Expanding your business into international markets is an exciting prospect, but the complexities of cross-border shipping can be daunting. From navigating customs regulations to ensuring your products reach your customers safely and on time, there’s a lot to consider.
This comprehensive guide will walk you through everything you need to know about cross-border shipping, empowering you to take your business global with confidence.
Cross-border shipping by its nature involves more moving parts than domestic shipping. As such, it is crucial to have a solid grasp on these parts to avoid potential issues down the line. This means mastering your documentation, understanding customs and duties, and being aware of international trade rules.
Think of your shipping documents as your products' passports – without the right ones, they’re not going anywhere. The three most critical documents for cross-border shipping are:
Commercial Invoice
This is the most important document in your shipping arsenal. It provides a detailed description of the goods, their value, the Harmonized System (HS) code, and the country of origin. This information is used by customs authorities to assess duties and taxes.
The BOL is a legal document that serves as a contract between the shipper and the carrier. It contains details about the shipment, including the type of goods, quantity, and destination. For truck shipments, a BOL is always required.
This document certifies the country where your goods were manufactured. It's particularly important for taking advantage of free trade agreements, which can reduce or eliminate duties on certain products.
Customs clearance can be one of the most challenging aspects of cross-border shipping and is often considered the most punitive when errors are made. Understanding the following concepts will help you navigate this process more smoothly and avoid potentially costly mistakes:
The HS code is a standardized method of classifying goods. It's used by customs authorities worldwide to identify products and assess the correct duties and taxes. You can find the correct HS code for your products using the Government of Canada website, or the U.S. International Trade Commission HTS Search.
Duties and taxes are fees levied by the destination country's government on imported goods. The amount you'll pay depends on the value of your goods, the HS code, and any applicable trade agreements.
A customs broker is a licensed professional who acts as an agent for importers and exporters. They can help you with all aspects of customs clearance, from preparing documentation to calculating duties and taxes.
For complex shipments or if you're new to international shipping, a customs broker can be an invaluable asset. When choosing a broker, look for those with experience in your industry, knowledge of your target markets, and excellent customer service.
The de minimis threshold is the value below which goods can be imported without incurring duties and taxes. This can be a significant advantage for eCommerce businesses shipping low-value items. Here are the de minimis values for some key markets:
|
Country |
De Minimis Value for Duties |
De Minimis Value for Taxes |
|
United States |
$800 USD |
Varies by state |
|
European Union |
€150 EU |
VAT applies to all goods |
|
United Kingdom |
£135 GBP |
VAT applies to all goods |
|
Canada |
$150 CAD |
$40 CAD |
|
Australia |
$1,000 AUD |
$1,000 AUD |
|
Mexico |
$50 USD |
$50 USD |
|
Japan |
¥10,000 JPY |
¥10,000 JPY |
|
China |
¥50 CNY |
¥0 CNY |
Be sure to note that these values are subject to change. Always be sure to verify the latest de minimis thresholds with the destination country's customs authority, or with a customs broker if you choose to use one.
Before you book your first cross-border shipment, taking a moment to answer a few key questions can save you from common customs delays and costly unexpected charges.
While a good shipping partner or customs broker can guide you, it is ultimately your responsibility as the shipper to ensure all documentation and compliance requirements are met.
With that in mind, here are a list of questions to consider before you begin booking your cross-border shipments.
Customs officials need precise information to classify and clear your goods. This information must be included in detail to avoid potential delays at the border.
What exactly are you shipping? Be prepared to provide a detailed and accurate description of your products.
Where are your goods made? Knowing the country of origin (e.g., Canada, U.S., Mexico, or elsewhere) is critical for determining duties and eligibility for trade agreements.
Do you know the HS Codes for your products? Having the correct tariff classification code for each item is essential for accurate duty and tax assessment.
As stated earlier, your commercial invoice is the cornerstone of your shipping documentation.
While shipping platforms like Freightcom can generate commercial invoices for you, it is important to have a thorough understanding of them, and so having a template of your own and being comfortable filling it out is highly recommended.
Does your invoice include all required fields? Every commercial invoice must include a full product description, the declared value of the goods, the country of origin, and the HS Code (if available). It is your responsibility to review all information for accuracy before the shipment is sent.
If you are shipping within North America, your goods may qualify for duty-free entry under the Canada-United States-Mexico Agreement (CUSMA/USMCA). The two major factors to consider when determining this are:
If either or both are the case, completing a CUSMA certificate of origin to submit when you ship is prudent, and can result in major savings on duties that would otherwise be charged.
More information on CUSMA compliance can be found on the Canada Trade Commission website, and a template for the CUSMA certificate of origin can be found on the Canada Border Services Agency website, or through your customs broker.
This is a critical decision that impacts your customer experience and your bottom line.
By default, duties and taxes are billed to the receiver of the shipment. If you choose this option, you must ensure your customer is aware of this responsibility. If they refuse to pay, the carrier will ultimately pursue you, the shipper, for the outstanding charges.
You can alternatively choose to have these charges billed to you, the shipper. This is known as shipping DDP (Delivered Duty Paid). If you select this, you accept full responsibility for all applicable taxes and duties and must understand these potential costs in advance. These charges may appear on a separate invoice after the shipment is delivered.
Decide on a strategy and communicate it clearly.
Understanding your shipping patterns helps you plan logistics strategy and choose the right carriers and services.
How often will you be shipping cross-border? Who are you shipping to? Are your customers other businesses (B2B), individuals (B2C), or a mix of both? All of these factors can affect the services and customs processes required.
The Right Service for Every Shipment
Freightcom’s partnerships with the most trusted carriers in North America mean you can always get the right carrier for every shipment.
International trade is governed by a complex set of rules and regulations. Understanding these rules is essential for avoiding costly mistakes.
Incoterms (International Commercial Terms) are a set of 11 rules that define the responsibilities of buyers and sellers in international transactions. They specify who is responsible for paying for and managing the shipment, insurance, documentation, and customs clearance. Using Incoterms in your sales contracts can help to avoid misunderstandings and disputes.
The 11 Incoterms are:
DAP and DDP are two of the most used Incoterms for eCommerce shipments.
Every country has a list of items that are restricted or prohibited from being imported. Shipping these items can result in fines, seizures, and even criminal charges. Before you ship, always check the destination country's list of restricted and prohibited items. Common examples include:
For eCommerce businesses, cross-border shipping is not just about logistics – it's also about the customer experience. A smooth and transparent shipping process can help you build trust with your international customers and encourage repeat business.
Clearly communicating your shipping policy on your website will help to curb miscommunication and potential customer issues down the line.
Tools like real-time rates at checkout and advanced tracking can add extra layers of transparency to your cross-border shipping process and further incentivize your growth outside the domestic market.
International returns can be a major headache for eCommerce businesses. A clear and convenient returns policy can help to mitigate the challenges.
Make your policy easy to find and understand. Use plain language and be upfront about any costs or restrictions.
Offer multiple return options. Consider partnering with a returns management service to offer local return drop-off points.
Be clear about duties and taxes. Let your customers know if they will be responsible for paying duties and taxes on returned items.
Returns are inevitable in any eCommerce business, but with the right preparation a well thought-out return policy can be a powerful tool for boosting conversions and customer retention, especially as you grow beyond the domestic market.
For businesses of all sizes, Freightcom can be a game-changer. Freightcom offers a range of features to simplify cross-border shipping, including:
Discounted shipping rates: Get access to heavily discounted pre-negotiated rates from a wide range of trusted freight and parcel carriers.
Streamlined fulfillment: Manage every step of your shipping process from a single easy-to-use platform.
eCommerce integrations: Connect Freightcom directly to your storefront with the Freightcommerce API to offer discounted real-time rates directly to your customers.
Expert support: Get access to a dedicated account manager and a team of shipping experts who can guide you through the complexities of cross-border shipping.
Cross-border shipping can be a complex and challenging process, but with the right knowledge and tools, it can also be a rewarding one. By understanding the essentials of documentation, customs, and international trade rules, you can set your business up for success in the global marketplace.
Cross-border shipping requires a thorough understanding of several critical components beyond those required for domestic shipping. Most importantly, one should focus on: mastering documentation, comprehending customs and duties, and being aware of international trade rules. Effective management of these elements is crucial to avoid potential complications and ensure smooth, timely delivery of goods across borders.
Three documents make up the core required documents when shipping goods cross-border:
A customs broker is a licensed professional who specializes in customs clearance. A freight forwarder is a company that arranges for the transportation of goods. Many freight forwarders also offer customs brokerage services.
You can find the HS code for your product on the Government of Canada website. You can also consult with a customs broker.
Incoterms (International Commercial Terms) are a set of 11 internationally recognized rules that define the responsibilities of buyers and sellers in international transactions. Incoterms specify who is responsible for various aspects of the shipment, such as payment for and management of shipping, insurance, documentation, and customs clearance. Using Incoterms in sales contracts helps to avoid potential misunderstandings and disputes.
By asking the following five questions, shippers can avoid potential common delays and unnecessary extra charges on their cross-border shipments:
LTL (Less-Than-Truckload) shipping is for smaller shipments that are consolidated with other shipments. FTL (Full-Truckload) shipping is for larger shipments that fill an entire truck.
Every country maintains a list of items that are either restricted or outright prohibited from being imported. Shipping these items can lead to severe consequences, including fines, confiscation of goods, and even criminal charges. Before shipping any item cross-border, it is vital to check the destination country's specific list of restricted and prohibited goods. Common examples of restricted and prohibited items include alcohol, tobacco, firearms, flammable materials, perishable goods, live animals, counterfeit items, and narcotics.
Some common mistakes to avoid include incomplete or inaccurate documentation, using an uncertified carrier, improper packaging, and not planning for duties and taxes.
For eCommerce businesses, cross-border shipping can significantly influence the customer experience. A transparent and efficient shipping process builds trust and encourages repeat business. This involves clearly communicating shipping policies on websites, providing real-time rates at checkout, and offering advanced tracking.
Despite the challenges inherent in international returns, a well-defined and convenient returns policy can mitigate issues. Policies should be easy to find on your website and easy to understand. Offering multiple return options and clarifying responsibility for duties and taxes on returned items can help to create a more customer-friendly policy. A thoughtful return policy can boost conversions and customer retention in the global market.
Freightcom offers features designed to streamline the complexities of cross-border shipping, benefiting businesses of all sizes. These include:
By providing these tools and support, shipping platforms empower businesses to confidently expand into global markets.