Key takeaways
- Landed cost = goods + freight + insurance + duty + tax + clearance + inland delivery.
- Always divide by sellable units, not total units. That is your real number.
- Duty is normally assessed on goods plus freight and insurance, not on the goods value alone.
- The forgotten items: port handling, storage, agent fees, currency spread and the cost of capital.
- Add a 5–8% contingency. Shipments do not run exactly to plan.
The formula
Landed cost per unit = (goods + freight + insurance + duty + tax + port and clearance + inland delivery) ÷ sellable units
The numerator is fairly straightforward. It is the denominator that most buyers get wrong.
The line items, one by one
1. Goods
The agreed price on the manifest. Make sure you know the currency and whether it includes packing and palletising.
2. Freight
The container rate, or the per-CBM rate on groupage. Watch for seasonal and fuel surcharges — ask for an all-in rate, not a base rate. The comparison is in the FCL vs LCL guide.
3. Insurance
Usually a small percentage of goods plus freight. If you bought CIF it is already included, but check the level of cover.
4. Import duty
Here is the point that matters most: customs in most countries in the region assess duty on goods + freight + insurance — that is, on the CIF value, not the invoice value alone. The rate depends on the HS code and varies by country and category, so ask your agent for the exact rate on your category before you book.
5. VAT
Applied on import in a number of countries in the region, normally on the CIF value plus duty. In many cases it is recoverable if you are registered — but it still hits your cash flow, because you pay it first.
6. Port and clearance
Container handling, documentation fees, your clearing agent's charge, and any inspection the authorities require. These are close to fixed regardless of shipment value, which is why they hurt small shipments most.
7. Inland delivery
From the port to your warehouse, plus unloading the container. If you are far from the port this is a real line, not a rounding error.
A worked example
A 40-foot container of mixed home goods. The figures are illustrative only — substitute your own market's rates.
| Line item | Amount | Note |
|---|---|---|
| Goods | $28,000 | 12,000 units on the manifest |
| Sea freight | $3,200 | FCL to arrival port |
| Insurance | $310 | About 1% of goods plus freight |
| CIF value | $31,510 | The base duty is assessed on |
| Import duty | $1,576 | Example at 5% of CIF |
| Port & clearance | $850 | Handling, documents, agent |
| Inland delivery | $420 | To warehouse, including unloading |
| Contingency at 6% | $2,076 | Storage, currency, surprises |
| Total landed | $36,432 |
The naive division: 36,432 ÷ 12,000 = $3.04 a unit. But the lot is returns with an 88% sellable rate, so 10,560 units are actually saleable. The real number: 36,432 ÷ 10,560 = $3.45 per sellable unit — 13% higher than the first figure.
This is the whole point. The gap between $3.04 and $3.45 is the gap between a good deal and a marginal one — and it appears in no quotation, only in your own arithmetic. Sellable rates are covered in the condition grades guide.
What buyers forget
- Demurrage and storage. The free period at the port is short. Every day of delayed clearance adds a daily charge.
- Currency spread. If you buy in dollars and sell in local currency, the gap between the bank rate and the market rate is a real cost.
- Cost of capital. Money paid today for goods that arrive in six weeks and sell over three months has a cost, whether you borrowed it or not.
- Sorting and processing. Returns need labour to sort, test and repack. Count the hours.
- Relabelling. If your market requires Arabic information, labels and labour are another line.
What to do with the number
Once you have a landed cost per sellable unit, compare it with the price you can realistically achieve. The working rule in closeout trading is to target a selling price of at least twice landed cost, because some of the lot will end up discounted.
If the gap is tight, the problem is usually not the goods price — it is the freight or the sellable rate. Change one of those before you negotiate on the goods.
We quote landed, not ex-warehouse
Tell us your arrival port or city and we come back with a number that includes freight and insurance to your destination, and states plainly what remains on your side.