If you’re reading this, chances are you’ve been stuck with an unbelievable bill for customs brokerage from a shipper like UPS. For a while I figured it was par for the course and that shipping goods from the US would be costly. NOT ALWAYS TRUE! If you want to learn how to avoid the hefty fee, read on.
Just a caveat: this is based on my experience with UPS and ONLY for items being shipped from the US and into Canada (where I reside). This is also as of April 2010 so things may have changed since I posted this article.
Since I started designing and making stationery items, I’ve had to buy materials, such as envelopes from the US. I buy these items for my business and therefore am a COMMERCIAL importer. If you’re just buying goods for personal use (such as something on Ebay) I’m pretty sure you can do the following as well, but I would suggest calling a local Canada Border Services Agency office to double check.
How much you’ll be paying depends on 2 things:
1. How much the package is worth
2. Which UPS service level is being used (Expedited, Ground, etc.)
HOW MUCH THE PACKAGE IS WORTH
The worth of your package determines how Duty, Taxes and Handling Fees on items mailed to you are applied. Chances are what you’re bringing in is worth more than $20 CAD so you’ll have to pay Canadian tax (GST, PST, HST). To figure out what you owe in tax, paperwork needs to be filed and subsequently, payment collected. This is referred to as “clearing customs“. EVERYONE must do this and it’s unavoidable. What is avoidable is the fee that UPS will charge to do the “clearing” for you, which is also known as acting as your broker. This brings us to the next part.
WHICH UPS SERVICE LEVEL IS BEING USED (EXPEDITED, GROUND, ETC)
Well, if it’s being sent expedited, the service of “clearing” for you is included. The brokerage fee (a.k.a. the charge to do the “clearing” for you) is built into the shipping rate. All you’ll pay on top of the cost of your goods and shipping charge is the applicable tax.
Ground/Standard shipping DOES NOT include this service. When a package is due to arrive shortly, I get a call from UPS informing me that my package needs to “clear customs” and they will ask if I have a broker. If not, UPS offers to act as my broker. If I say yes, they ask for my credit card number to bill the fees and taxes and my package arrives as usual. Then I see my credit card statement and have a heart attack.
UPS DOES NOT NEED TO BE YOUR BROKER!
What they don’t tell you is that you don’t need a broker at all. You can clear your own package without involving a third party.
HERE’S WHAT YOU NEED TO DO:
1. Once your package is on its way and you have a tracking number, call UPS at 1-800-PICK-UPS. Let them know that you’ll be clearing your own package. At this point, they should tell you where you’ll need to go to pick up the paperwork to do so (it’ll usually be a hub location). Here in Vancouver, the UPS hub is in Richmond, BC near the airport. The hub locations are different in each city and it may not always be a close drive for you as it was for me. They will call you when the paperwork arrives.
2. Once the paperwork arrives, pick it up from the hub and take it to any Canada Border Services Agency office. At the UPS hub I went to, they told me the location of the closest CBSA office and even gave me a map which was great. The paperwork generally consists of a commercial invoice and the shipping documentation. You have 5 business days to pick up the paperwork, get it processed and returned for your package to be released. After 5 days, the package is returned to sender.
3. At the CBSA office, you will need to fill out a B3 form. Since my package was for my business, it’s considered a commercial import. As such, I needed to have an Importer Number and the form is filled out on a computer. If this sounds complicated, it wasn’t really. The staff at the office were extremely helpful. I didn’t have an Importer Number but all I needed to do was call a toll-free number they gave me and I got one right away (I’m talking 5 minutes on the phone and another 15 minutes for the system to update). This is a one-time set-up and should be the same as your Business Number but with a couple different letters. As for the form, there are step by step instructions that walk you through filling in all the necessary information. I’m not sure what the steps are for personal goods but it’s probably something similar without the extra steps of having to get an Importer Number and such. It’s best to ask an agent there.
4. Once the form is completed and printed out, labels are applied to the paperwork and it all gets stapled together and submitted for processing. They have up to 48 hours to do so but in actuality it takes about an hour or two. They will call when the paperwork is processed and ready for pick up.
5. When you retrieve the paperwork from the CBSA office, you will at this time pay any applicable taxes and duties to a cashier there. Be sure the appropriate documents have been stamped cleared as UPS won’t release your package without the proper stamps.
6. Take the paperwork back to the UPS hub where you originally picked up the paperwork and they’ll release the package to you then and there.
I realize that this may not be a viable option for everyone. If you don’t live close to a hub, then all the driving back and forth can be time consuming, less convenient and ultimately more costly in effort. For me, it was easy since both the hub and CBSA office were no more than 5 minutes apart and close to my home and business.
So how much did I save? The cost of the goods were $150 CAD and the ground shipping charge $50 CAD. If I were to have UPS as my broker, I would have paid close to $60 in fees and taxes. But because I cleared the package myself, I only had to pay the GST which was $7.22 CAD. I’d say the savings are worth the one hour of my time that it took to do it all.
It’s a pretty long post but I hope you found it useful. For other shippers such as FedEx, I imagine you’d be able to do something similar. Good luck and here’s to saving all those brokerage fee dollars!
~ Cassie