Total landed cost

If duties and taxes are not prepaid, the carrier must collect these from the end consumer when they deliver the shipment. The carrier typically charges a fee for this service, called a COD fee.

This fee is common—UPS, FedEx, DHL, and delivery entities for postal couriers all charge this fee. For example, USPS delivery partners, such as Canada Post or Royal Mail, charge COD fees on all First Class and Priority United States (U.S.) mail that incurs duties and taxes.

If you request estimated duties and taxes from Zonos' API, COD fees are included. However, these are only estimates. If you request a guaranteed landed cost from Zonos' API, COD fees are typically not included, as they will not be charged (there will be nothing for the carrier to collect upon delivery). Instead, all duties and taxes will be prepaid.

Requiring the consumer to pay extra fees when their shipment is delivered often leads to upset customers. To avoid this, some shippers either subsidize these costs or collect them upfront (such as in the checkout alongside shipping costs). The end consumer gets their package delivered without being asked to pay anything extra first.

This change in process requires the carrier to front the money for duties and taxes to pay the local customs agency during transit. They usually charge a disbursement fee for this service. The fee is usually a percentage of the amount they fronted or a flat rate (in the destination currency), whichever is greater. These fees can frustrate shoppers because they are not well-disclosed by carriers or online retailers.

Tomato (to-may-toe) or tomato (to-mah-toe)?

Each shipping carrier uses different terminology to define their disbursement fee. To help you decode these fees, below you will find a cheat sheet for shippers and the jargon they use for a disbursement fee. This information can be helpful when asking for the proper international fee waivers in a negotiation with a carrier like UPS, FedEx, or DHL.

Disbursement fee terminology by carrier

The impact of disbursement fees on your international customers' imports can be very high. It can sometimes be higher than the taxes, duty, or both combined. Also, to compound the issue, these charges are subject to VAT. In the UK, FedEx will charge 12 GBP plus VAT on the fee, so it can be very cost-prohibitive if you do not waive these fees. Below, you will find some examples.

Disbursement fee examples

In most cases, international mail and parcel providers, such as DHL eCommerce, RR Donnelley, APC Logistics, and Landmark Global, do not charge an advancement/disbursement fee.

As explained in the disbursement fee section, the carrier still has to front money to the local customs authority when duties and taxes have been prepaid. Most carriers collect their fee for this service through the disbursement fee. However, when this money is fronted, the carrier also has to handle billing the duties and taxes back to the shipper. One carrier (UPS) charges for this service separately, while the other carriers consider it to be included in their advancement fee.

Forwarding surcharges by carrier

UPS and FedEx both have brokerage fees on ground shipments into Canada. UPS Standard to Canada charges a brokerage fee called an “Entry Preparation Fee,” and FedEx charges a “Clearance Entry Fee.”

Brokerage fee examples

UPS and FedEx do not charge brokerage fees on international air shipments into Canada, but they will still charge disbursement fees (see "Disbursement fee" above).

The importing country may have fees assessed on certain shipments. These fees can be assessed for a wide variety of reasons, but usually represent services rendered by various government departments for things such as clearance, approval, inspection, storage, quarantine, processing, etc.

Country-specific fee examples

A broker usually spends more time clearing a shipment with a long list of items compared to a shipment with a single item. To account for this, many carriers (who use brokers to clear goods) will add fees when more than a certain amount of items are in a shipment. This is usually called an additional tariff line item fee.

Zonos includes additional tariff line item fees in our calculations when applicable.

Additional tariff line item fee examples

Most carriers have a foreign exchange (FX) fee when converting from the destination currency back to the billing currency. These FX fees are usually mentioned in the carrier's terms and conditions, not listed as a separate line item. The fee varies from carrier to carrier, and from country to country.

Zonos has chosen to take a simplified approach to foreign exchange costs. We calculate a transparent 4% FX fee that is built to absorb the carrier's fees and account for FX risks that happen when currencies get exchanged multiple times on a transaction, e.g., Converted at import by the broker and then again by the carrier for billing.

Zonos also guarantees our calculations for 90 days, given that the journey from order placement to order delivery can take time, during which FX can change. The 90-day window allows our customers to present a quote to their shoppers with cost certainty and have 90 days to fulfill the order before the order needs to be re-quoted.

Carriers or customs may apply other fees to an international shipment. For example, the clearance of certain goods into the United States may involve government bureaus like the U.S. Food and Drug Administration (FDA). This additional handling could result in additional charges from those agencies.

Other fee examples

If you are aware of a fee that could be charged on your import, please notify us to ensure the correct landed cost calculation.