Landed cost is the total price of an imported product when it arrives at your warehouse, ready for sale or use. It includes every expense from the moment you place the purchase order to the moment the product is on your shelf: product cost, international freight, insurance, customs duties, fees, domestic transportation, warehousing, and handling. Most importers focus on the product price and duties, but the hidden costs — demurrage, detention, exam fees, customs broker charges — can add 5-15% that nobody budgeted for.
Landed Cost = Product Cost + International Freight + Insurance + Customs Duties + MPF + HMF + Customs Broker Fees + Domestic Freight + Warehousing + Handling + Contingency. Let us break down each component.
The price you pay the supplier. The Incoterm you negotiate determines what is included in this price. EXW (Ex Works) includes only the product at the factory gate. FOB (Free on Board) includes local transport and loading onto the vessel. CIF (Cost, Insurance, Freight) includes ocean freight and insurance to the destination port. The Incoterm does not change the total cost — it just determines who pays for what.
If your Incoterm does not include freight (EXW, FCA, FOB), you need to arrange and pay for international transportation. Ocean freight for a 40-foot container from China to a US West Coast port runs $2,000-$5,000 in normal markets, though it spiked above $15,000 during the 2021-2022 supply chain crisis. Air freight costs $4-$8 per kilogram. Truck freight from Mexico costs $2,000-$4,000 per full truck to major US cities.
Duties are calculated on the customs value (typically the transaction value) at the rate determined by your HTS classification. Remember to include ALL applicable duties:
A licensed customs broker typically charges $150-$350 per entry for standard formal entries. Additional charges may include ISF filing ($25-$50), classification services ($50-$200 per HTS code), post-entry amendments, and compliance consulting. Some brokers also mark up freight and handling charges. Always request an itemized fee schedule before engaging a broker.
A $50,000 FOB shipment of furniture from China: Ocean freight $3,500 + Insurance $200 + Duty 0% base + 25% Section 301 ($13,375) + MPF $173 + HMF $67 + Broker $250 + Drayage $500 + Unloading $350 + Warehouse (5 days) $150 + Delivery $800 = Total Landed Cost: $69,365. The $50,000 product costs $69,365 delivered — a 38.7% markup.
“The product price is just the beginning. Every importer who has been surprised by their true landed cost has learned the same lesson: calculate everything before you buy, not after the container arrives.”
— Camtom Team
Camtom Team
Trade Compliance
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