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Cabotage is the point-to-point movement within Canada by U.S. carriers using U.S. drivers and U.S. equipment, and the point-to-point movement within the U.S. by Canadian carriers using Canadian drivers and Canadian equipment.
Both immigration and customs govern cabotage. In broad terms, customs laws cover the truck, immigration laws cover the driver. Sometimes, under customs laws, a particular movement is legal for the truck, but illegal under immigration laws without the necessary authorization. To conduct legal motor carriage under cabotage rules, compliance with both customs and immigration laws in the country of travel is required.
Scope
The use of foreign-based vehicles and containers in international commercial transportation in Canada is governed by the Canada Border Services Agency (CBSA).
Regulatory citations
- CBSA Memorandum D3-1-5
- Customs Tariff 98.01, 9801.10
Key definitions
- Foreign-based conveyances: CBSA defines “foreign-based conveyances” as equipment that:
- Is owned or leased and imported by a person legally domiciled in a foreign country;
- Leaves from and returns to the foreign country when conducting normal operations;
- Is controlled from the foreign country; and
- Is exported within 30 days of their importation.
Summary of requirements
Importing foreign-based equipment. Under Tariff item 9801.10.00, Canada allows foreign-based vehicles and containers used in commercial transportation to be temporarily imported without duties and taxes.
CBSA defines “foreign-based conveyances” as equipment that:
- Is owned or leased and imported by a person legally domiciled in a foreign country;
- Leaves from and returns to the foreign country when conducting normal operations;
- Is controlled from the foreign country; and
- Is exported within 30 days of their importation.
These vehicles are subject to customs examination when arriving or departing Canada.
International commercial transportation. According to CBSA, international commercial transportation means any transportation that results in the movement of goods or people for hire or financial gain if the transportation of people or goods is:
- From a point outside of Canada to a place in Canada;
- From a point in Canada to a point outside Canada; or
- Traveling through Canada from a place outside of Canada to another destination outside of Canada.
When determining if a foreign-based vehicle is engaged in international commercial transportation, CBSA bases the decision on the origin and destination of the goods, and not the actual route of the vehicle.
Traveling through Canada. Qualified vehicles are permitted to transport goods through Canada from a point outside of Canada to another point outside of Canada.
When the goods being transported through Canada are transported in a Canadian-based vehicle for part of the travel, and then transferred to a foreign-based vehicle, the transportation is still considered international commercial transportation.
Incidental domestic transportation (point-to-point) is not allowed:
- When a foreign-based vehicle transports goods from the U.S., through Canada, to another point in the U.S.
- When a foreign-based vehicle Transports goods from a point in Canada, through the U.S. to a destination in Canada.
Point to point transportation. Vehicles (qualified under tariff item 9801.10.10 and 9801.10.30) may conduct transportation of goods from one point in Canada to another if:
- The vehicle is moving in the general direction of the point of delivery of the international freight;
- The vehicle entered Canada empty to pick up freight for export;
- The vehicle is to pick up export freight after delivering international freight; or
- The travel is part of the return movement of the vehicle or container to the country of origin.
Any point-to-point transportation must occur immediately before or immediately after the equipment is used for international commercial transportation. This means a foreign-based vehicle is limited to one point-to-point movement before or one point-to-point movement after use in international commercial transportation. Vehicle entering without freight or with a partial import or export load must also comply with these rules.
All point-to-point transportation in Canada must follow a route that is consistent with the movement of the freight in international commercial transportation. Foreign-based equipment may be used to transport goods from point to point within Canada to fill a less than full import or export load.
When conducting any transportation that is incidental the international transportation of freight, all required provincial operating authorities and other permits must be obtained.
Pick-up and delivery. Some carriers maintain terminals or warehouses in Canada used to consolidate or deconsolidate loads and to pick up or deliver freight.
When international goods have been delivered to such a location, a foreign-based vehicle or container maybe used to pick-up or deliver goods from that location for the duration of the 30-day period they are allowed in Canada.
The equipment must be used only to complete deliveries of other international goods previously delivered to the warehouse, or to pick-up and deliver to the location goods intended for export from Canada.
Empty equipment. Equipment entering Canada empty may be used for transportation incidental to the international movement of goods on the inward portion of an international trip provided it enters Canada to pick up a load for export.
The export load must have been scheduled before the empty equipment enters Canada.
Incidental domestic use of the equipment must always follow a route that is consistent with the pick-up destination in Canada. Foreign-based equipment is allowed only one such movement during an international transportation trip.
When empty foreign-based equipment moves between two points in Canada, it is not considered transportation incidental to the international movement of freight. Empty foreign-based equipment may be moved to any Canadian location without restriction.
Foreign-based drivers. The CBSA rules apply to foreign-based equipment only. Foreign drivers in Canada are governed by Canadian immigration rules administered by Citizenship and Immigration Canada.
Even though foreign-based equipment is operating legally under Canada Customs and Revenue rules, the foreign-based driver may not be in compliance. Contact Citizenship and Immigration Canada for information about the regulations for foreign drivers.
Information. For information regarding foreign-based drivers, contact:
- Citizenship and Immigration Canada
- Montreal: (514) 496-1010
- Toronto: (416) 973-4444
- Vancouver: (604) 666-2171
- Within Canada, toll-free: (888) 242-2100.
Information regarding foreign-based equipment is available from:
- CBSA Border Information Service
- (800) 461-9999, or
- (204) 983-3500 or (506) 636-5064 from outside Canada
Canada's international commercial transportation regulations are summarized in Memorandum D3-1-5, dated April 9, 2020.