The Tricks of Trucking to Canada

Knowing the Rules of the Game and Finding the Right Partners Helps

By Theresa Sullivan Barger

Hellmann Worldwide Logistics was transporting crackers from Canada to a U.S. company and as part of the border inspection; customs agents broke the steel security seal to inspect the truck’s contents.

The truck sailed through customs. But when it arrived at its destination, the customer refused to receive the shipment because of the broken seal. The company didn’t want to take any chances by accepting a food product that could have been tampered with.

Only after receiving signed affidavits from the customs agents, the truck driver and the trucking company essentially testifying that the contents hadn’t been contaminated – which amounted to an extra $1,000 in paperwork costs for Hellmann – did the customer accept the shipment?

Needless to say, Hellmann now requires that if a seal is cut at a border inspection, a new seal is clamped on and a written record is made.

It’s experiences like this that established carriers and logistics providers can learn from to help newcomers to international trade. Once businesses learn the ropes, importing or exporting from Canada by truck is not that complex. The trick is knowing the rules of the game and finding the right partners to help.

“The process is not as complicated as they may think it is,” said Tom Wajer, vice president of international sales for NEMF, a family-owned carrier based in Elizabeth, N.J. “Pick a good carrier. Follow some simple documentation rules.”

Getting Started

Companies generally need help from three partners: a third-party logistics broker (3PL), a customs broker, and a carrier. Some trucking companies say you are better off dealing directly with them, but third-party logistics brokers act somewhat like an insurance agent who shops for the best insurance package among several companies.

Those who are new to the game can  especially benefit from a federally licensed property broker or 3PL. A third-party logistics broker, also called a transportation or freight broker, looks out for his clients by knowing the industry: such as which trucking companies have the right equipment for your product, which days are best for delivering refrigerated goods so that they get to their destination unspoiled, which border crossing is best for the volume you r shipping, or which route is going to be the most efficient.

“If you don’t know who you should be going to and you don’t know all the choices you have, going directly through a carrier doesn’t buy you a heck of a lot,” said Jeff Tucker, chief executive officer of Tucker Company Inc., of Cherry Hill, N.J., the nation’s oldest transportation brokerage firm.

A freight broker will ask a customer questions relating to how quickly it has to be shipped and offer prices for various options – generally, the more urgent speed is, the more expensive the costs. Certified freight brokers can help customers clarify their needs, he said. For example, a customer may think the cargo must be shipped by air because the company's production line is waiting for the parts, he said, but the business may not really need to pay the premium price for chartering a plane.

“I say, ‘Time out.’ We talk to them and we decide whether we do have to charter a plane,” Tucker said.

If his company promises that a less expensive alternative will get them the product in time to make their production schedule, he knows he has to pick a carrier that will deliver on his promise without breaking drive-time or weight-limit laws.

Businesses are encouraged to be completely honest with their freight brokers, carriers and customs brokers about their cargo because those people can do more to help them if they know what they’re dealing with, experts said. And their integrity and reputations are on the line as well.

For instance, some highly specialized equipment or food products may need to be shipped on a truck with air-ride suspension rather than spring suspension, Tucker said. Some items, such as pharmaceuticals and food, need added customs clearance and paperwork.

If the customer has flexibility on the pick up and delivery schedule, freight brokers may be able to shop around for a good rate. U.S.-based companies may want to work with a carrier that came into the States with a shipment and is looking for something to haul back home. Or, businesses importing from Canada may want to shop for a U.S. carrier delivering to Canada that is looking for a return-trip haul.

“Often when they’re going back home,” Tucker said, “you’ve got a more motivated trucking company. The pricing tends to be a little more favorable.”

While some large companies have in-house logistics departments, it’s “the small to medium sized companies that tend to value and get a lot more out of us,” he said.

 Tucker suggests companies new to trucking to or from Canada talk to two freight brokers and at least one carrier to get a sense of their pricing, delivery and service options. To learn more or check for logistics association members, Tucker suggests www.nitl.org, the website for the National Industrial Transportation League or www.tianet.org, the website for the Transportation Intermediaries Association.

Customs Brokers

Whether you’re importing or exporting, you need a licensed customs broker.

“Nothing moves across the border in either direction unless you have a broker,” said Tom Flacke, vice president and general manager of Logistics Management Systems in Bangor, Maine.

Those exporting to Canada have two options: working with a U.S.-based customs broker or having their Canadian customer, the “importer of record,” hire a customs broker. (Large companies generally have their own import-export brokers.) U.S.-based importers need a customs broker.

In either case, the customs broker knows what duties and taxes must be paid and, under NAFTA (the North American Free Trade Agreement,) what products are duty-free.

Customs brokers live on their reputation for honesty and integrity, so it’s important to choose an ethical one, Flacke said. “Your broker keeps you clean.”   

Your customs broker is like your lawyer, he said. “They handle all your affairs at the border. If you want to talk to customs, you talk to customs through your agent.”

Like freight brokers, customs brokers know what you can and can’t do. For example, you can’t ship 10 loads a day through just any Canadian border crossing, but your customs broker will know where you can and will help you plan the trip. And it’s crucial to be upfront and thorough with your broker, who is required by law to keep clients’ business confidential, he said. 

“If you’re going to be in this business, it’s essential that you have a sit-down with your broker,” Flacke said.

Customs brokers can be your ally and help make business connections.

Flacke knew of an American company that wanted to sell tin cans to Canada, and before the firm had a client, it approached a customs broker. “They said, ‘This is what our intention is. Are we going to have a problem with this product?’ ” he said. The customs broker told the company what it needed to do. Before long they were selling – and shipping – to a Canadian customer.

Carriers

Choosing the right carrier is important for several reasons that boil down to your company’s viability and bottom line:

•    If a carrier doesn’t have the drivers or trucks available when you need them, you may not meet delivery commitments to your customers or production deadlines.
•    If the carrier gets into an accident hauling your cargo and the driver was exceeding drive-time or weight limits to meet a deadline you imposed, you could be on the liability hook.
•    If there’s an accident and environmental cleanup is required and your carrier was under insured, you could be forced to help pick up the tab.

There’s a shortage of drivers in the trucking industry, so businesses should

never put all their eggs into one carrier’s basket, said Jean-Robert Lessard, vice president for marketing and public relations at Robert Transport, based in Quebec. “We have trucks, but sometimes we don’t have enough drivers.”

He advises businesses to split their loads between three trucking companies, with 60 percent going through the primary carrier and the other 40 percent split between two others. That way if the major carrier can’t move the cargo, the business has an established relationship with two other carriers that can pick up the slack.

“In our case, we never pick up more than 70 percent of a customer’s capacity,” Lessard said. “The customer relies on you. If you have a close partnership, it’s not because you don’t want his business, but you want to protect him.”

When choosing a carrier, said Wajer, of NEMF, “know who is moving your cargo.” Some carriers own their own trucks and employ their own drivers, others don’t and some carriers do both.

Asking about a carrier’s performance record in terms of on-time delivery, the quality of deliveries and the safety record helps protect you, experts said.

Importers and exporters should respect government regulations about weight limits and trucker driving hours, Lessard said, because if an accident occurs while a business is pushing its carrier and regulations were violated, “you will be sued and your business held responsible.”

Ask your carrier for written proof of insurance, be sure it’s adequate, and keep that proof on file, Lessard advised. If a spill costs $5 million to clean up and the carrier only had coverage for $1 million, the government will look for the owner of the cargo to help cover the bill. Or, if your cargo is worth $4 million and your carrier’s coverage is only $2 million, be sure there’s extra insurance either by buying it yourself or paying your shipper’s premium for the added coverage.

Most established carriers have in-house experts who can help new importers and exporters through the process, Wajer said. New shippers to Canada are required to provide detailed information about the transaction.

However, NEMF and most of its peers has a single, customs-approved form on its website that businesses can fill out and give to their carrier to avoid having to provide multiple documents.

          Companies also should specify on their documentation where the cargo will clear customs, whether at the border or at the final destination, and who the customs broker will be, said Peter Teixeira, president and CEO for Hellmann Canada, a division of Hellmann Worldwide Logistics based in Miami.

Carriers have to know what commodity is being shipped, Teixeira said.

“When shipping, we are very careful as to the commodity, especially if it is hazardous. Then we have to be very sure all of the documents are in order and that an emergency response form is completed” by the company shipping the freight, he said in an e-mail. “This is a form that lists the properties of the cargo and whom within their company to contact in case of an emergency.”

Security

Naturally, border security has been increasingly tightened since 9/11, the establishment of the Homeland Security Department and subsequent terrorist attacks across the world.  Meeting added security demands has cost businesses money. But there are several steps businesses can take to streamline the customs clearance process, experts said.

First, work with a C-TPAT (Customs-Trade Partnership Against Terrorism) certified carrier and become C-TPAT certified yourself. For information, go to the U.S. Customs and Border Protection website at www.cbp.gov. Those who are C-TPAT certified may also become FAST (Free ands Secure Trade Program) certified, which literally allows them to pass through the FAST lane at the border crossing.

There are about 9,000 companies that have applied for C-TPAT participation and about half of them have received it, said Michael Carr, director of customs compliance for Hellmann Worldwide Logistics.

Avoid those who are not C-TPAT certified, experts warned. “If the person says, ‘No, that’s a lot of red tape,’ that’s a red flag,” Carr said. “If anybody has a lax attitude about security and security initiatives, if they tell you it’s too costly,” keep looking.

“I would not want to be the importer who didn’t choose to follow the security initiatives and have something introduced in my container,” he said.  “There is an initial cost for security, but the savings in things like faster transit times, reduced exam cost and lower insurance [premiums,] … the benefits far outweigh the cost.”

Those who have C-TPAT clearance not only ensure a more secure supply chain for their employees, suppliers and customers, the U.S. Customs and Border Protection website says; they also are subject to fewer inspections.

To save time and money, Wajer said, use shippers that are Canada customs-bonded carriers and have “post-audit privileges,” which means the carriers have met all paperwork guidelines over a period of time and Canada allows them to be on the honor system.

Since NEMF has been moving across the border for years for a variety of customers, the customs agents know their drivers. “They learn who the importers and exporters are,” he said. “What they typically look for is something new that they haven’t seen before. Less than 3 percent of cargo is inspected by customs.”       

 “You cut your turnaround time from order to order-fulfillment because you’re being rewarded for securing your supply chain, giving yourself a competitive edge,” Carr said.

To facilitate a smooth border crossing, it’s essential that the paperwork matches the cargo to the letter, literally. And this means that everyone from the forklift driver to the warehouse manager to the sales rep has to check his or her paperwork.

Once, Logistics Management Systems, the Maine warehousing and transportation company, was moving a load of lumber from a mill in Canada into the U.S. The lumber mill’s advance paperwork said it was loading 14 bundles of 2X6X10-inch boards and the paperwork accompanying the load said the same. When the truck was stopped by customs and an agent measured the lumber, it measured 2X8X10, said Flacke, Logistic Management’s general manager.

The truck was not allowed to cross the border and it sat there for 12 to 15 hours as the faxes flew back and forth trying to straighten the paperwork inconsistency out, he said. Meanwhile, the clock kept ticking and the trucking company’s bill increased with each passing hour.

These days, even something as innocent as a careless mistake can create trade nightmares, experts say, so don’t forget the details.