How to work out landed cost before you import
What goes into landed cost
- Product cost, at the Incoterm you agreed (for example FOB)
- International freight
- Cargo insurance
- Customs duty, plus any anti-dumping or safeguard duty that applies
- Import VAT or GST, which registered businesses can often reclaim
- Customs broker, port and terminal charges
- Delivery from the port to your warehouse
- Bank charges and currency conversion costs
Which value is duty charged on?
It depends on the country. India and EU member states, among many others, calculate duty on the CIF value, which is goods plus freight plus insurance. The United States generally charges duty on the transaction value without international freight and insurance. Check your country's rules, or ask your customs broker.
A worked example
These figures are illustrative, including the 10% duty and 18% tax rates. Use the real rates for your product and country.
| Item | USD |
|---|---|
| 10,000 units at $2.00 FOB | 20,000.00 |
| Ocean freight | 1,800.00 |
| Insurance | 110.00 |
| CIF value | 21,910.00 |
| Customs duty at 10% of CIF | 2,191.00 |
| Broker, port and terminal charges | 450.00 |
| Delivery to warehouse | 300.00 |
| Bank charges | 60.00 |
| Landed cost | 24,911.00 |
| Per unit | 2.49 |
| Import tax at 18% of (CIF + duty), usually reclaimable | 4,338.18 |
| Cash needed at import | 29,249.18 |
A $2.00 product costs $2.49 once it's in the warehouse, and the business needs about $29,250 in cash to land the shipment, even if part of the tax comes back later.
Costs people forget
- Demurrage and detention: daily charges if a container stays at the port, or with you, beyond the free days.
- Minimum charges on small less-than-container (LCL) shipments.
- Testing and certification required before some goods can be sold.
- Currency movement between order and payment.
Where trade data helps
Shipment records show the unit prices other importers paid for the same HS code, and which ports they used. That tells you whether your FOB price is competitive before you add the rest. See how to benchmark prices.