2 May 2019 / 0 min read
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 into Canada, your Canadian customers will literally pay the price by getting forced to pay these fees when the package arrives at their door.
Clearance and brokerage fees differ based on whether a box is moving on a plane or a truck. 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 using an air method, the shipping fees are much higher than if it shipped ground.
Below are some examples of clearance fees on ground vs. air shipments for a shirt valued at $110.00 CAD (~$86 USD).
|Clearance fees||UPS Express||FedEx Priority||DHL Express|
|Brokerage fees||CA$0 Entry fee||CA$0 Entry fee||CA$0 Entry fee|
|Disbursement fees||CA$10 Bond fee||CA$10 Disbursement fee||CA$11.25 Processing fee|
|COD fees||CA$5 ICOD fee||CA$10 ROD fee||CA$5.25 Transaction fee|
|Total clearance fees||CA$15||CA$20||CA$17.500|
|Clearance fees||UPS Standard||FedEx Ground|
|Brokerage fees||CA$26.60 Entry fee||CA$25.50 Entry fee|
|Disbursement fees||CA$6 Bond fee||CA$10 Disbursement fee|
|COD fees||CA$5 COD fee||CA$10 ROD fee|
|Total clearance fees||CA$37.60||CA$45.50|
Brokerage fee: This is the fee charged by the broker for clearing the shipment with customs. UPS calls it an entry preparation 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, UPS calls 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 the 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.
For more information on carrier-specific import fees:
Are you calculating fees for your customers?
If you are not, they are getting an unpleasant surprise at the door.
If you send the shipment DDU, there isn’t much you can do to lower brokerage fees. The carrier or broker is the one charging the fees to the importer and the importer doesn’t have those fees negotiated. However, if you send the shipment DDP (and collect duties, taxes, and fees from your Canadian customer at checkout), you can directly negotiate some of these fees. Below are a few tips on how to reduce Canadian brokerage fees when you send a shipment DDP.
Bill the duties and taxes to your shipper account (DDP); this will completely eliminate the COD fee because the duties and taxes are billed to your shipper account with your carrier.
Entry fees only apply to ground shipments to Canada. Both UPS and FedEx can negotiate the entry fee (DHL does not have a ground service); 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 shipments to Canada do not incur entry fees.
The disbursement fee is harder to negotiate with the carriers you need to ship a lot internationally to possibly get this fee negotiated. Upfronting money to customs has an inherent risk for the carriers which is one of the reasons this fee is less likely to be negotiated.
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.
For example, Landmark, RR Donnelly, APC, etc. 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 a CA$9.95 entry fee on top of the duties and taxes.
Clint Reid is the founder and CEO of Zonos, a St. George-based technology company on a mission to create trust in global trade. During Clint’s previous experience working in international logistics at DHL and UPS, he repeatedly witnessed the pain and frustration on the faces of global business owners losing money due to refused packages and hidden international costs. Clint decided to take a chance and started Zonos with the mindset that many cross-border problems could be solved with technology. Today, Zonos helps thousands of companies to sell cross-border.