US to Canada with a drop in US?

#1
I was offered a load out of California to Canada with one drop on in US on its way?

Is this legal for a Canadian carrier to do? (I didnt do it because I was in doubt).

Thanks
 
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alx

Site Supporter
#2
No NO NO

No it is not legal, the trade name of that activity is called CABOTAGE.
In laymen's terms it is referred to as point to point.

As a Canadian carrier, one cannot pick up freight in one point in the USA and deliver this to another point in the USA, and everyone is pretty strict on this matter as the good old government of the USA does not get its tax revenue on the revenue you have made.

U.S. customs will say it is ok but immigration will say it is not.

The big Quebec carriers did this for a while and found themselves (Robert Transport for one), with their equipment impounded, with a minimum fine levied as 25% of the value of the equipment involved in the crime.

I hear lots of carriers do it if they have a very savy driver with a printer on board his truck, whereby they falsify bills of lading and such.

A very high risk for the extra revenue.
 
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TRUCKIT

Site Supporter
#3
The rule as I know it allows a Canadian Carrier to drop a partial load within the US providing the ultimate consignee is in Canada and the drop location is enroute to the foreign destination for the Canadian customer. In other words you can pickup in Californina for Toronto for a Canadian customer. You can then drop say in Chicago as long as the goods dropping there are considered to be part of the same shipment destined to Toronto. I know that this practice has been going on for over 40 years.
 

alx

Site Supporter
#4
To Trcuk it

Question for you, and it is the same one that the DOT officer will ask your driver when he finds a bill of lading showing Chicago as the destination.

If it is destined for Toronto, why are you delivering to Chicago?

As I said earlier, point to point means picked up in one US city and delivered to another US city, this is illegal in any way, shape or form.

For example it is illegal to have one driver pick up one of your empty trailers that another driver has dropped at one consignee and to move it to another location in the USA!!!

The only time we have gotten away with this is when our truck took a shipment to the USA and it did not clear US Customs and the freight was dropped at the customs brokers warehouse on the US side of the border. Another of our own trucks then took the freight from the warehouse to final destination once it had cleared. This of course would not apply since the ACE program is in effect!!

There has been talk for years about modifying some of the parameters of this law, but in my opinion it will not happen until the IRS figures out a way to collect income tax from Canadian carriers.
 
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Nawk

Well-Known Member
#5
Yet Americans can move a shipment point to point in Canada for "repositioning purposes". Hardly seems fair. But we continue to bend over for big brother time and time again.
 

alx

Site Supporter
#6
Right on

Yet Americans can move a shipment point to point in Canada for "repositioning purposes". Hardly seems fair. But we continue to bend over for big brother time and time again.
You are so right , free trade works better for them than us. I'm sure Celadon does not care about our silly little rules!!!
 

theman

Well-Known Member
#7
By DOT and ICC standards, it is fine. By immigration, it is not. I wouldn't bother.

Celadon can do it (reposition within Canada) because they employ Canadian drivers. If a Canadian carrier has US drivers, then it is also legal.
 

TRUCKIT

Site Supporter
#8
Question for you, and it is the same one that the DOT officer will ask your driver when he finds a bill of lading showing Chicago as the destination.

If it is destined for Toronto, why are you delivering to Chicago?

As I said earlier, point to point means picked up in one US city and delivered to another US city, this is illegal in any way, shape or form.

For example it is illegal to have one driver pick up one of your empty trailers that another driver has dropped at one consignee and to move it to another location in the USA!!!

The only time we have gotten away with this is when our truck took a shipment to the USA and it did not clear US Customs and the freight was dropped at the customs brokers warehouse on the US side of the border. Another of our own trucks then took the freight from the warehouse to final destination once it had cleared. This of course would not apply since the ACE program is in effect!!

There has been talk for years about modifying some of the parameters of this law, but in my opinion it will not happen until the IRS figures out a way to collect income tax from Canadian carriers.
alx

This is a good topic that certainly needs clarification. You seem quite informed so I would be interested in seeing your reference material to backup your comments.

To answer your question your driver would have to have a bol consigned to a foreign country showing a stop-off in Chicago for the related company.

As for repositioning equipment within the US this is unrelated to this topic and has seperate rules from moving freight.
 

alx

Site Supporter
#9
Information

Back in 1999 when I was working for Maisliner as a dispatcher, we had an urgent load that had to get down to New Jersey pronto. I had a driver that I told not to bring his load back into Canada and drive up to our terminal in Lasalle, wasting valuable driving time (we could still split driving time back then).

We had instructed him to sleep at Champlain NY. We would switch with him in Champlain NY, thus saving him the time of clearing the LTL shipment into the US + we had textile on Visa from China (those loads could take the whole day to clear).

I arrived at the border and cleared the shipment (I was dressed in a three peice suit since I was working in the office that day - somewhat suspicious attire). Customs had no problem, but immigration pulled me in for inspection.

For the next 4 hours I was under arrest for cabotage. All my paperwork and personal papers were confiscated as well as my cellular phone.
Fortunately I had a McGill university ID card in my wallet that they were interested in. I happened to be taking classes in law at the time.

I explained to them exactly what I was doing and why (to save our driver valuable time on his log) therefore driver safety was our main reason for the switch in the US.

After several encounters with various officers I was explained the laws of cabotage, shown the impounded tractor trailer rigs in their yard and released with a stern talking to.

No need to say that I remember evrything I was told very well.
 
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alx

Site Supporter
#11
Road Runner

Thanks for the link to the site.


The article clarifies the domestic incidental move. If properly used this will help our revenues a great deal!!
 

Michael Ludwig

Well-Known Member
#12
The Cabotage Can of Worms

I would want to rely on more than information in a magazine article to plan my business, although I have read the article and it is fairly accurate, but to each his own.

However, to answer the original question, if you pick up a load at one shipper and it is destined for Chicago and Toronto, it is perfectly legal for a Canadian carrier (equipment & driver) to do, provided you have a proper bill of lading for each stop.

Furthermore, it is perfectly legal for a Canadian carrier (equipment & driver) to pick up Canadian freight in the United States for delivery in the United States, provided it has not been improved or enhanced in value ... in other words, storage loads.

Where it becomes grey is if you pick up from one shipper for Toronto and another shipper for Chicago. Some camps contest that is okay provided both the 2nd pick up and the Chicago drop are incidental to the primary movement to Toronto. Other camps insist that it is not legal. The issue has always been with INS, never Customs, although Customs may report the incident to INS. Now that CBP looks after everything, it is pretty much a given that what one knows, the other will know. Regardless, the government has been wishy-washy on laying charges .... sometimes they do, sometimes they don't.

Add to this the fact that provided you have all the proper licensing, USDOT#, MC#, IRP Account, IFTA Account, UCR, and HVUT, it is perfectly legal for your equipment to pick up and deliver within the United States. What is not legal is for your Canadian driver who does not have a work visa or temporary citizenship to do so. On the other hand, if you have a Native American driving the truck, you are good to go all the way around.

Another issue to take into consideration is where exactly the cargo is going. Were you to pick up a load of tobacco in North Carolina and deliver it to an Indian Reservation in Oklahoma, this is also legal. Indian Reservations are sovereign territory and are not subject to Customs and Immigration rules. Found this one out the hard way, and wouldn't care to repeat it.

Definitely check with a U.S. Immigration attorney (Dan Joyce in Buffalo, NY is a good source) before setting off on your adventure, or you can just roll the dice ... Just don't get caught!

ALX ... You're lucky they thought your issue was cabotage, which to some extent it was. From the brief bit of information you revealed, I would expect that a little more thorough examination of your situation would have put you in contravention of IRS and CCRA rules ... and that simply spells lots of troubles. Was in that pickle barrel myself one time ... don't ever want a repeat of this one either.

TRUCKIT ... IRS already knows how to get their tax money. If you are running in the U.S. you have an EIN right, and you file a U.S. tax return every year don't you? If you don't, you should be. Cabotage rules in the U.S. will never change. It all has to do with Immigration and employment numbers. There will always be an overabundance of commercial drivers in the United States because under that classification they include everyone from a CDL driver to the pizza delivery boy.

theman ... U.S. domiciled carriers do not need Candian drivers to haul point to point in Canada. Our government, in it's infinite wisdom, allows U.S. carriers to make one repositioning move within the country. For example a U.S. carrier can pick up a load in Boston and deliver it to Halifax. He can then pick up a load in Halifax and deliver it to Vancouver. In Vancouver he can pick up a load for Seattle ... all perfectly legal. Unfortunately Canadian carriers are not afforded the same opportunity in the U.S.
 

TRUCKIT

Site Supporter
#13
Thanks for the info Michael.

All Foreign Carriers should be filing an 1120-F (U.S. Income Tax Return of a Foreign Corporation) as well as the annual 2290 (HVT). They should also have an EIN. In addition there are many state taxes imposed on Canadian Carriers such as Ad Valorem, Weight Distance and Highway Use Tax to name a few. I am sure that there are many Canadian carriers that have not registered properly in the US and are not paying there way. Many players simply learn by trial and error and many never send a single dime to the IRS before their demise.
 
#14
alx

To answer your question your driver would have to have a bol consigned to a foreign country showing a stop-off in Chicago for the related company.

.

Yes this is correct.

It usually would look the same as a U.S. Carriers B.O.L except that it would have to state a Canadian Purchases / Buyer in full details (Just like it might appear on a Customs Invoice)

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