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Cheapest shipping route across Canada? Try the U.S.

Mail is processed at the main post office in Chicago.

Scott Olson/2006 Getty Images

For a small but growing number of this country's eBay vendors, the cheapest path across Canada lies through the heart of America.

Canadians are showing up in increasing numbers at U.S. Postal Service outlets with parcels and letters destined for other provinces - and, in at least one case, a neighbouring town.

The reason? It's often cheaper to send a letter from Toronto to Vancouver by dropping it off in Buffalo, N.Y., than it is to use the nearest Canada Post outlet.

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Enough eBay sellers are now taking advantage of this postage-rate quirk that some U.S. mail outlets credit Canadians with helping them get through the downturn.

And for Canadians peddling their wares online, the U.S. Postal Service has become a conduit for survival.

In border towns across the country, from New York to North Dakota to Washington state, a growing number of Canadians are licking U.S. stamps to send what is, in reality, domestic mail.

"It's really crazy," said Teresa Pope, assistant manager of TSB Shipping Plus, a mail service store in Point Roberts, Wash., a stone's throw from the B.C. border.

"I was shocked the first time I actually shipped for someone [from Canada]who said, 'I checked it out and it's actually cheaper for me to drive down here.'"

Though the numbers are still small, as the loonie has risen over the past six months, both Ms. Pope and the Point Roberts postmaster have seen a notable increase in Canadians crossing the border to do exactly that.

Those who do so brush up against customs rules, which require taxes and a $5 fee for anything worth over $20, and potential delays, since mail that crosses the border inevitably ends up slow to arrive. For that reason, some eBay sellers don't go this route.

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"I think that's stupid," said Pierre LeBel, a Belleville, Ont., stamp seller who conducts about 12,000 online transactions a year. He argues that the potential for unexpected customs costs could damage eBay sellers' reputations. Canada Post's basic rate also offers package tracking and basic insurance, unlike the U.S.

But the savings south of the border are compelling enough that many sellers take advantage of it, and online talk of the mailing discounts has brought growing interest.

Ben Hoffman, a Toronto music seller, completes about 3,000 vinyl record sales a year on eBay. Most go to the U.S. and other international destinations. Occasionally, someone in Vancouver buys a record. To ship it there via Canada Post would cost him $8.45, once he takes advantage of a 25-per-cent discount he can access through eBay. But if it is sent from Buffalo, the price drops to $5.01 (U.S.). It costs Mr. Hoffman about $1 (Canadian) per LP to courier his wares to Buffalo, where they are dropped into the postal system with stamps he buys and prints online. Add it all up, and he's still looking at a significant discount off the Canadian rate.

For Mr. Hoffman, whose buyers are likely to abandon him over a 50-cent premium, and for whom shipping is a big cost on what is often a $10 record, that is a major difference.

The savings stem chiefly from how mail rates are calculated by weight and size. The U.S. has one rate to all of Canada, while Canada Post charges by distance. That's why it's cheaper to ship light, thick parcels in the United States. Heavier packages are generally cheaper to ship via Canada Post. So Mr. Hoffman only ships through the U.S. to buyers east of Montreal and west of Winnipeg.

But in eBay's competitive world of penny-mad thrift, cutting out Canada Post is a necessary strategy for some eBay vendors, who have long argued that Canadian mailing rates make them uncompetitive.

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"If I didn't ship through the States, I'd probably have to lay all my staff off for sure and just run the store, my wife and I," said Gary Nerman, whose Nerman's Books and Collectibles in Winnipeg employs three people. "It would probably cut our sales down by 80 per cent, 90 per cent."

Every week, Mr. Nerman drives an hour south to Pembina, N.D., usually with between 90 and 130 books to ship. The savings are dramatic. In the U.S., a special media rate allows him to ship, say, a Stephen King hardcover to Los Angeles for less than $3. From Canada, it would cost about $10. (It's also substantially cheaper and faster to ship to Europe or Australia, through the U.S.)

Canada Post argues that it is competitive, and that those who send domestic mail through the U.S. are "rare."

"We are competing fair and square and I think you'll find that our rates are the best within Canada," said John Swettenham, general manager of marketing and strategy for Canada Post's parcels division.

When Canada Post surveys competitors, it ignores the U.S. But there is little Canadian sellers can do. Most are too small to negotiate special rates, or to have a strong enough voice to bring change.

"A lot of Canadians come on [eBay]and they complain: 'How can we compete? Shipping rates are outrageous here,'" Mr. Hoffman said. "The unpleasant answer always is, 'Well, you could move to the U.S.A.' And if you don't want to live in the U.S.A., then that's the price of living here."

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About the Author
Asia Bureau Chief

Nathan VanderKlippe is the Asia correspondent for The Globe and Mail. He was previously a print and television correspondent in Western Canada based in Calgary, Vancouver and Yellowknife, where he covered the energy industry, aboriginal issues and Canada’s north.He is the recipient of a National Magazine Award and a Best in Business award from the Society of American Business Editors and Writers. More

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