Shipping to Canada? Don’t Forget “Other Government Department” Compliance Mandates

Businesses that ship products to Canada understand that compliance with Canada Border Services Agency (CBSA) mandates and regulations is a necessary part of any cross border transaction.  But less well known is that, in addition to CBSA, more than a dozen government agencies have oversight over importation of certain products.  These agencies, known as “other government departments,” or “OGDs,” set standards for “controlled” goods ranging from firearms to vehicles to plants to food to live animals.

CBSA acts on behalf of the OGDs by ensuring that all required permits, licenses, fees and other OGD authorizations are in place.

Compliance mandates can vary from one OGD to another.  The Canadian Food Inspection Agency (CFIA) may require import permits for certain types of seed, plant materials and live animals, while Health Canada requires pre-authorization and a permit before a chemical, drug or veterinary drug may be allowed in to the country.

A shipment affected by OGD compliance mandates must arrive at the border with all necessary paperwork, licenses and permits.  Failure to comply could result in a fine, as outlined in CBSA’s Administrative Monetary Penalty System (AMPS), or in a shipment delayed or denied entry outright.  In addition, certain OGDs assess their own non-compliance penalties, for which a business would be liable.

Learn more about OGD compliance procedures by downloading a complimentary copy of Purolator International’s new white paper, “Understanding the Canadian Import Process:  Canada Border Services Agency and Other Government Departments.”

http://www.purolatorinternational.com/white-paper/Canada-Border-Services-Agency-and-Other-Government

 

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Reducing Risk in Your Logistics Strategy

Every day as many as 10,000 commercial trucks cross the U.S./Canadian border via the Ambassador Bridge, which links Detroit, MI with Windsor, Ontario. As much as 25 percent of all cross border trade clears the border via this privately-owned crossing, causing some to refer to it as “the single most important piece of infrastructure” between the U.S. and Canada.

But what if the bridge was suddenly out of commission? After all, the structure is 86-years old and as recently as late 2015 had wooden planking installed underneath after falling debris caused the closing of several nearby streets. While bridge officials say the planking was installed out of an abundance of caution, it does draw attention both to the bridge’s age and desperate need for an upgrade, and to the tremendous disruption that would occur trucks could no longer move between Detroit and Windsor.

A new bridge, a joint venture between the United States and Canada, is scheduled to open in 2020. The new bridge will be located a few miles from the existing crossing, and has been the subject of years of debate and controversy, including intense U.S.-Canadian negotiations over cost. For drivers who depend on a delay-free crossing, the new bridge can’t come soon enough. “It’s certainly been a long time coming,” Ontario Trucking Association President David Bradley said when details of the new bridge were announced. “We are hopeful the political wrangling that has delayed progress on this most important infrastructure project is finally over,” he added.

This Ambassador Bridge example illustrates the deteriorating infrastructure in both the U.S. and Canada, which is affecting the timely movement of shipments between the two countries. By some estimates, as much as $400 billion is needed to address Canada’s crumbling or outdated bridges and roads, while more than $4 trillion is needed to fix and upgrade U.S. bridges, ports and roadways.

According to Infrastructure Canada, poor infrastructure “tends to drive away foreign investment more so than quality infrastructure attracts private investment.” The federal agency estimates that infrastructure-caused congestion costs Canadian businesses almost CAN $4 billion annually in lost time and wasted fuel.

Inferior infrastructure, unfortunately, is not the only “logistics plan buster” that threatens well-planned shipping strategies. Weather can have a debilitating effect, as can fire, a supplier bankruptcy or an unexpected labor action. The 2015 labor slowdown that essentially shut down all U.S. West Coast ports cost the U.S. economy as much as $2 billion per day, and took months from which to recover. U.S./Canadian shipments are highly affected by global disruptions, since many products traveling between the U.S. and Canada include parts sourced from overseas suppliers.

Business must also contend with the possibility  of a shipment arriving damaged, or becoming  lost in transit, or even stolen. The Federal Bureau of Investigation estimates North American shipment theft totals as much as $30 billion each year, the vast majority from trucking losses.

Clearly there are a number of external factors affecting shipments traveling between the United States and Canada. Understanding these risks, and having a proactive strategy in place to deal with an unplanned disruption can minimize
the impact.

To download a complimentary copy of Purolator International’s new white paper, please click here.

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Evolution of the U.S. Logistics Industry

Although they couldn’t have known it, General George Washington and the Continental Army in many ways blazed the trail for what has become our modern logistics and supply chain practices. While history has well documented the hardships the troops endured, especially during the Valley Forge winter of 1777-78, a poor supply chain is generally blamed for the crippling lack of food, shoes, clothing, blankets, and armaments.

http://www.purolatorinternational.com/whitepapers

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Ten Mistakes U.S. Businesses Make When Shipping To Canada

When one Pennsylvania-based manufacturer of musical instruments decided to expand to the Canadian market, it had high hopes that its high-quality products would find a warm welcome within Canada’s vibrant music community. And they did, as orders quickly started flowing in from Canadian music stores and individual customers. But things soon went awry when shipments encountered significant issues upon arrival at the border. U.S. customs officials questioned if wood used in the instruments was eligible for export, and Canadian import policies meant the manufacturer’s Canadian customers would face unexpected charges at time of delivery for significant taxes and fees.

Ten Mistakes U.S. Businesses Make When Shipping To Canada

 

 

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Purolator helps ATV parts manufacturer reduce Canadian

Purolator helps ATV parts manufacturer reduce Canadian customs and freight fees and improve transit times. Learn more at http://www.purolatorinternational.com/SuccessStory/ATV-Parts-Manufacturer

PI-Case-Study-2008-Hunting-Gear-Producer-1

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eTail West Conference – Jan 15

Join Purolator International at eTail West Conference on February 22-25, 2016 at the
JW Marriott, Palm Springs, CA.

eTailWest_01-14-2016

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Uniform Tariff Codes Provide ‘Rules of the Road’ for Global Trade

As the paper discusses, roughly 30 percent of shipments arrive at the border with an incorrect tariff classification. Not only can this result in fines and penalties, but an improper classification may result in a business paying more duty than is necessary, or missing out on free trade agreement benefits.

 

So how does the tariff classification system work?

 

Several decades ago, the world’s nations recognized the need for uniformity in global trading practices, and commissioned an organization, the World Customs Organization (WCO) to establish the rules and police enforcement. Located in Brussels, Belgium, the WCO maintains a uniform system of codes to identify international trade shipments. The system, known as the Harmonized System (HS) includes unique six-digit codes for roughly 5,000 different commodity groups. The system is used by roughly 98 percent of the world’s trade merchandise.

 

Because of HS, a product originating in one country will carry the same identifying code as the same product manufactured in a different country. Without HS, worldwide commerce would be a mishmash of disconnected codes and identifiers.

 

The harmonized codes are updated every five years, most recently in 2012, when 220 changes were implemented. Because the Harmonized System truly is the law of the land, every country must adjust its own import and export practices to ensure that they are in sync with HS revisions.

 

WCO allows countries to add additional qualifying codes, as a way to capture data about the flow of goods into and out of their borders. In the United States, for example, export codes, known as “Schedule B,” are maintained by the U.S. Census Bureau. Import codes, known as the Harmonized Tariff Schedule of the United States – are developed and maintained by the International Trade Commission.

 

As an example, a U.S. business exporting white wine would use the code:

2204.21.5046. The first six digits signify the HS assigned code, while the last four digits reflect U.S. Schedule B identifying information.

 

A similar system is in place in Canada, which is the United States’ largest trading partner. Canada’s coding system is known as the Canadian Customs Tariff. Similar to the system in place in the U.S., Canada requires that exports supplement the 6-digit harmonized code with a 4-digit Canadian code.

 

 

Differences between product categories can be slight, but can carry different tariff obligations. Customs attorney James Sawyer wrote: “United States Customs and Border Protection (CBP) has ruled that needled sutures are considered medical devices, eligible for unconditional duty free entry, whereas non-needled sutures are classified as pieces of thread subject to duties as high as 8% based on the constituent material, e.g., gut, nylon, silk. However, if these same non-needled sutures are imported sterilized, they are again eligible for duty free entry.”

 

This highlights the need for a business to be certain that its shipments are properly classified, and that care is taken to thoroughly explore all classification options, and all potential for duty savings.

 

To learn more, please click here to download a complimentary copy of Purolator International’s new white paper.

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New White Paper Helps Businesses with Canadian Supply Chain Efficiency

The U.S. Department of State publishes a series of “Guides to Doing Business” that provide detailed analysis for businesses considering expanding operations to a specific foreign nation.  Not surprisingly, the Department’s “Guide to Doing Business in Canada,” is among the most frequently requested.

Most businesses that choose to test the waters of international business tend to start locally, with sales to either Mexico or Canada.  In Canada especially, businesses assume that selling to Canadian consumers will closely mirror transactions within the United States.  But that assumption is terribly mistaken, and has gotten many businesses in trouble.  In fact, the State Department publication clearly states “Doing business in Canada is not the same as doing business in the United States.  Canada customs documentation, bilingual labeling, packaging requirements, ITAR (International Traffic in Arms Regulations), and Canadian federal and provincial sales tax accounting can be surprisingly challenging.”

Supply chain management could also be added to this list.  Many U.S. businesses have learned the hard way that the same transportation and logistics process that works so well in the U.S., simply cannot be transferred to Canada.  And there are lots of reasons for this.

For one thing, Canada has its own infrastructure that requires different accommodations than in the U.S.  While 80 percent of the Canadian population lives near urban areas, a business must be able to reach customers residing in some of the country’s more remote provinces.  In addition, more than 20 percent of the Canadian population are French-speakers, and there are very strict federal and provincial mandates for bi-lingual labeling and packaging.

Customs compliance is another factor.  Clearing shipments through the U.S./Canadian border process is a very exacting and time-consuming process.  If not handled properly, businesses face unexpected delays, additional fees and punitive penalties.  At least one major U.S. online retailer was forced to cease operating in Canada, citing  customs inefficiencies as one of the key reasons.

Fortunately, help is available.  A new white paper from Purolator International, “Finding Efficiencies in your Canadian Supply Chain,” offers detailed analysis for building a Canadian-based supply chain that is highly efficient and cost effective.

A key recommendation is to enlist the services of a logistics provider with deep Canadian experience.  Find a provider that truly understands the Canadian market, offers a distribution network that can address your unique needs, and offers a range of service options that allows for flexibility and scalability.

Customs expertise is another area where U.S. businesses are often ill advised.  A qualified Canadian provider can help ensure a hassle free border clearance by participating in U.S. and Canadian “trusted trader” programs, by ensuring that shipments pay no more in duties than absolutely necessary, and by taking advantage of free trade agreements and other government programs that help minimize duty obligations.

Don’t be fooled into thinking that just because a logistics provider has a big brand name, that they have the expertise you need.  Dig deep and do your homework! Make sure you are entrusting your vital shipping needs to the best possible logistics provider.  And if you make a mistake, don’t be afraid to make a change.

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“Death, Taxes and Customer Returns” – New White Paper Details Challenges and Opportunities for Businesses

While no retailer enjoys dealing with customer returns, an alarming number of distribution center managers  — 44 percent in one study – said they consider returns a “pain point” in their operations.  And for retailers that must contend with returns coming from Canadian customers, the process can be even more painful.

The reason for all the pain?  Lack of planning, for one thing.  Until recently returns management was the 600-pound gorilla in the supply chain.  Everyone could see the problem, but no one wanted to address it.

That’s all changing, as businesses are increasingly realizing that (a) customers care very much about how they are treated when they return a product and (b) there is money to be had, and lots of it by reselling non-defective returns in the secondary market.

Smart businesses are enlisting the services of experienced logistics providers to help construct returns policies to meet their unique business needs.  Key considerations include the frequency with which returns are delivered, whether to maintain a designated returns processing center, establishing core processes for returns handling, and incorporating a highly effective customer service component.

Businesses that ship regularly to Canada face added challenges including a trip across the border and a stop at U.S./Canada customs.  Purolator International recently published a new white paper:  “Death, Taxes and Customer Returns:  Turning the Unavoidable into a Supply Chain Opportunity,” that details the added challenges of cross border returns management.

For one thing, products that leave the U.S. as exports, return as imports.  Products entering the U.S. must be in compliance with a bevy of regulatory mandates, paperwork filings and duty/tax requirements.  However, product returns are eligible for priority treatment in some areas.  But unless a logistics provider is aware of the exact nuances of Canada Border Services Agency (CBSA) and U.S. Customs Border Protection (CBP) policies, a shipment may not receive the benefits to which it is legally entitled.

Before returns arrive at the border, a business will need to determine the most efficient method for gathering those packages, which will likely be arriving from points all across the vast Canadian landscape.  Ask your logistics provider about intra-Canada consolidation, whereby packages will be combined into smaller shipments, thereby eligible to cross the border as a single unit.  This will reduce border wait times and help control customs and brokerage fees.

Another consideration is making the returns process as easy as possible for your Canadian customers.  Canadian consumers expect the same high level of customer service as American customers, and according to the 2008 TD Trust loyalty survey, fully 95 percent said good customer service “can make or break” a relationship with a particular brand or company.  A few things to consider:

  • Include a pre-printed returns label in the original packaging, or allow customers to print a label directly from your website.
  • Returns Material Authorization (RMA) whereby the consumer alerts you in advance of a product return will give your consumer tracking/visibility into the status of a return, and will allow you to understand exactly what merchandise is being returned, and for what reason.
  • Access to good customer service.  Technology now makes it possible for a business to implement state of the art solutions that allow customers to track their returns and get the information they need.  But for those issues that can’t be addressed online, businesses need to invest in human resources that allow customers to speak with trained and polite agents.

Returns management is slowly losing its stigma as a necessary evil of doing business.  Businesses are beginning to understand that with those returns comes opportunity.  Purolator’s white paper will help you understand the components of a solid returns management process, including the extra steps for returns coming from Canada.

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Multiple Regulatory Challenges for Cross Border Sales of U.S. Pharmaceuticals, Medical Devices

A U.S. pharmaceutical manufacturer looking to expand to the Canadian market will need to ensure that all product labeling meets Canadian requirements, which often vary from U.S. requirements.

For one thing, Health Canada requires that directions for use be printed both in French and English, since Canada is officially a bi-lingual country.  And special care must be taken to list all product ingredients, manufacturer details, dosage/use  information and, if the product is imported, the name of the manufacturer and distributor must appear on the label.

If any of Canada’s labeling requirements or conditions for use differ from U.S. requirements, the U.S. Food and Drug Administration requires the manufacturer to state, on the label, that those conditions are not approved in the United States.

Sounds like a crowded label, right?

In fact, the regulatory burden for U.S. pharmaceutical and medical device manufacturers was listed as the top supply chain concern of industry executives in a recent study.  But it is not the only issue.  Changing demographics, namely the aging of the U.S. population and the increasingly global marketplace are also putting strains on the traditional supply chain.  The expiration of several lucrative patents, which led to a surge in generic drugs is another factor that has caused manufacturers to look for efficiencies.

Purolator International takes a detailed look at all trends affecting U.S. health product manufacturers’ supply chains in a new white paper, “U.S. Pharmaceutical and Medical Device Manufacturers:  Supply Chain Trends and Canadian Cross Border Efficiencies.”

As the paper makes clear, one of the most important decisions a supply chain manager will make, is choosing the right logistics provider to oversee all logistics and compliance issues.  Surprisingly, many managers do not do the necessary legwork, and learn too late that its “experienced” logistics provider does not have what it takes to move highly-regulated, highly-sensitive shipments of drugs across the border to Canada.

To learn more, please click here to download a copy of “U.S. Pharmaceutical and Medical Device Manufacturers:  Supply Chain Trends and Canadian Cross Border Efficiencies.”

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