Last updated on August 24th, 2020 -
UPS, DHL, and FedEx brokerage fees decoded
de·code (dēˈkōd): to convert (a coded message) into intelligible language.
Canadian brokerage or entry fees with UPS, FedEx, or DHL can be expensive and confusing.
If you are not familiar with UPS, FedEx, and DHL clearance fees in Canada, your Canadian customers will literally pay the price by getting forced to pay these fees when the package arrives at their door.
Air and ground shipments have different fees.
This is possibly the most confusing point to a fairly inexperienced seller. The shipping method you select has more of an effect on the cost of clearance than the carrier you choose. If your shipment travels on a truck with UPS or FedEx, the clearance fees are exorbitantly higher than if it traveled on an airplane. On the flip side – if you ship air, the shipping fees are exorbitantly higher than if it shipped ground.
For example, a nice shirt valued at $80 appears to cost $20 less to ship ground than air; however, your customer is only paying ~$5 less after fees when it ships ground. In fact, if there were two t-shirts and shipping didn’t change, your customer would pay $2.60 more in total for a ground shipment, even though your business saved $20 in shipping.
UPS Canada brokerage fees
|UPS Canada||Shipping cost||Entry fee||Bond fee||ICOD fee||Total|
|UPS Standard (Ground)||$20.00||$19.95||$6.00||$5.00||$50.95|
FedEx Canada brokerage fees
|FedEx to Canada||Shipping cost||Entry fee||Disbursement fee||ROD fee||Total|
DHL Express Canada fees
|DHL to Canada||Shipping cost||Entry fee||Processing fee||Transaction fee||Total|
Ground to Canada brokerage fee comparison
|FedEx vs UPS||Shipping cost||Entry fee||Disbursement fee||COD fee||Total|
Air to Canada brokerage fee comparison
|Service level||Shipping cost||Entry fee||Processing fee||COD fee||Total|
Carrier terminology decoder
Brokerage fee: This is the fee by the broker for clearing the shipment with customs. UPS calls it an entry prepartion fee, whereas FedEx calls it clearance entry fees. Since international shipments with UPS, FedEx, and DHL include routine brokerage, this fee is only applied to ground shipments.
Disbursement fee: The disbursement fee is for upfronting money to customs or paying the customs charges of duties and taxes on your behalf. In Canada, UPS calls it a bond fee (although in every other country in the world, they call is a disbursement fee). FedEx calls it either a disbursement fee or an advancement fee, whereas DHL calls it a processing fee.
COD fee (Collect on Delivery): A COD fee is charged only to the receiver of the goods when they either do not have an account number to invoice the customs charges with FedEx, DHL, or UPS, or the importer did not pay them prior to customs clearance. UPS calls it by the name that seems to make most sense – an ICOD fee, whereas FedEx calls it a ROD fee and DHL Express calls it a transaction fee.
International Ground Delivery (US to CA): UPS and FedEx offer ground delivery from the United States to Canada, and DHL Express does not. With UPS, it is called UPS Standard, and FedEx calls it International Ground.
International Air Delivery (US to CA): UPS has a few different air services to Canada – UPS Express, Saver, and Expedited. FedEx offers FedEx Priority and Economy, whereas DHL Express only offers their Express service.
Need to calculate carrier fees at checkout?
You can calculate a total landed cost (which includes duty, taxes plus all the carrier fees) by using Zonos International Checkout or Zonos Landed Cost. Zonos has landed cost plugins for ecommerce platforms as well as custom solutions using Zonos Landed Cost APIs.
To calculate UPS brokerage fees, check out our UPS brokerage fee calculator.
Reduce UPS, FedEx, and DHL Canadian brokerage fees
There are a few different ways to reduce these fees to your Canadian customer base. If you send the shipment DDU, there is not a lot you can do, because the carrier or broker is the one charging the fees to your consumers. However, if you send the shipment DDP (and collect duties, taxes, and fees from your Canadian customer at checkout), you can be in control with what is ultimately charged and reduce the fees.
Below are a few tips on how to reduce Canadian brokerage fees when you send a shipment DDP.
1. Eliminate the COD fee
Bill the duties and taxes to your shipper account; this will completely eliminate the COD fee, because the duties and taxes are billed to your shipper account with your carrier
2. Eliminate or reduce the disbursement fee
With FedEx, you can put a credit card on file and then bill the duties and taxes to your shipper account to avoid the disbursement fees.
FedEx ship manager user guide
3. Negotiate the entry fee
Both UPS and FedEx will negotiate the entry fee; however, you may have to work with their brokerage team in Canada. Again, you only have to worry about this if you send a shipment ground to Canada, because the air shipment to Canada does not incur an entry fee.
4. Use an alternate broker
You can bypass UPS, FedEx, and DHL brokerage altogether by picking a different broker. They still have fees, but they will not be as expensive as UPS or FedEx. For example, you could work directly with Border Buddy, Livingston, or another brokerage firm. It will require you to set up an NRI account (Non-Resident Importer); however, if you do high volumes – this could make a lot of sense.
5. You can ship with another company
For example, Landmark, RR Donnelly, APC, or other. Also, the USPS is less expensive, but they do not have the ability to bill the duties and taxes to your account; Canada Post charges at $9.95 CAD entry fee on top of the duties and taxes.
Get help selling internationally with Zonos
Want to learn more about the many cross-border technology products offered by Zonos to help you with your international ecommerce?
We have plugins, APIs, and tools that allow you to show and collect total landed cost at checkout, optimize your website for international shoppers, and stay globally compliant.