A full guide for export goods to Canada
Question:
According to my forwarder, he can only ship by sea or by air under DDU.
What does this mean? Is my company required to be registered in Canada? Is customs clearance my responsibility?
Additionally, my forwarder told me I needed to obtain an income record and pay customs and GST.
What’s the difference between the USA and Canada? And why can’t I release the goods as DDP?
What is GST? Are the customs percentages in the US and Canada comparable/identical/different?
Answer:
Without getting into too much detail on the sales certificate and the differences between DDP & DDU, by and large, shipments to Canada are usually DDU, which means that the shipping price does not include the customs and VAT costs.
In practice, as soon as the shipment arrives in Canada it will go through the customs clearance process, will be released, and we’ll receive the import record detailing customs and VAT costs.
(Note: if you’re not familiar – GST = VAT).
GST in Canada is only 5%.
In other words, you’ll need to add customs (per the HTS code) and VAT costs to your shipping costs.
In most cases, your forwarder will release your shipment under his Canadian registered company, if the shipment is from China (in which case you don’t need to have a Canadian registered company).
Once the shipment is released, the forwarder will send you the import record and invoice you accordingly.
With respect to the question of customs percentage US vs. Canada
Basically, HTS codes can have the same/different customs %.
For example:
Let’s take sports goods classified (HTS) as 91.9506. For the exact same product, regardless of GST, this HTS code has 1.12% customs in the US and 0% in Canada.
Therefore, we can agree that whoever wants to ‘investigate’ selling products in different countries, it would be prudent to check the HTS classification for each destination country.
Re the question about Canada, let’s elaborate on that:
Let’s talk operational shipping terms –
Vancouver is the central port in Canada, on Canada’s western shores.
Most shipping companies with routes to the West Coast (US): LA, Oakland, Seattle, will pass through Vancouver and from there to other destinations in the world.
Most of Canada is forested or uninhabited, and Amazon's warehouse center is located either in Alberta or in Ontario / Toronto.
It’s important to grasp the huge distances in Canada – as an example, the distance between Vancouver and the Amazon warehouse in Toronto is approx.. 4,000 km (refer to Google map below).
You should therefore take into account transportation time, by train, from Vancouver to Toronto.
Canada is known for its extreme weather during winter (in certain parts) that can reach up to -50 deg. Celsius.
Of course, like any other rail company, there are many strikes, that may slow down or halt services.
Factor in the rail transportation times when planning your shipments and inventory.
Consider the long shipping times to central/eastern Canada.
The time it takes for goods to move from Vancouver to Toronto is significant and impacts you as a seller.
