With sharp increase of the Canadian Dollar verses the US Dollar now is the time for your business to begin or increase your importing from the United States. Since most products in the United States are lower priced than Canada importing can reap huge rewards if done correctly.
Small businesses can overcome the disadvantage of small package charges, you just have to be aware of what the exact charges are. Or course large Canadian businesses can import in quantity and that reduces their brokerage and freight charges. However small companies can import cost effectively, but must operate with care and deal with select USA companies. There are companies that absorb some of these importing charges and these are the companies you are looking to purchase from. The full charges are explained below, your responsibility is to know each of the charge and then do the best you can to minimize or avoid them altogether This will be explained later in this article.
First step in importing small quantities is to figure out the freight cost to Canada. Freight cost depends on the weight of your order and dimension of the package or packages. This plus the method the company is going to ship your products. You need to be proactive here and request that the company quote freight rates using the United States Postal Service via Priority Mail and United Parcel Service via Canada Standard Service only. There are large differences between the two. In general a lighter package is better off being sent via the United States Postal Service. However there are expectations to this so you need to know exact freight cost of each carrier.
When it comes to importing it’s not just a question of the freight cost. Brokerage charges need to be factored in. Brokerage charges can vary markedly. The United States Postal Service sometimes does not charge brokerage charges, but sometimes they do for no apparent reason. Confused? Me too, I have tried and have not found a reason for this, so lets continue. In general the United States Postal Services brokerage charges are minimal, so this should not be a worry for you. United Parcel Service always charges brokerage charges as long as the order is over $20.00. These brokerage charges can range from $10 to $75 for small packages depending on the dollar amount. Collection costs are also added which can be between $5.00 and $10.00. The company you are purchasing from needs to furnish you quotes of these charges with the estimated dollar amount. If they cannot do that then I would advise you not to purchase from them.
The company you are purchasing from most probably cannot figure out the Duties the Canadian government charges at the border. However there are no duties on products you are purchasing which are made in the United States or Mexico. With the North American Free Trade Agreement (NAFTA) there are no duties crossing the borders between USA, Mexico and Canada. Remember the products need to be made in the USA or Mexico. Ask the company you are purchasing from where the products you are purchasing are made. Buying products made outside the United States or Mexico can increase your cost substantially depending on the duties of that particular product.
As your order crosses customs you will have to accept the order and charges, so determine the complete charges before your order leaves the company in the United States.
Tips on cutting your importing costs:
First step is to look for companies in the United States that offer free shipping to Canada. There aren’t a lot of them, but they do exist. Freight costs to Canada can be quite high, especially if you are ordering heavier products. Free shipping is the key to substantial savings on your end. Companies in the northern end of the United States have a better chance of offering free shipping than companies in the southern areas. So keep an eye out for States like New York and avoid Florida or California.
Second, there are select United States companies that receive reduced brokerage charge rates, especially to residential customers. These brokerage charges can be as low as $10.00 from United Parcel Service. Ask the company their brokerage rate. If they don’t receive this special brokerage rate, look for one that does. If you have a commercial location you may want to have your order shipped to your residence as the reduced brokerage charge can be significant.
Third, make sure the company does not hold your order so they can collect orders and then ship in volume, usually weeks later. Ask when the order will be shipped. If it’s not within a day or two, move on because this company is trying to save themselves money by consolidating shipments at your expense.
Fourth, to avoid duties, try to buy goods made in the United States or Mexico. This is not an easy task in a world where a large segment of manufacturing has moved to Asia. However products are still made in the USA and buying these products can give you substantial savings.
Fifth, be aware of the exchange rate. It changes daily, but most changes are slight. You can Google this information by searching for “Canadian vs US Dollar exchange rate”.
The United States companies you deal with must be experienced and willing to inform you of all charges. Experienced companies can save you money as they know the best methods to use to export to Canada. The key is for you to be aware and informed so you don’t import blindly and end up costing you much more than you thought. Keeping this article and questioning the company you are buying from about each of the charges discussed will make you an educated importer, save you money and give you an advantage over your competitors.
Wayne Fetta formed and is currently CEO of Fetpak, Inc. Fetpak was formed in 1992 to distribute packaging supplies for retailers, wholesalers, manufacturers and organizations.
Fetpak has Free Shipping to the 48 Contiguous States and All of Canada.
Fetpak’s focus is on small to mid size business and helping them acquire their packaging supplies in a cost effective and timely manner. Items supplied are all in stock and range from paper and plastic bags to drawstring pouches, labels and tags. Fetpak also has an extensive line of jewelry displays, jewelry supplies and jewelry gift boxes. With over 1,200 individual products to choose from, a fill rate of 98% and orders shipped the same or next day.