Customs clearance can be one of the biggest challenges for importers and carriers. The right paperwork, packaging and following regulations is the difference between a shipment arriving quickly and being held back at customs. Border services in both U.S. and Canada are quite strict, so when it comes to cross-border transport there is a lot to remember. However, in understanding the basics of the customs clearance process, any carrier or importer can simplify matters and ensure the shipments arrive quickly and with ease.
The customs clearance process involves the movement of commercial goods through customs, so that they can reach their intended destination. The goods are moved through import or export processes. The first step is to prepare the goods, by packaging them correctly, and then prepare the appropriate paperwork. Then, the goods can be shipped, while the appropriate duties or taxes are paid on the shipment. For Canada, the customs process deals with the CBSA (Canada Border Service Agency), meanwhile in the U.S. you are dealing with CBP (Customs and Border Protection).
All international shipments need to be cleared by customs, and these shipments need to contain essential paperwork to identify, classify and clear the goods. A customs broker is usually hired to handle the paperwork, as this simplifies the process and ensures accuracy. While importers can opt to handle customs clearance alone, it is usually a lot of work and mistakes are easily made. When preparing for customs clearance, some of the necessary paperwork for commercial crossing between Canada and the United States includes:
A Customs or Commercial Invoice is a document that contains the description of the goods as well as their origin and value. The invoice acts as a bill of sale for the intentional sale or import/export of goods, as it is a legal document stating the goods are being sold and for which value. The invoice is one of the most important documents, as it contains contact information of both the receiver and shipper, as well as export date.
A Packing Slip is a complete list of all the items in the shipment or package, and relevant parts to the shipment such as dimensions, weight, model number, item quantity or units. Your packing list will look similar to your invoice, though it will pertain to the shipment specifically, and not the value, so be sure that there is enough detail.
PARS/PAPS labels are essential in the cross-border process, as they connect to the pre-arrival processing of the documents needed for border crossing. Technology allows carriers or trucking companies to submit data about the shipments which are being transported, ahead of time, for review and clearance. The PAPS and PARS numbers are submitted along with the ACE or ACI eManifest, so that the goods can be reviewed and cleared before drivers even arrive at the border. Canada bound shipments need a PARS number while U.S. bound shipments require a PAPS label or number.
A Bill of Lading is a legally binding document which contains relevant information about a shipment, including where the goods are shipped from and where they are headed. The document is a contract between the parties involved in the import or export process, and must be signed by authorized parties involved, as well as it must accompany the shipment as it crosses the border.
A Lead Sheet is used to reference or bring up the eManifest of the specific shipment in the border services database, and needs to accompany the driver and shipment. The sheet usually needs to contain a trip number or cargo control number, and will be stamped by customs officers, as a way to log the passage.
Carrier or SCAC Code are unique 4 character codes and the code requirements are in place to identify transportation companies or carriers to border services. U.S. SCAC code and the Canadian Highway Carrier code are mandatory.
Certificate of Origin is a significant document in international trade, as it is a declaration from the exporter of the origin of the goods which are being shipped. The document contains information about the country the shipment was produced, manufactured or obtained in, providing insight into the goods which are now traveling internationally. The origin of the product is used to determine duties and fees so it is important.
In addition to having the paperwork, it is important to understand why it's necessary. A reason for much of the paperwork at customs is in order to ensure the goods coming in can legally enter. The documents are also a method for customs officials to calculate taxes or duties and fees on the goods. Each country imposes different amounts of taxes or import duties on goods which cross their border. The fees are in place to not only protect the economy of the country goods are being imported to and facilitate trade, but they also help generate income and jobs for citizens.
Usually when carriers reach customs, there will have already been a filing of the ACE or ACI eManifest. You can use the Zipments real-time PARS/PAPS tracking to check your status ahead of time and see if you are cleared to cross. This is helpful as it allows you to know if any delay would occur or if there are paperwork issues to fix.
Once at the border, a customs officer will ask a few questions about why you’re there and what you are transporting, as well as assessing the paperwork. The documents are checked for accuracy and correct completion.
Customs will then assess import duties or taxes, using the information provided on the paperwork. This is also where restricted goods may be assessed or they will incur added fees. Customs brokers are usually involved in facilitating smooth customs clearance and accounting for the duties/fees that need to be paid. The shipment will clear customs once duties or fees have been paid, unless the carrier is bonded, which will allow the goods to flow through to a bonded warehouse. The shipment clears customs once the fees have been paid and they can be transported to the destination.
To calculate tariff duty and tax you can anticipate when importing into Canada, you can try the Zipments easy to use calculator: Canadian Duties and Taxes Calculator
de minimis
There is a general rule that most countries follow, which is a threshold for which dollar amount goods can be valued before they need to have formal customs clearance. De Minimis refers to something too minor to consider, such as a low value of a shipment. With de minimis threshold; imports which hold value below a specific amount do not need to have a formal customs clearance. In Canada the threshold is under $150 dollars, while in the U.S. it is under $800, as of now.
Simplify
One of the most important components to importing is knowing the correct tariff codes and classifying the goods correctly. In order to have a correct HS code, you would normally need to research and find up to date information on your specific goods. With Zipments, Ai technology automatically generates the tariff code for your goods as you are completing your paperwork using the platform, so you can speed up the process.
Attention to Detail
You want to take time preparing or organizing documents, as this is integral in speeding up the customs clearance process. In case your goods get inspected, it is important that all packages are labelled and marked correctly. Research any regulations and laws in the country you are importing to, as a way to ensure that you are not trying to import prohibited goods. If you plan to ship often, then you can actually work with the CBP or CBSA to develop specific packing standards to speed up the process, such as grouping SKUs together for example.
Technology
Always try to use carriers who participate in the Automated Manifest System (for the ACI and ACE eManifest) and ensure brokers you work with are licensed and vetted. Delays most often occur due to paperwork issues, so it is important to remain organized. Using one platform like Zipments, communication between shipper, carrier and broker can be streamlined and thus errors are avoided. In one space, you can generate relevant customs paperwork including the invoices and bill of lading, as well as track your PARS/PAPS, without having to worry about what may come up once goods reach the border.
If you're shipping or transporting goods between the United States and Canada, it's important to know all of the customs rules and regulations, so all items can get through quickly. When it comes to customs clearance, the right paperwork and packaging is crucial for shipments. Once you’ve completed the first trip or two, it gets easier to navigate. Remember to utilize technology to simplify the process and make things easier for yourself. At Zipments.io, we’re here to help you navigate through the customs clearance process with ease, so don’t be afraid to get started!