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Companies are increasingly turning to cross-border transportation, which not only increases their global presence but also creates a lot of moving parts to keep track of. When working with cross-border logistics, there is a lot to know and understand in terms of parties involved, regulations and required documents. It's all fun and games until someone gets lost. Here's an alphabetized guide of the key terms you'll hear while transiting the world of ground freight or cross border shipping..png?width=1640&name=Neutral%20Beauty%20Skincare%20Search%20Bar%20Promotional%20Facebook%20Cover%20(2).png)
To help simplify the cross-border process, the list of key terms used is in alphabetic order, with simplified definitions of each term. The list is divided into three main categories:
- Documents and Reporting Systems
- Parties or Individuals Involved
- Regulations
You can also use your CTRL + F search function on a computer to lookup any term you may be interested in.
DOCUMENTS and REPORTING SYSTEMS
| ACE/ACE Manifest | Automated Commercial Environment. The U.S digital reporting system used to report imports and exports, and referred to by border agents to determine admissibility. Used in border crossing practices in order to enhance security and efficiency at the border. The manifest electronically reports to the CBP about the incoming shipment and driver. |
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ACI/ACI eManifest |
Advanced Commercial Information. This is the Canadian version of the digital reporting system which reports key shipment information and documents to the CBSA, for clearance and risk assessment, and it is mandatory for border crossings. |
| Bill of Lading (BOL) | This is a required and legally binding document containing the relevant information about the shipment, indicating that goods have been shipped, where they've been shipped from and where they are going. This is a contract between the parties involved. It is issued by the carrier to the shipper and acts as a document of ownership of the goods. It must accompany the shipment and be signed by authorized parties. |
| Certificate of Origin (CO) | This is an important document in international trade, and it is a declaration by the exporter of the origin of the goods being shipped. It reflects the country where the goods in the shipment were originally produced, obtained or manufactured. |
| Customs Invoice | This is a legal document which travels with a shipment and describes the goods sold, the quantity and value or amount due. Acting as a bill of sale for the shipment. It is usually done by an authorized customs broker or the shipper. Unlike a standard commercial invoice, it may contain more elements or details for customs. |
| Commercial Invoice | A legal document which reflects a transaction between shipper and buyer, providing information about the shipment. It contains key information such as what the goods are, value and quantity. It is evidence of a sale, and used by customs to determine fees, duties or taxes. |
| FAST Certificate | This is an expedited clearance program between U.S. and Canada for commercial vehicles. |
| Packing Slip | This is a document including the complete list of items in the package, or all relevant components in the shipment, such as quantity, model numbers, dimension, weight, items or units. |
| PARS | Pre-Arrival Review System. Used when dealing with Canadian customs or CBSA. A sticker containing both carrier code and shipment number is the PARS sticker, and it is used to identify carrier and shipment to CBSA. |
| PAPS | Pre-Arrival Processing System. The number or labels are used when dealing with United States customs or CBP. It is a number assigned to shipments requiring pre-arrival clearance. |
| Pro-Forma Invoice | A preliminary invoice sent to a buyer from the seller, requesting the payable total prior to the shipment of the goods. It includes total estimated payable amounts and description of goods as well. |
| Surety Bond | A contract between three parties, a principal, obligee and surety, ensuring that the principal will fulfill their obligation or responsibility. The obligee is the beneficiary while the surety is the company making the guarantee on behalf of the principal to the obligee. If the principal does not fulfill their obligation, the surety will need to take over the financial responsibility, up to the bond limit. In shipping it is the contract between importer, surety and customs. |
PARTIES and INDIVIDUALS INVOLVED
| Bonded Carrier | A bonded carrier is licensed to move cargo or freight past the first point of entry, without a customs release, toward a bonded facility, despite duties and fees not having been paid yet for the goods. A bonded carrier is allowed to carry customs-controlled shipments between customs points, having more clearance than a regular shipment. |
| Carrier | This is a person or company legally authorized to transport goods from point A to point B. The carrier is the company transporting the goods on behalf of a shipper. Carriers can transport via air, rail, ground and ocean. In cross-border most often a carrier is the transportation company using ground transport. |
| CBP | Customs and Border Protection. This is the term used for United States Customs. They are responsible for protecting the U.S. border and facilitating safe trade. |
| CBSA | Canada Border Services Agency. This is the Canadian Customs. They are responsible for protection, immigration and enforcement of customs for Canada. |
| Country of Origin | The country where the goods were produced or manufactured. |
| Consignee | Recipient of the goods being shipped. The person or location where the shipment is to be delivered to. They are the ultimate owner of the goods. They are also referred to as Importer of Record on documents. |
| Consignor | The company or entity shipping the product. They can be a distribution center, factory etc. They are the Exporter of Record on the documents. |
| CRA | Canada Revenue Agency. The government agency responsible for collecting taxes. |
| Customs Broker | A customs broker is the licensed firm or individual who acts as an intermediary between customs and the importer or the other parties involved in shipping. Their role is to communicate with government agencies to clear goods through customs, determine duties and fees or taxes, and also any additional regulations or classifications a shipment requires. |
| DOT | Department of Transportation. They oversee the United States federal highway, railroad, air, maritime and other transportation administrative functions. |
| Exporter of Record (EOR) | This is the entity responsible for shipping goods properly and in accordance or compliance with customs regulations. They are the original company or entity shipping the product. They also must send information to any forwarding agent if there is one. Often referred to as the consignor. |
| Filer | This is what the broker who files entry for crossing the border, is referred to at times. A remote filer is the broker who does not have physical presence at the border. |
| Freight Broker | The liaison between carrier and shipper, acting as an intermediary for the transportation of goods. Connects shipper with carrier who can fulfill their needs, at a percentage fee. |
| Freight Forwarder | Unlike the broker, the forwarder takes possession of the freight, to store, pack or ship. This is a company or individual who organizes shipments or arranges the cargo on behalf of shippers. They coordinate shipments from one place to another, sometimes using multiple modes of transportation or multiple carriers. |
| FMCSA | Federal Motor Carrier Safety Administration. The organization operates within D.O.T. and are focused on preventing commercial motor vehicle accidents or fatalities by enforcing safety regulations. |
| Importer of Record (IOR) | The purchaser, owner or consignee of the goods being shipped. The individual or entity who has ownership of the goods being imported, as they’re imported. They are responsible for complying with local laws and regulations pertaining to imports, as well as paying duties, fees or taxes on the shipment. |
| Non-Bonded Carrier | This is a carrier who is not authorized to move shipment beyond first point of arrival, so they must release the shipment at the border. |
| P.O.A. | Power of Attorney. This is the authorization given by shipper or receiver to the customs broker so that the broker can liaise or act on their behalf. |
| Third Party Logistics | These are individuals or companies that offer outsourced logistics services, specifically to ecommerce merchants, that can range from storage or transport of the shipment. They do not function as the carrier or shipper, but are able to provide authorized motor carriers or shipping services when needed. |
REGULATIONS and REQUIRED CODES
| Bonded Goods | Bonded goods are those on which customs duties, fees or taxes are still owed. |
| Business Number | This is a 9 digit code that identifies a business to Canadian federal, provincial and municipal government. |
| Canada Highway Carrier Code | A unique four character code that is used to identify carriers to CBSA. |
| Duties | These are the fees or tax collected by customs on specific shipments or packages. |
| DOT Number | A number usually 8 digits in length, assigned by the FMCSA to carrier companies, and is used as an identifier for the company. It is used to monitor safety and compliance with regulations. It is mandatory to transport commercial cargo within the US. |
| Entry Number | This is a unique number that reflects a shipment was processed by a U.S. customs broker in the process of delivering goods into the U.S. |
| FIRMS Code | Facilities Information and Resource Management System. This code is given to a location when a bond has been filed with the CBP. The code needs to be on file in the Automated Manifest System. |
| Freight Class | This is a classification used for pricing of goods or freight transported via LTL (Less than Truckload) shipping. The class is determined by the National Motor Freight Traffic Association, using size, value, liability or complexity of transport of the freight. It is used to determine the carrier’s shipping charges. |
| GST Number | This is the Government Sales Tax number, which identifies the shipper or receiver to the Canada Revenue Agency. |
| Harmonized System/HS Code | The standard numerical method of classifying traded goods or products. It is used to generate a number used by customs to identify product categories, and determine the duty and tax rates for specific goods (HS Code). The first 2 digits of the code indicate product category, while the next 4-6 digits indicate the subcategories the product fits into. |
| HAZMAT | Hazardous Materials. This is an accessorial applying to shipments which are in a special classification. This can include health risks, more paperwork or special handling and licensing requirements. |
| NAFTA | North American Free Trade Agreement. This is the trade agreement outlining the rules of trade between Canada, United States and Mexico. |
| Port Code | This is the unique code issued at each border crossing point. |
| SCAC Code | Standard Carrier Alpha Code. This is the United States unique 4 letter code used to identify carriers or transportation companies to the CBP. |
| T.E. Bond | This is the Temporary Export Bond, used for goods traveling through a country but not remaining there. This is usually when goods travel through one country to get to their destination. |
| Tariff | A tariff is a tax imposed on goods as they cross a border, meaning goods imported or exported from another country. It is imposed based on type and value of good, used to determine duties and fees for the shipment. |
| Tax ID | This is sometimes also referred to as the IRS number, this is the Internal Revenue Service number identifying the shipper or received in the United States, to the IRS. |
| Transaction Number | The number assigned to a shipment processed by a Canadian Customs broker for goods coming into Canada. |
One of the most common errors in cross-border is related to documents, or individual parties being unsure of their responsibility in the process. To make the process of cross-border shipping as smooth and convenient as possible, knowing some of the key terminology can help cut time and potential error in shipping. The art of cross-border transportation is complicated, but with the right knowledge and documents, you can save yourself days.
