must have purchase orders, commercial invoices, bills of lading, and other required documentation on hand. The Canada Border Services Agency will provide a list of required documentation. Working with a custom broker is also an option.
- Exporters (or custom brokers) must provide proof of origin/certificate of origin.
- Importers and exporters must ensure the items being sent into Canada are permitted and determine if they’re subject to any restrictions.
- Exporters must maintain records of shipments to Canada for at least six years.
Prohibited Items
- Obscene material
- Counterfeit coins
- Used or second-hand mattresses and materials
- Used or second-hand motor vehicles
- White phosphorous matches
- Items promoting hate propaganda or disinformation
- Goods manufactured by prisoners or forced labor
Restricted Items
Many items are subject to additional guidelines under Canadian customs. Most restricted goods coming from the United States will require a permit, certificate, or license but not an export declaration. Some of these items include:
- Firearms
- Diamonds
- Food
- Live animals or plants
- Wood packaging
- International waste
- Used machinery or equipment
- Nuclear material
- High-security goods
- Hazardous waste
- Medical devices
- Natural health products
- Pharmaceuticals
- Pesticides
- Telecommunications equipment
- Gas and other explosives
- Items containing human pathogens
A complete list of regulations can be found here. The Canadian government also has a separate tool for food and plant imports that outlines specific requirements based on commodity type. When hiring a third party to ship your goods, ensure they have experience shipping that specific type of goods and cross-border freight experience with Canada.
Comparing Shipping Methods
Each of these methods has a set of trade-offs between cost and convenience. The choice really depends on the type and volume of goods, the delivery timeline, and the overall budget.
Air
- Most expensive option.
- Fastest delivery times, so it’s ideal for perishable goods or urgent/expedited shipments.
- Stringent security checks, with specific regulations on hazardous materials and perishable items.
- Shipments must be compliant with the Canadian Air Transport Security Authority.
Sea
- Most economical choice for large volumes of goods.
- Longer transit times/not ideal for time-sensitive shipments.
- Exporters must comply with the Canada Marine Act.
Road/Trucking
- Costs vary based on distance, fuel costs, and goods being transported. It’s generally more cost-effective than air and sometimes less expensive than rail for shorter distances.
- Offers flexible route management and (sometimes) door-to-door delivery.
- Easier to access remote areas or other places that are hard to reach via air or sea.
- Exporters must comply with the Canadian Motor Vehicle Safety Standards.
Rail
- More economical for large shipments over long distances and can be less expensive than air and trucking for these types of loads.
- Rail is less flexible than road transport because it relies on fixed routes and schedules.
- Rail carriers (and exporters) must follow Transport Canada regulations.
Common Challenges/Issues
Weather Delays
Canada’s diverse and sometimes extreme weather conditions can significantly impact shipping schedules. During the winter, heavy snowfall, ice, and blizzards can disrupt road and rail transport across major routes, particularly in more northern and remote regions. Similarly, coastal fog and storms can delay marine and air shipments.
Logistics companies are prepared to deal with this challenge, as every state or country can experience some form of extreme weather. They can help you reroute shipments if needed.
Missing Documentation
Your chosen logistics provider should have cross-border freight experience. This experience is important because even one missing document can result in delays, fines, and sometimes criminal punishment depending on the item(s) being shipped. All shipments to Canada should have a:
- Bill of Lading: The contract between the person shipping the freight and the company responsible for transporting it.
- Commercial Invoice or Canada Customs Invoice: This document contains the overall price of freight.
- Certification of Origin: This certificate proves the Country of Origin.
- Certificate of Insurance: This certificate outlines what’s covered under the cargo insurance policy.
- Cargo Control Document: The CCD highlights specific shipment details, including the weight of the items being shipped and the delivery and shipping addresses.
- B3 Coding Form: The B3 form is primarily used for accounting purposes because it helps establish what tariffs/taxes must be charged for the shipment.
- Packing List: The shipment also comes with a packing list highlighting every item in the shipment, the total number of items being shipped, and the weight of each item.
- Permits: If any goods require permits, licenses, certificates, or export declarations, the carrier must have them handy.
Choosing a Provider
When you’re looking for a provider to help you ship your goods to Canada, look for one that:
- Has experience shipping the type of goods you’re exporting
- Can handle the volume of goods you’re shipping
- Is permitted to transport cross-border freight
- Is familiar with the process of carrying goods to Canada.
Additionally, long-haul drivers and owner-operators must be vetted to ensure they have no criminal records, carry the correct commercial licenses, and have valid transportation documentation (passport).
Learn More From TSI
Shipping freight across any border isn’t easy. That’s why you need a professional like TSI on your side. For over four decades, we’ve provided CTPAT-certified cross-border shipping services to Canada and Mexico.
Please visit our website to learn more about our expertise and capabilities, or contact us today to speak with a representative.
