EXHIBIT 4.18
                                                                    ------------









                        THE DESCARTES SYSTEMS GROUP INC.



                       DIRECTORS' DEFERRED SHARE UNIT PLAN






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SECTION 1  INTERPRETATION
           --------------

1.1        PURPOSE

           The purposes of the Plan are:

       (a) to promote a greater alignment of interests between directors of the
           Company and the shareholders of the Company;

       (b) to provide a compensation system for directors that, together with
           the other director compensation mechanisms of the Company, is
           reflective of the responsibility, commitment and risk accompanying
           Board membership; and

       (c) to assist the Company to attract and retain individuals with
           experience and ability to serve as directors of the Company.

1.2        DEFINITIONS

           As used in the Plan, the following terms have the following meanings:

       (a) "Account" has the meaning ascribed thereto in Section 2.6;

       (b) "Affiliate" means an affiliate of the Company, as applicable, as the
           term "affiliate" is defined in paragraph 8 of the Canada Revenue
           Agency's interpretation bulletin IT-337R4, Retiring Allowances;

       (c) "Annual Remuneration" means all amounts payable to an Eligible
           Director by the Company in respect of the services provided by the
           Eligible Director to the Company in connection with such Eligible
           Director's service on the Board in a fiscal year, including without
           limitation (i) the annual base retainer fee for serving as a
           director, (ii) the annual retainer fee for serving as a member of a
           Board committee, (iii) the annual retainer fee for chairing a Board
           committee, (iv) any fees for attending meetings of the Board or Board
           committees, but, for greater certainty, excluding amounts received by
           an Eligible Director as a reimbursement for expenses incurred in
           attending meetings;

       (d) "Beneficiary" means an individual who, on the date of an Eligible
           Director's death, is the person who has been designated in accordance
           with Section 4.7 and the laws applying to the Plan, or where no such
           individual has been validly designated by the Eligible Director, or
           where the individual does not survive the Eligible Director, the
           Eligible Director's legal representative;

       (e) "Board" means those individuals who serve from time to time as the
           directors of the Company.

       (f) "Committee" means the Compensation Committee of the Board, or such
           other persons designated by the Board;
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       (g) "Common Share" means a common share of the Company;

       (h) "Company" means The Descartes Systems Group Inc.;

       (i) "Conversion Date" means the date used to determine the Fair Market
           Value for purposes of determining the number of Deferred Share Units
           to be awarded to an Eligible Director, which date shall be the date
           recommended by the Committee and confirmed by the Board taking into
           account the trading blackout period applicable to the Company's
           directors as specified in the Company's Insider Trading Policy;

       (j) "Corporate Transaction" means a merger, amalgamation or plan of
           arrangement involving the Company, acquisition or take-over bid of
           the Company, or similar transaction, in each case resulting in a
           Change of Control (as defined below), or sale of all or substantially
           all of the assets of the Company. A "Change of Control" shall occur
           in the event of either (A) an acquisition of voting securities of the
           Company to which are attached in excess of 50% of the votes attaching
           to all outstanding voting securities of the Company or (B) if the
           Company is not the surviving corporation following completion of a
           Corporate Transaction, a transaction whereby the shareholders of the
           Company immediately before the transaction hold less than 50% of the
           shares of the surviving corporate entity or purchaser;

       (k) "Deferred Share Unit" or "DSU" means a unit credited by the Company
           to an Eligible Director by way of a bookkeeping entry in the books of
           the Company, as determined by the Board, pursuant to the Plan, the
           value of which at any particular date shall be the Fair Market Value
           at that date;

       (l) "Election Notice" means the written election in the form of Schedule
           A hereto;

       (m) "Eligible Director" means all directors of the Company who are not
           employees of the Company or any Affiliate, but including any
           non-executive Chair of the Board;

       (n) "Equity Ownership Policy" means the equity ownership policy for
           outside directors, as approved by the Board from time to time;

       (o) "Entitlement Date" has the meaning ascribed thereto in Section 3.1;

       (p) "Fair Market Value" means, with respect to any particular date, the
           weighted average closing price of the Common Shares in the period of
           five trading days immediately preceding such date on the quotation
           system or stock exchange on which the greatest volume of trading of
           Common Shares in that period has occurred or, if the Common Shares
           are not quoted on a quotation system or listed on a stock exchange on
           such date, the fair market value of the Common Shares as determined
           by the Board, in its sole discretion, acting reasonably;
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                                       -3-


       (q) "Minimum Amount" means the minimum amount, if any, of an Eligible
           Director's Annual Remuneration required to be satisfied by Deferred
           Share Units pursuant to the Equity Ownership Policy of the Company
           applicable to Eligible Directors, as amended from time to time;

       (r) "Plan" means this Directors' Deferred Share Unit Plan, as amended
           from time to time; and

       (s) "Redemption Notice" means the written election in the form of
           Schedule B hereto.

1.3        EFFECTIVE DATE

           The Plan shall be effective as of June 28, 2004.

1.4        CONSTRUCTION

           In this Plan, all references to the masculine include the feminine;
references to the singular shall include the plural and vice versa, as the
context shall require. If any provision of the Plan or part hereof is determined
to be void or unenforceable in whole or in part, such determination shall not
affect the validity or enforcement of any other provision or part thereof.
Headings wherever used herein are for reference purposes only and do not limit
or extend the meaning of the provisions contained herein. References to
"Section" or "Sections" mean a section or sections contained in the Plan unless
expressly stated otherwise.

1.5        ADMINISTRATION

           The Committee shall, in its sole and absolute discretion: (i)
interpret and administer the Plan; (ii) establish, amend and rescind any rules
and regulations relating to the Plan; (iii) have the power to delegate, on such
terms as the Committee deems appropriate, any or all of its powers hereunder to
the Chief Executive Officer or Chief Financial Officer of the Company; and (iv)
make any other determinations that the Committee deems necessary or desirable
for the administration of the Plan. The Committee may correct any defect or
supply any omission or reconcile any inconsistency in the Plan in the manner and
to the extent the Committee deems, in its sole and absolute discretion,
necessary or desirable. Any decision of the Committee with respect to the
administration and interpretation of the Plan shall be conclusive and binding on
the Eligible Director and any other person claiming an entitlement or benefit
through the Eligible Director. All expenses of administration of the Plan shall
be borne by the Company as determined by the Committee.

1.6        GOVERNING LAW

           The Plan shall be governed by and construed in accordance with the
laws of the Province of Ontario and the federal laws of Canada applicable
therein.
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SECTION 2  ELECTION UNDER THE PLAN
           -----------------------

2.1        PAYMENT OF ANNUAL REMUNERATION

           Subject to Section 2.2 and such rules, regulations, approvals and
conditions as the Committee may impose, an Eligible Director may elect to
receive his Annual Remuneration in the form of Deferred Share Units or cash or
any combination thereof.

2.2        METHOD OF ELECTING

       (a) To elect a form or forms of payment of Annual Remuneration in respect
           of the year in which this Plan becomes effective, an Eligible
           Director shall complete and deliver to the Secretary of the Company
           an initial Election Notice by no later than July 21, 2004, which
           shall apply to the Eligible Director's Annual Remuneration payable on
           and after the effective date, subject to the provisions of this
           Section 2.2(a). An Eligible Director may change the form or forms of
           payment of his Annual Remuneration for a subsequent fiscal year by
           completing and delivering to the Secretary of the Company a new
           Election Notice prior to the first day of such subsequent fiscal
           year.

           For greater certainty, the Committee may prescribe election forms for
           use by Eligible Directors who are residents of a jurisdiction other
           than Canada that differ from the election forms it prescribes for use
           by Canadian resident Eligible Directors where the Committee
           determines it is necessary or desirable to do so to obtain comparable
           treatment for the Plan, the Eligible Directors or the Company under
           the laws or regulatory policies of such other jurisdiction as is
           provided under the laws and regulatory policies of Canada and its
           Provinces, provided that no election form prescribed for use by a
           non-resident of Canada shall contain terms that would cause the Plan
           to cease to meet the requirements of paragraph 6801(d) of the
           regulations under the INCOME TAX ACT (Canada) and any successor to
           such provisions.

       (b) The amount elected or designated to be satisfied by Deferred Share
           Units for any fiscal year shall be not less than the Minimum Amount
           for such fiscal year.

       (c) In the absence of a new Election Notice, an Eligible Director's
           latest election with respect to the percentage of the Annual
           Remuneration that is to be provided in the form of Deferred Share
           Units shall continue to apply to all subsequent Annual Remuneration
           payments to such Eligible Director until the Eligible Director
           submits another Election Notice. An Eligible Director's election
           shall be irrevocable with respect to the fiscal year specified in the
           Election Notice and for any subsequent fiscal year unless the
           Eligible Director submits a new Election Notice in accordance with
           Section 2.2(a).

       (d) Where there is no election that complies with Sections 2.2(a) and (b)
           in effect for an Eligible Director for a fiscal year, such Eligible
           Director shall be deemed to have elected to have the Minimum Amount
           for that fiscal year satisfied by Deferred Share Units and the
           balance paid in cash.
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2.3        PAYMENT OF DIRECTOR'S ANNUAL REMUNERATION

           The portion of the Annual Remuneration payable in respect of a period
within the fiscal year to which such Annual Remuneration relates, as determined
by the Board, shall be paid in cash (net of applicable withholdings), or
provided in the form of Deferred Share Units as set out in Section 2.4, as
elected by the Eligible Director, as soon as practicable after the last day of
each period in respect of which the Annual Remuneration may be payable.

2.4        DEFERRED SHARE UNITS

           Deferred Share Units elected by an Eligible Director pursuant to the
Plan shall be credited to the Eligible Director's Account as of the Conversion
Date applicable for the period to which the Deferred Share Units relate. The
number of Deferred Share Units (including fractional Deferred Share Units) to be
credited to an Eligible Director's Account as of a particular Conversion Date
shall be determined by dividing the portion of that Eligible Director's Annual
Remuneration for the applicable period to be satisfied by Deferred Share Units
by the Fair Market Value on the particular Conversion Date. Deferred Share Units
will be fully vested upon being credited to an Eligible Director's Account and
the Eligible Director's entitlement to payment of such Deferred Share Units at
his Termination Date shall not thereafter be subject to satisfaction of any
requirements as to any minimum period of membership on the Board.

2.5        DIVIDENDS

           On any payment date for dividends paid on Common Shares, an Eligible
Director shall be credited with dividend equivalents in respect of Deferred
Share Units credited to the Eligible Director's Account as of the record date
for payment of dividends. Such dividend equivalents shall be converted into
additional Deferred Share Units (including fractional Deferred Share Units)
based on the Fair Market Value on the date such additional Deferred Share Units
are credited.

2.6        ELIGIBLE DIRECTOR'S ACCOUNT

           The Company, as determined by the Board, shall maintain in its books
an account for each Eligible Director (an "Account") recording at all times the
number of Deferred Share Units standing to the credit of an Eligible Director.
Upon payment in satisfaction of Deferred Share Units credited to an Eligible
Director in the manner described herein, such Deferred Share Units shall be
cancelled. A written confirmation of the balance in each Eligible Director's
Account shall be mailed by the Company to the Eligible Director at least
annually.

2.7        ADJUSTMENTS AND REORGANIZATIONS

           In the event of any stock split, stock consolidation, combination or
exchange of Common Shares, Corporate Transaction, spin-off, dividend or other
distribution of the Company's assets to shareholders, or any other change in the
capital of the Company affecting
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Common Shares, such proportionate adjustments, if any, as the Committee in its
discretion may deem appropriate to reflect such change, shall be made with
respect to the number of Deferred Share Units outstanding under the Plan.


SECTION 3  TERMINATION OF SERVICE
           ----------------------

3.1        ENTITLEMENT DATE FOR REDEMPTION OF DEFERRED SHARE UNITS

           Subject to Section 3.2, an Eligible Director may elect the date as of
which the Deferred Share Units credited to the Eligible Director's Account shall
be redeemed (the "Entitlement Date") by filing an irrevocable Redemption Notice
with the Secretary of the Company within the 30 days following the Eligible
Director's Termination Date, provided that an Eligible Director may not elect
more than two such dates in respect of the Eligible Director's Deferred Share
Units. The Entitlement Date elected by an Eligible Director pursuant to this
Section 3.1 shall not be prior to the date that is 75 days after the Eligible
Director's Termination Date and shall not be later than December 15 of the
calendar year commencing immediately after the Eligible Director's Termination
Date. Where an Eligible Director does not elect a particular date within the
permissible period set out above as his Entitlement Date within 30 days
following his Termination Date, the Entitlement Date for such Eligible Director
shall be the date which is 75 days after the Eligible Director's Termination
Date. The value of the Deferred Share Units credited to the Eligible Director's
Account as at the Entitlement Date, as may be adjusted pursuant to Section 3.2
and less any applicable taxes and other source deductions required to be
withheld by the Company, shall be payable in cash to the Eligible Director or
the Eligible Director's Beneficiary, as applicable.

3.2        LIMITATION ON PAYMENT DATE

           Notwithstanding any other provision of the Plan, all amounts payable
to, or in respect of, an Eligible Director's redemption of DSUs hereunder shall
be paid on or before December 31 of the calendar year commencing immediately
after the Eligible Director's Termination Date.


SECTION 4  GENERAL
           -------

4.1        UNFUNDED PLAN

           Unless otherwise determined by the Committee, the Plan shall be
unfunded. To the extent any individual holds any rights by virtue of an election
under the Plan, such rights (unless otherwise determined by the Committee) shall
be no greater than the rights of an unsecured general creditor of the Company.

4.2        SUCCESSORS AND ASSIGNS

           The Plan shall be binding on all successors and permitted assigns of
the Company and an Eligible Director, including without limitation, the estate
of such Eligible Director and the legal representative of such estate, or any
receiver or trustee in bankruptcy or representative of the Company's or the
Eligible Director's creditors.
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4.3        PLAN AMENDMENT

           The Board may amend the Plan as it deems necessary or appropriate,
but no such amendment shall, without the consent of the Eligible Director or
unless required by law, adversely affect the rights of an Eligible Director with
respect to any amount of Annual Remuneration in respect of which an Eligible
Director has then elected to receive Deferred Share Units or Deferred Share
Units to which the Eligible Director has then been granted under the Plan.
Notwithstanding the foregoing, any amendment of the Plan shall be such that the
Plan continuously meets the requirements of paragraph 6801(d) of the regulations
under the INCOME TAX ACT (Canada) or any successor to such provision.

4.4        PLAN TERMINATION

           The Board may terminate the Plan at any time, but no such termination
shall, without the consent of the Eligible Director or unless required by law,
adversely affect the rights of an Eligible Director with respect to any amount
of Annual Remuneration in respect of which an Eligible Director has then elected
to receive Deferred Share Units or Deferred Share Units which the Eligible
Director has then been granted under the Plan. Notwithstanding the foregoing,
any termination of the Plan shall be such that the Plan continuously meets the
requirements of paragraph 6801(d) of the regulations under the INCOME TAX ACT
(Canada) or any successor to such provision.

4.5        APPLICABLE TRADING POLICIES

           The Committee and each Eligible Director will ensure that all actions
taken and decisions made by the Committee or an Eligible Director, as the case
may be, pursuant to the Plan, comply with applicable securities regulations and
policies of the Company relating to insider trading and "black out" periods.

4.6        CURRENCY

           All payments and benefits under the Plan shall be determined and paid
in the lawful currency of Canada.

4.7        DESIGNATION OF BENEFICIARY

           Subject to the requirements of applicable laws, an Eligible Director
shall designate in writing a person who is a dependant or relation of the
Eligible Director as a beneficiary to receive any benefits that are payable
under the Plan upon the death of such Eligible Director. The Eligible Director
may, subject to applicable laws, change such designation from time to time. Such
designation or change shall be in the form of Schedule C. The initial
designation of each Eligible Director shall be executed and filed with the
Secretary of the Company no later than July 21, 2004. Changes to such
designation may be filed from time to time thereafter.
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                                       -8-


4.8        DEATH OF PARTICIPANT

           In the event of an Eligible Director's death, any and all Deferred
Share Units then credited to the Eligible Director's Account shall become
payable to the Eligible Director's Beneficiary in accordance with Section 3 and
the date of death shall be deemed to be the Termination Date.

4.9        RIGHTS OF PARTICIPANTS

4.9.1  Except as specifically set out in the Plan, no Eligible Director, or any
other person shall have any claim or right to any benefit in respect of Deferred
Share Units granted or Annual Remuneration payable pursuant to the Plan.

4.9.2  Rights of Eligible Directors respecting Deferred Share Units and other
benefits under the Plan shall not be transferable or assignable other than by
will or the laws of descent and distribution.

4.9.3  The Plan shall not be construed as granting an Eligible Director a right
to be retained as a member of the Board or a claim or right to any future grants
of Deferred Share Units, future Annual Remuneration or other benefits under the
Plan.

4.9.4  Under no circumstances shall Deferred Share Units be considered Common
Shares nor shall they entitle any Eligible Director or other person to exercise
voting rights or any other rights attaching to the ownership of Common Shares,
nor shall any Eligible Director or other person be considered the owner of
Common Shares or any interest therein by virtue of this Plan.

4.10       COMPLIANCE WITH LAW

           Any obligation of the Company pursuant to the terms of the Plan is
subject to compliance with all applicable laws. The Eligible Directors shall
comply with all applicable laws and furnish the Company with any and all
information and undertakings as may be required to ensure compliance therewith.

4.11       WITHHOLDING

           The Company shall be entitled to deduct any amount of withholding
taxes and other withholdings from any amount paid or credited hereunder.
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                                   SCHEDULE A

               DEFERRED SHARE UNIT PLAN FOR ELIGIBLE DIRECTORS OF
                  THE DESCARTES SYSTEMS GROUP INC. (THE "PLAN")


                                 ELECTION NOTICE


I.     ELECTION:

       Subject to Part II of this Notice, for the period February 1, to January
       31, , I hereby elect to receive the following Deferred Share Units
       ("DSUs"):

       [_] the Minimum Amount; or

       [_]
           --------------------------------------------------------------------
           (INSERT ELECTED AMOUNT THAT IS GREATER THAN THE MINIMUM AMOUNT, AS
           A WHOLE PERCENTAGE OF ANNUAL REMUNERATION OR ANY COMPONENT THEREOF).

       The balance of my Annual Remuneration, if any, shall be received in cash,
       net of any applicable withholdings.


II.    ACKNOWLEDGEMENT

       I confirm and acknowledge that:

       1.  I have received and reviewed a copy of the terms of the Plan and
           agree to be bound by them.

       2.  I will not be able to cause the Company or any Affiliate thereof to
           redeem DSUs granted under the Plan until my Termination Date.

       3.  When DSUs credited to my account pursuant to this election are
           redeemed in accordance with the terms of the Plan after my
           Termination Date, income tax and other withholdings as required will
           arise at that time. Upon redemption of the DSUs, the Company will
           make all appropriate withholdings as required by law at that time.

       4.  The value of DSUs are based on the value of the Common Shares of the
           Company and therefore are not guaranteed.

       5.  No funds will be set aside to guarantee the payment of DSUs. Future
           payment of DSUs will remain an unfunded and unsecured liability
           recorded on the books of the Company.
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                                       -2-


       6.  This election is irrevocable.

       7.  The foregoing is only a brief outline of certain key provisions of
           the Plan. In the event of any discrepancy between the terms of the
           Plan and the terms of this Election Notice, the terms of the Plan
           shall prevail. All capitalized expressions used herein shall have the
           same meaning as in the Plan unless otherwise defined herein.






________________________                        ________________________________
Date                                            (Name of Eligible Director)



                                                ________________________________
                                                (Signature of Eligible Director)




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                                   SCHEDULE B

               DEFERRED SHARE UNIT PLAN FOR ELIGIBLE DIRECTORS OF
                  THE DESCARTES SYSTEMS GROUP INC. (THE "PLAN")

                                REDEMPTION NOTICE

Pursuant to Section 3.1 of the Plan, I hereby advise The Descartes Systems Group
Inc. (the "Company) that I wish to redeem the Deferred Share Units credited to
my account under the Plan in the amount, and on the Entitlement Date specified
below:

================================================================================
  NUMBER OF DEFERRED SHARE UNITS                         ENTITLEMENT DATE
        TO BE REDEEMED
=======================================  =======================================



---------------------------------------  ---------------------------------------



--------------------------------------------------------------------------------

THE ENTITLEMENT DATE SHALL NOT BE PRIOR TO THE DATE THAT IS 75 DAYS AFTER THE
ELIGIBLE DIRECTOR'S TERMINATION DATE AND SHALL BE NO LATER THAN DECEMBER 15 OF
THE FIRST CALENDAR YEAR COMMENCING IMMEDIATELY AFTER THE ELIGIBLE DIRECTOR'S
TERMINATION DATE.


I confirm that I understand the value of the DSUs redeemed pursuant to this
election as at the Entitlement Date shall be paid by the Company to me as a lump
sum in cash, after deduction of any applicable taxes and other source deductions
to be withheld, as soon as practicable after the applicable Entitlement Date.



________________________                        ________________________________
Date                                            (Name of Director)


                                                ________________________________
                                                (Signature of Director)


If the Redemption Notice is signed by a legal representative, documents
providing the authority of such signature must be provided to the Company.
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                                   SCHEDULE C


                             BENEFICIARY DESIGNATION




To:    The Descartes Systems Group Inc.

I, ___________________________, being a participant in The Descartes Systems
Group Inc. Directors' Deferred Share Unit Plan (the "Plan") hereby designate the
following person as my Beneficiary for purposes of the Plan:


       Name of Beneficiary:            ____________________________________


       Address of Beneficiary:         ____________________________________


                                       ____________________________________





This designation revokes any previous beneficiary designation made by me under
the Plan. Under the terms of the Plan, I reserve the right to revoke this
designation and to designate another person as my Beneficiary.



       Date:                           ____________________________________


       Name:                           ____________________________________
                                       (please print)

       Signature:                      ____________________________________