If you ship UPS or FedEx into Canada life can be an expensive nightmare – getting a broker fixes it

If you ship things from the United States to Canada by courier services, you probably got hit with high brokerage fees. Rarely are there are no fees.

Mostly the brokerage fees and GST result in a door-step collection that gives you the slow burn.

UPS charges some of the highest brokerage fees. I’ve had shipments where the GST was $110 and UPS wanted $87 for brokerage. Sound fair? I don’t think so.

I made a polite call to UPS and the customer service person made a one-time $40 cut in the invoice. I’ve done that before and he seemed to know the drill. I was very polite. Friendly works better than fighting.

You can Google “UPS brokerage fees” and get hundreds of irate posts on the topic. Car parts, electronics, sex aids, perfume – sometimes the brokerage is more than the cost of the item.

FedEx is slightly better.  A computer software upgrade disk yesterday cost $10 for brokerage by FedEx.

The real problem is the insane collection of small amounts of GST which the Canadian government isn’t likely to change.

The easiest solution is to use US Postal Service or USPS. The brokerage will be the Canada Post rate which is usually $6 to $10. Postal service can be very quick, less than a week usually.

US vendors know the brokerage fees are barrier to sales. Some have turned to the Canada Post Borderfree service which handles everything for a reasonable fee.

I found a quick and dirty calculator you can use. The Final Cost. It estimates the exchange, brokerage, shipping. The GST rate is still 6% but you can figure out the difference. You might find the Canadian price is better once you include all the fees and costs.

Use a broker

If you ship from the States more than once in a long time, the best solution is to get organized and appoint a broker which costs nothing.

In all the blogs about UPS, I found a recommendation for Dilas International Customs Brokers.

The drill is you fill out a form and fax it to them with your credit card. That opens an account.

Then tell the shipper to put Dilas on the shipping papers. The good ones know the routine. The waybill for Fedex or UPS should read:

Canadian Customs clearance through Dilas International Customs Brokers
Calgary (780) 701-0948 fax 1-866-234-2611 e-mail yeg@dilas.ca

Check with them if you live in Toronto or east. The phone/fax number may be different.

Dilas charges reasonable brokerage fees, about what FedEx used to charge and about what UPS discounted my shipment. The $87 US would have been $43 with Dilas. That’s not free but they do have to work to get Customs clearance.

Other than that, the only other solutions are to drive to the border yourself or buy in Canada, which is the best policy. It gets ugly sending things back the to US for warranty or returns.

Update – November 3, 2009

Dealing with a broker can be easier but also have hidden costs so read the website first. On my first shipment with Dilas there was a one-time account set-up fee of $50. They also collect PST on behalf of provinces who aren’t HST yet. The fee came to slightly more than I expected but the shipment processing went very smoothly.

For low value items, US Postal Service is still the least expensive.