Cross-Border Shipping Requirements 101

In the twenty-first century, the supply chain is globalized to an unprecedented extent. North America alone has witnessed explosive growth in international trade. Since 1995, U.S. trade with Mexico has increased over 400%, while trade with Canada has increased 84%. Given this reality, it is imperative that shippers and carriers understand the requirements and challenges of cross-border shipping.

The Landscape of Cross-Border Shipping

Cross-border shipping has taken on a new life since the enactment of the North American Free Trade Agreement (NAFTA) in 1994. By eliminating some of the barriers to international commerce, the pact spurred cross-border commerce. This inevitably trickled down to the trucking industry with trade by truck increasing nearly 200%. It’s expected that NAFTA’s replacement, USMCA, will continue to drive growth.

The American Trucking Association estimates that over 5.7 million trucks have crossed the U.S.-Canada border. In 2019, Canada was the largest market for U.S. goods exports. U.S. producers need to understand cross-border transportation logistics to take advantage of the opportunities this market presents.

Likewise, Mexico is the second-largest market for goods exported from the U.S. The American Trucking Association estimates that 6.4 million trucks have crossed the U.S.-Mexico border with goods exceeding $6 billion in value. Shippers and carriers must be prepared to negotiate the particularities of cross-border shipping to ensure efficiency and on-time delivery.

Planning for Cross-Border Shipping Challenges

The first step to setting yourself up for success with cross-border shipping is to consider transit times. In the age of two-day e-commerce deliveries, customers may need to adjust expectations for cross-border shipments. Freight traveling to Mexico or Canada typically has more legs on its route. Consequently, transit times are longer for cross-border shipping. Transporting time-sensitive products across borders requires careful logistical planning to ensure allowances for extra stops and potential delays.

Good supply chain visibility is the key to managing these challenges. Maintaining visibility during cross-border shipping can be tricky. Unlike domestic shipping, customs may take possession of shipments periodically. Having a TMS or satellite tracking system in place can help keep the shipper notified of freight’s whereabouts from end to end.

The majority of challenges to cross-border shipping arise at the border. Shippers and carriers new to international trade may not be sufficiently prepared for tariffs. Tariffs are taxes that a country charges on imported goods and services. Countries can use the threat of heavy tariffs as a political tactic in international negotiations. One goal of USMCA is to stabilize these costs for companies. Still, it’s best to be familiar with any tariffs for your industry ahead of time.

When a company participates in cross-border shipping, its goods must be in compliance with the laws of that country. Many have to do with agricultural products and plants that could carry bacteria or pose an environmental hazard. Some regulatory challenges are specific to pharmaceutical and food products. Each country has different standards for the quality of these products, the allowable ingredients, and more. A customs agency reviews trailers upon their arrival in a country, so shippers should familiarize themselves with customs regulations to avoid delays.

Cross-Border Shipping Logistics Considerations

There are a number of ways that shippers can be proactive and prevent delays for cross-border shipping. Customs brokers, agents hired to help move a shipment through the customs process, work with shippers to classify freight, fill out and file the appropriate paperwork, and understand associated tariffs.

It’s worth noting that how many customs brokers you need and where you need them depends on where you are shipping freight. For shipping freight to Canada, you only need a customs broker on the Canadian side of the border. If you’re exporting to Mexico from the U.S., you need a customs broker on both sides of the border.

As mentioned above, one thing customs brokers help with is paperwork. Cross-border shipping involves a lot of red tape in the form of complex paperwork. Inaccurate paperwork can result in fines on top of the costs associated with delivery delays. The paperwork required varies a bit from country to country, but they often include a commercial invoice, bill of landing, certificate of origin, import and export forms, an export license, and more. Companies need strong guidance on logistics either in-house or through a 3PL to get everything right.

In addition to customs paperwork, shippers should be aware of gaps in their insurance for cross-border shipping. Many shippers don’t realize that their domestic insurance policies don’t cover international freight. Each country has different requirements and caps when it comes to carriers’ liability. This is especially a problem for shippers exporting freight to Mexico where carriers are only liable for $0.025 per pound transported. Shippers can obtain cross-border insurance so that, no matter what happens, their freight is covered.

Contact First Call for Cross-Border Shipping Services

Need assistance with cross-border shipping services across North America? We’ve got you covered. At First Call, we’re committed to supporting your supply chain and optimizing freight spend year-round. To learn more about our cross-border shipping services, contact our team today.