Overview of Cross-Border Freight Shipping From the U.S.
According to the United States Bureau of Transportation Statistics, cross-border freight between the United States, Canada, and Mexico totaled $141.9 billion between March 2021 and March 2022, representing a yearly increase of 23.8%. Trucking was the dominant mode of transport, accounting for $85.5 billion. These statistics tell us 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.
Let’s look at some of the most significant challenges transportation companies must overcome when shipping goods from the U.S. to Canada, Mexico, and overseas markets.
Shipping Freight From the United States to Canada
Exporters moving freight between the United States and Canada have multiple options: air freight services, ocean freight, rail transportation, or truck transport.
Generally, most freight shipping between the United States and Canada is handled by truck transportation companies, primarily because truck transportation is faster and more reliable than air, ocean, and rail. However, fast and reliable doesn’t necessarily mean simple.
One primary challenge trucking companies must overcome when shipping to and from Canada is ensuring their drivers have the correct documentation.
Documentation that a driver needs to carry includes:
- Bill of Lading: This is the original contract between the person shipping the freight (exporter) and the company responsible for transporting the freight (carrier).
- Commercial Invoice or Canada Customs Invoice (CCI): This document contains the overall price of the freight.
- Certification of Origin: This certification proves the Country of Origin (where the goods are being shipped from).
- Certificate of Insurance: This certificate outlines what is covered under the exporter’s cargo insurance policy.
- Cargo Control Document (CCD): This document 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 only for commercial-use items that are being shipped to Canada.The form is primarily used for accounting purposes, as it helps establish what tariffs/taxes must be charged for the shipment.
- Packing List: The shipment should also come with a packing list highlighting every item in the shipment, the total number of items being shipped, and the weight of each item. This helps prevent packages from being misplaced.
If transportation companies haven’t filled out documentation correctly or are missing required documents, customs will delay the shipment at the border. The best way to prevent these delays is to work with a customs broker and a professional freight carrier, as they help ensure all documents are present and accurate.
Shipping Freight From the United States to Mexico
Shipping freight to the Southern border is just as challenging. Although the 2020 USMCA has opened new opportunities for U.S. exporters and relaxed some regulations, the shipping process is still complicated. Mexico’s regulations are very different from the United States’ shipping regulations, and all shipments to Mexico are subject to inspection from Mexico’s Tax Administration (Servicio de Administración Tributaria, or SAT) to ensure compliance.
Similar to shipping cross-border freight to Canada, companies transporting freight to Mexico need specific documentation to prevent delays. Required documentation includes the Certificate of Origin, the Customs Declaration Form (Pedimento de Importación), a commercial invoice, and a Bill of Lading. Depending on the products being shipped, additional documentation may also be required. It’s also important to note that exporters must accurately fill out these documents in Spanish.
Certain Mexican importers, particularly those in the textiles and apparel industry, also must be registered in the Padrón de Importadores (Mexican Official Register of Importers). You can read more about Mexico’s trade standards on the International Trade Administration’s website.
Again, working with a customs broker and freight forwarder eliminates some of these challenges. However, it’s essential that shippers specifically work with a customs broker with experience handling shipments between the United States and Mexico; experienced brokers will stay updated on any changes to Mexico’s existing trade standards and regulations.
Shipping Freight From the United States Overseas
If cross-border shipping between the U.S., Canada, and Mexico weren’t complicated enough, shipping international freight always comes with a wide range of regulations, requirements, and restrictions. Every country has its own export regulations, especially regarding how the freight is packaged.
There are two primary international freight options: air and ocean. Air is faster but more expensive, whereas ocean freight is less expensive but takes much longer to arrive. Both freight options require similar documents, including commercial invoices, Certificates of Origin, and packing lists, but other documents may be needed depending on what’s being shipped.
For instance, packages shipped in wooden crates will most likely need to be ISPM 15-certified, indicating they’ve been properly heat-treated to prevent pest infestations during transport. If the package doesn’t have an ISPM 15 label, the package may be destroyed or sent back to the country of origin. Some countries may even require shipments to be fumigated. If this is the case, the carrier must provide a fumigation certificate.
Exporters must also be aware of country-specific restrictions on hazardous (hazmat) materials and other dangerous goods. The International Air Transport Association (IATA) and the International Maritime Organization (IMO) also have their own regulations.
Lastly, exporters must be aware of any intellectual property laws and regulations in a specific country of acquisition. If customs believe a shipment contains counterfeit goods, they will detain and forfeit it. The exporter could also face hefty fines, but penalties will vary based on the country of acquisition.
Again, the best way to avoid obstacles related to international freight is to work with a customs broker and professional freight forwarder with the right experience.
Common Cross-Border Shipping Mistakes to Avoid
As previously mentioned, shipping freight from the United States to Canada, Mexico, or overseas can be challenging. If even one step is missed, it can result in fines and shipping delays. Some of the most common cross-border shipping mistakes include:
- The carrier is missing documentation or has inaccurate documentation.
- The carrier has insufficient credentials or is not permitted to transport cross-border freight. Long-haul drivers and owner-operators must be vetted to ensure they have no criminal records, have the correct licenses, and have valid transportation documentation (passport).
- The exporter doesn’t research customs regulations and requirements by country.
- The Importer of Record (the person responsible for ensuring the shipment is cleared at customs) is not identified.
- There are cost inaccuracies in the commercial invoice. Costs that need to be included in the commercial invoice include royalties, packaging costs, the retail price of the item(s) being shipped, and insurance. Cost inaccuracies can result in fines. The declared value must also be correctly converted to the currency of the country of acquisition.
- Failing to clarify whether the exporter or importer is responsible for paying Customs Duty (a tariff or tax that is calculated at customs). Customs Duty will vary based on where the freight is being shipped to, the type of product being shipped, the weight of the shipment, the number of packages in the shipment, and more. In some situations, an exporter may pay the tariff, while in others, the importer will be responsible.
Learn More About Cross-Border Freight Shipping
Shipping freight across any border isn’t easy. That’s why you need a professional like TSI on your side. We’ve provided CTPAT-certified cross-border shipping services to Mexico and Canada for over four decades. Please visit our website to learn more about our expertise and capabilities, or contact us today to speak with a representative.