How to get a better price when importing goods into Canada
Canada imported goods worth a record $631 billion in 2021, up 12.2% from 2020, but 2.7% higher than in 2019. In 2020 Canada ranked 11th top importer in with world, in terms of total USD value of imports. To determine the cost of importing goods into Canada, you’ll need to consider several factors, such as duties, taxes, and shipping fees. There are also other costs involved, such as customs clearance, storage, consulting and insurance.
List of factors impacting costs of importing goods into Canada
Duties
Imported products into Canada are charged with tariffs, or import duties. These vary by product, but on average there’s an 8% tax on imported products.
Shipping Fees
There can be additional fees for shipping products across borders. In general, these range between 2-5%.
Insurance
When your shipment arrives in Canada, you may have to pay extra for insurance. When calculating the total cost of importing goods into the country, you need to add this fee.
Customs Clearance
If the value of your shipment exceeds certain limits, you will have to pay more for custom clearance. You’ll typically have to pay about 1% of the full value of the shipment for custom clearance.
Storage Costs
You might also have to cover any storage fees when storing your shipment until it reaches its destination.
Taxes
Depending on where the goods come from, you could be taxed upon entering Canada. For example, some countries impose their own sales tax on imported goods.
Forex Rates and Costs
It is important that you also factor in Forex costs and exchange rates in your total costs on import, sometimes these rates could benefit you, sometimes it can work against you.
Actual import costs depend on many different factors, including the type of goods being imported, how they’re shipped, what services are required, and so on.
It’s important to note that not every product is subject to the same charges. Some items are exempt from paying duties and taxes altogether.
Here’s a link to an online guide on the CBSA Website for Importing Commercial Goods into Canada CBSA Website
How to arrive at the best pricing when you import goods into Canada?
Get a detailed quote from the exporter
Some of the common mistakes travelers make is failing to declare items like
A detailed quote will include the following details:
– Shipper & Consignee’s details
– Incoterm® & Place
– Port of Loading (POL) & Port of Discharge (POD)
– Currency (most commonly USD)
– Product details and pricing
– Product HS/HTS Codes (The HTS code or HS code are part of a worldwide standardized system of classifying goods in international trade. Also known as a Harmonized System Code or a Tariff Code.)
– Product and packaging sizes
– Shipment type (by Full Container – FCL, or Less-than-Container-Load LCL Cargo).
Getting a detailed quote from your exporter will help you calculate pricing with better accuracy and will also help you with documentation, shipping and customs clearance. This step is crucial and will assist you with pricing comparison and estimations.
Understand Canadian Customs Clearance charges, duties and taxes
Customs duties, taxes, and other charges usually account for a considerable proportion of the finished cost of imported goods. These charges are paid to customs, tax organizations, customs brokers, terminal operators, and warehouse owners. The total amount that the importer of record pays during the customs clearance process is dependent on different factors such as:
- Product nature
- Harmonized System (HS) tariff code
- Customs valuation for duty
- Tariff treatment
- Duty rate
- Packaging type
- Gross and net weight
- Volume of goods
- Duration of the clearance process
- Number of lines in each entry
Get Quote and Compare International Freight and Shipping Costs
Shipping costs also take up quite a large portion of the costs of importing your goods into Canada, this can range from 15 to 20% of the cost of goods.
It will include the following:
International Sea freight from Port of Landing to Port of Discharge – This pricing is usually provided in US and will vary throughout the year, you will need to confirm the validity date of the quote provided when comparing costs between different agencies and providers
Local shipping and handling charges in Canada – These include local port handling costs, documentation, quarantine, marine transit insurance, domestic trucking, storage, warehousing etc.
Shipping costs usually go down when you import in higher volumes, also shipping via Full Container load is more cost effective than less than container load cargo.
Here’s a detailed blog posts on hidden shipping costs you need to be aware of when importing goods into Canada.
Hire an Experienced Customs Broker
If all this appears daunting and you need external help in getting the best pricing when importing goods into Canada, hiring an experienced and licensed Canadian Customs Broker will pay great dividends. The customs broker will provide you with consulting services and will also work with partners to help get your goods into Canada at the best pricing.
