A product that costs $5 FOB Shanghai does not cost $5 when it reaches your warehouse. The gap between factory price and true landed cost can be dramatic — and underestimating it is one of the most expensive mistakes new importers make.
Landed cost is the total cost of getting a product from the factory floor to your warehouse, ready to sell. Here is how to calculate it accurately, component by component.
1. Product Cost (FOB or EXW Price)
Start with your supplier’s quoted price and confirm the Incoterm — EXW, FOB, or CIF. Each implies a different starting point for your additional cost calculation. Most international quotes are FOB.
2. Export and Origin Costs
If buying EXW, add the cost of trucking from the factory to the port of origin (typically USD 100–400 per container depending on distance), plus export customs documentation fees of USD 50–150.
3. Ocean or Air Freight
Ocean freight is quoted per container (FCL — Full Container Load) or per cubic metre or kilogram (LCL — Less than Container Load). Rates fluctuate considerably — in a normalised market, expect USD 1,500–4,000 for a standard 20-foot FCL container from Asia.
Air freight runs approximately 3–5x the cost of ocean freight per kilogram. Use it for high-value, low-weight goods or urgent replenishments only.
4. Cargo Insurance
Standard cargo insurance runs 0.3%–0.5% of the declared cargo value. Skipping it and losing a shipment to damage or theft can eliminate months of margin in a single event — it is never worth the saving.
5. Import Duties and Taxes
Duty rates vary by HS Code (the product classification code) and country of import. In the United States, duties range from 0% to 25% or more, with additional Section 301 tariffs applied to many Chinese-origin goods. In the EU, manufactured goods commonly attract 4–12% duty, plus VAT. Always classify your products accurately — misclassification triggers fines and customs holds that far outweigh any short-term saving.
6. Customs Brokerage and Port Handling
Budget USD 150–500 for customs broker clearance fees, plus terminal handling charges at the destination port of USD 300–600 per container.
7. Inland Delivery to Your Warehouse
Final trucking from the port to your warehouse is typically USD 500–2,000 depending on distance and market.
Quick Reference: Markup on FOB Price
- Air freight from Asia: Add 30–50% to FOB cost for total landed cost
- Sea freight (FCL, high volume): Add 10–20% to FOB cost
- Sea freight (LCL, small volumes): Add 20–35% to FOB cost
At Vantasource, we provide detailed landed cost estimates for all sourcing clients before purchase orders are placed — so there are no surprises at the destination port.