U.S. businesses are increasingly realizing the potential of expanding to the Canadian market, where just across our northern border, live 33 million potential customers, and an economy that weathered the recent recession far better than the U.S. did. But before you set out to conquer the Canadian market, there are a few things to keep in mind. Here is our list of “Top Ten Things” to keep in mind when expanding your customer base to Canada:
- Canada offers excellent opportunities for U.S. businesses. More than $1 billion in goods and services cross the U.S./Canada border each day, with the U.S. Department of Transportation reporting that surface trade (shipments that travel over ground, ie – trucks and rail) surged by more than 22 percent during 2010, compared to 2009. Canadian Business magazine reports that many U.S. retailers — Victoria’s Secret, Crate and Barrel, Marshalls and Brooks Brothers –have already hung their shingles in Canada, with others, including Target, J. Crew, Macy’s, Nordstrom, Kohl’s and JC Penny expected to follow suit during 2011.
- Don’t Get Stuck at the Border. Businesses on either side of the border are complaining about a “thickening of the border,” whereby post-9/11 security mandates and compliance regulations have caused longer wait times, increased inspections and bureaucratic red tape. While discussions are ongoing for a permanent fix, each government operates “trusted shipper” programs, to allow certified carriers preferential treatment upon arrival at the border. Make sure your shipment is traveling with a trusted carrier who is a participant in both U.S. and Canadian programs.
- The Fine Art of Customs Compliance. In addition to the above-mentioned security mandates, there are many, many other customs-related forms and fees with which to contend. Unless you are well versed in the intricacies of customs compliance, it might make sense to entrust the compliance process to an experienced third party. Any mistake in the process can result in costly delays and fines, and possibly even having your shipment denied entry.
- Once your shipment arrives in Canada, then what? Here’s a mistake that many U.S. businesses make – Just because your U.S. based carrier does an excellent job of transporting your intra-U.S. shipments, do not automatically assume that they can handle distribution to your Canadian customers. Make sure your carrier has a Canadian network in place that will ensure seamless service and an on-time delivery. Too many shipments have been left lingering at the border, waiting to be picked up by a Canadian carrier while precious days tick by.
- Your government may actually Pay You for shipping to Canada. Both the U.S. and Canadian governments operate programs to entice cross border trade. The Canada Border Services Agency (CBSA), for example, operates the Non-Resident Importer program, which basically levels the playing field for U.S. businesses, and allows them to avoid having to circle back to their customers with an additional invoice for unexpected duties and fees. In the U.S., the Duty Drawback program actually reimburses businesses for import fees that are paid on materials that are used in the manufacture of goods that are subsequently exported. But, you have to know about these programs to benefit from them. Most businesses aren’t tuned into the customs process enough to know about these programs – but a qualified carrier should be.
- Strong Canadian Dollar is Fueling Demand for U.S. Goods. It used to be that the U.S. dollar had a decisive advantage over its Canadian counterpart, commonly called the Canadian loonie. But in 2007, that changed when the two currencies reached parity. Since then, the Canadian dollar has remained strong, against a weaker U.S. currency. The impact has not been lost on Canadian consumers, who are racking up Internet sales of U.S. goods. According to Statistics Canada, Canadians placed more than 95 million online orders last year, which marked a 32 percent increase over 2007 levels.
- Beware of Carriers with Limited Delivery Options. Unthttp://www.statcan.gc.ca/daily-quotidien/100927/dq100927-eng.pdfil recently, few carriers offered express or expedited service to the Canadian market – and even fewer offered options for weekend deliveries. And some carriers offer rigid “one size fits all” options for weekday deliveries. Shop around, and make sure you entrust your shipment to a carrier that offers a variety of options that meet your delivery needs.
- Canada is a Vast Country – Make Sure you don’t lose sight of your shipment. Will your customer understand if a shipment fails to arrive on time, and you have no idea where it might be? Probably not. Well, unfortunately, that can happen, when a U.S. carrier hands off a shipment to an unknown Canadian partner, and with that hand off, gives up all tracking capability and visibility. An experienced Canadian logistics provider will be able to maintain control of your shipment for the entire route, and will also ensure continual tracking and visibility.
- Make sure you are prepared to handle the inevitable returns. According to Forbes.com, businesses can expect that roughly 7 percent of sales will be returned. How a business handles those returns – timely replacements, credits, refurbishments – is a vital part of the overall customer service experience. And vital to processing those returns, is a good returns management policy. Make sure your carrier has the capacity and the solutions that you need to bring your Canadian returns back into the U.S., where your shipments will be subject to a second round of Customs procedures.
- There’s no substitute for actual, bona fide Canadian cross border logistics know-how. There’s more to shipping goods to Canada than meets the eye. Many businesses – and carriers – take a “how hard can it be” approach – because of Canada’s close proximity and the strong U.S./Canada trade relationship. But unless your carrier has actual hands on experience and expertise with the Canadian market, chances are that you will find that the process can be quite confusing and challenging.