Why is Shipping Expensive in Canada?

Running an online eCommerce store involves several expenses, including licensing, inventory cost, permits, payment gateway, packaging, taxes, and more. 

Another significant expense is the cost of shipping. Also, your shipping expenses will likely get higher if you ship within Canada.

In case, if you ship orders from Canada to an overseas country, then you also need to pay customs duties as well. 

High shipping costs in Canada have been an issue that affects both eCommerce businesses and consumers. 

There are various factors that contribute to higher shipping expenses in Canada, including the country’s vast geography, and scattered population, logistics, regulatory issues, etc. We will talk about these issues in more detail later.

Here are a few factors that lead to higher shipping costs while shipping in Canada

Expansive and Diverse Geography

Canada has a vast and diverse geography that makes transit difficult and increases the shipping costs of sellers. 

The long distances and often widely scattered regions contribute to higher fuel costs, as vehicles have to cover large areas. 

This geographical challenge in Canada makes logistics complicated and shipping more expensive to do business nationwide.

Dispersed Population

Besides the vast size of Canada, the population is widely dispersed, which often makes it difficult to reach. 

A sparse population means fewer delivery centers per route and higher per-unit transportation costs. 

Harsh Weather Conditions

Many regions in Canada have extreme weather conditions, which affect shipping expenses. For example, harsh winter months with deep snowfall and unpredictable weather like thunderstorms can disrupt transportation. 

Such unpredictable weather conditions cause delays, rising fuel costs, and additional handling expenses. Adjusting logistics to these weather challenges is the key to managing shipping costs and ensuring timely delivery services.

Distance from Major Markets

The geographical location of Canada is relatively far from many prominent marketplaces of the world. Such distance often makes shipping products to and from the country more expensive. 

This isolation and distance can lead to higher transit costs, lengthier shipping time, and adherence to additional regulations. 

Logistical Challenges

Limited logistics due to vast and remote areas in Canada make it difficult for sellers, leading to soaring shipping expenses. The shipping process often encounters various bottlenecks, sluggish transit times, and changes to alternative and longer routes.

To deal with these logistical hurdles, sellers need to create strategies, partner with efficient logistics companies, and make the most of the available infrastructure to minimize shipping costs. 

Also, providing reliable customer service in remote locations can help to win new customers and retain the existing ones.

Customs Procedure and Border Clearance

Complex customs procedures can slow down the shipping process and expenses for sellers. The process of customs clearance, including paperwork, and compliance can increase both shipment time and costs.

Customs delays can result in higher storage fees and possible penalties. This is why understanding the need for thorough paperwork to get through customs procedures quickly and minimize shipping expenses is crucial.

Fuel Cost

A longer shipping process can add to fuel costs and make the logistics budget go through the roof. 

Higher fuel prices lead to a spike in the carriers’ operational costs, and the cost is often passed on to the seller. Monitoring and calculating the expenses can help with effective cost management. 

Import/Export Taxes and Tariffs 

Shipping packages should include a provision for expenses, such as import/export taxes and tariffs on products for cross-border movements. 

As a seller, you need to be aware of the tariff systems and taxes to manage the shipping process seamlessly. This way, you control the costs efficiently and improve the competitiveness of your business. 

How Much Shipping Cost You Will Have to Bear to Deliver Your Packages in Canada?

The following are the tentative shipping costs of some of the leading carriers in Canada. This service is for shipping a small package up to 500 grams):

Shipping Service	Starting Price	Delivery Time
Canada Post – Regular Shipping	CA$ 12.99	Between 2 & 9 business days
FedEx SmartPost	CA$ 14.99	Between 2 & 8 business days
FedEx Ground Shipping	CA$ 21.95	Between 1 & 7 business days
DHL eCommerce	CA$ 14.99	Between 2 & 5 business days
Purolator Ground Shipping	CA$ 14.95	Between 1 & 7 business days
UPS Ground Shipping	CA$ 19.95	Between 1 & 5 business days

You can pick any of the above shipping carriers based on their shipping rates, delivery timeline, and your budget.

How to Manage Your Shipping Costs in Canada for Affordability

By streamlining your shipping, you can save costs and increase the profitability of your eCommerce business. Here are the ways to do that:

Negotiate Pricing with Shipping Carriers 

In Canada, you can negotiate pricing with shipping carriers, such as Canada Post, FedEx, UPS, DHL, and others to reduce your shipping expenses. 

You can also consolidate shipments to receive volume-based discounts or make the most of the competition by collecting quotes from different carriers and then bargaining with them. 

Get into a long-term partnership with a private shipping platform to obtain highly discounted shipping rates. 

Take the Advantage of Regional Fulfillment Centers

Using regional fulfillment centers can strategically position your Canada-based business to manage shipping expenses efficiently. Storing your inventory nearer to crucial customer bases can minimize shipping distances, lowering transit costs. 

Besides enabling faster delivery, and reducing shipping costs, regional fulfillment centers also help improve customer satisfaction. 

Do Efficient Packaging

By applying efficient packaging, you can manage package shipping costs by adjusting dimensions and materials. The appropriate size of packaging can minimize dimensional weight charges and reduce the overall cost. 

Why is it expensive to ship packages to Canada from the US? 

Do you wonder why shipping from the US to Canada is so expensive? Here are the main reasons why:

Transit Cost

One of the major reasons that makes your shipping cost go up is the transit cost due to the distance between the USA and Canada. Your packages cross both US and Canadian borders during the transit, usually by ground shipping or air transportation, to arrive in Canada.

Transit costs for shipping from the US to Canada are significantly high. This is because shipping packages from the US to Canada carry a range of expenses, such as fuel, vehicle maintenance, labor fees, and other operating costs.

Conversion from US Dollars to Canadian Dollars

The conversion rate from USD to CAD is another factor that increases the shipping fees. Although there could be other reasons too, still, converting from USD to CAD can affect the final cost.

This is why you need to stay updated about the exchange rates and other fees to figure out the total cost of shipping from the US. 

When exchange rates are favorable, you will get more value for your money. Conversely, when the exchange goes down, it can make shipping fees costlier after conversion. Also, it is important to keep in mind that some financial processors often charge a fee for currency conversion.

Brokerage Fees

Brokerage fees can also shoot up the total shipping cost as they cover services, such as documentation, customs clearance, and complying with import guidelines. 

These types of fees are usually based on the declared value of a package and can differ depending on the carrier’s shipping policy and customs process.

Tariffs

Tariffs are import duties and import taxes on the items people buy from other countries. It may appear like paying an additional amount other than the amount already spent. However, there is more to it.

The Canadian government imposes taxes as tariffs on certain packages, and the amount customers pay as tariffs depends on the value and the type of the shipment. Usually, the higher the value of the item the more the tariff.

Assume you want to ship a bunch of clothing items for a customer from the US to Canada. The cost of the products is $10,000.

To find out the applicable import duty and import tax your customer has to pay, you need to check the commodity code for clothing. You can then let the customer know the import duty for clothing in Canada is between 16 and 18%.

If your customer needs to pay import duty on the shipment from the US, the customs will inform the customer or the courier. They’ll tell the customer the outstanding amount and when it’s due.

Peak Seasons Rush

During the holidays like Christmas and New Year’s Day, customer demands skyrocket. Due to this, there is a significant spike in the number of packages.

Many customers buy gifts for their loved ones from eCommerce stores during the holidays. It causes a massive demand surge and increase in shipping costs since shipping carriers try to keep up with the demand. 

There is a Better Way to Ship in Canada with Discounted Rates!

Both domestic and cross-border shipping to and from Canada can be a complicated process. The good news is you can easily get around the shipping issue. 

The most ideal solution is seeking a cross-border shipping provider that offers efficient shipping with deep discounted rates. Also, you will get top-notch shipping service. 

With ShippingChimp, you can overcome the shipping challenges in Canada and beyond. ShippingChimp offers zero volume commitment, free pick up and up to $100 worth of free insurance. You can also achieve higher cost efficiency and enhance customer experience.  

Here’s a sneak peek into ShippingChimp’s rates: