Every time you move goods into Canada, you must use a process called customs valuation to calculate the duties you owe.
While it sounds straightforward, the final value for duty is not just the price on your invoice.
It depends on a concept called the place of direct shipment (PODS), which is the specific location where your shipment’s continuous journey to Canada officially started.
This location is used to determine which transportation costs must be included in your value for duty and which can be excluded.
Because modern freight movements often involve multiple carriers and transshipment points, determining the place of direct shipment can be challenging.
That’s why, in this article, we explain what it means, how it is established, and how it applies when goods move through transshipment points.
The place of direct shipment (PODS) refers to the place and time at which goods begin their direct and uninterrupted journey to Canada.
PODS is not necessarily where goods are loaded for export or the last foreign port they pass through.
Instead, it is the moment the goods become clearly destined for Canada and the location they are in at that time.
From a customs valuation perspective, PODS establishes a reference point that is used to assess transportation costs.
The place of direct shipment is determined by looking at three interconnected elements: the event, the time, and the place.
These elements are used together to identify the exact moment a shipment becomes destined for Canada and where the goods are physically located at that moment.
The event is the action that causes the goods to be shipped to Canada.
This could be a sale or any other type of transaction that sends the goods to a Canadian destination.
The time refers to the precise moment when that event occurs.
This is the point at which the goods are no longer part of general inventory and are clearly identified for export to Canada.
The place is the physical location of the goods at the time the event takes place.
Transit points along the journey to Canada, if for logistical reasons, do not change the established place of direct shipment.
While the place of direct shipment is based on whether goods move toward Canada as part of a continuous journey, this does not mean the goods must travel on a single vessel or aircraft or move without stopping.
Instead, it all depends on whether the journey to Canada remains uninterrupted for customs purposes, even if there is a temporary stop along the route.
Transshipment, on its own, does not break the continuity of a shipment.
Goods may pass through intermediate locations to change carriers or to be consolidated or deconsolidated without affecting the place of direct shipment.
However, if goods are processed or warehoused for reasons other than transshipment, the continuity of the journey is broken, and the intermediate location becomes the place of direct shipment.
To support continuity, the CBSA requires documentation showing both the place and date of direct shipment.
This information may be identified on commercial invoices, confirmations of sale, destination tags, freight invoices, or, in some cases, a bill of lading.
The place of direct shipment acts as a clear dividing line for transportation costs.
Transportation costs incurred up to the place of direct shipment are generally considered in relation to the value of the goods.
Depending on the applicable valuation method, these costs form part of the value for duty.
Transportation costs incurred after the place of direct shipment, including international shipping costs to Canada, are assessed separately.
These costs may be excluded from the value for duty, as long as they are clearly identified and distinguished from the price paid or payable for the goods.
At Cole International, we provide freight forwarding services to help Canadian businesses manage their shipments in line with CBSA valuation and documentation requirements.
Our team can work with you to:
Our goal is to help you ship your goods smarter and faster.
If you need help determining the place of direct shipment or understanding how transportation costs should be applied, reach out to one of our trade professionals.