Landed cost is the total cost of getting an imported commodity to your warehouse or plant. It is the number that tells you whether an offer is really competitive, because two offers with the same price per tonne can land at very different costs once freight, duties and local charges are added.
The main cost components
- Purchase price: the price in the contract, on the agreed delivery terms (for example FOB or CIF).
- Freight: sea freight to the discharge port, if you buy FOB or FCA.
- Insurance: cargo insurance, if not included in the price.
- Port and terminal charges: unloading, terminal handling, port dues and storage.
- Customs duties: set by the tariff code and origin of the goods; preferential rates may apply under trade agreements.
- Import taxes: VAT or sales tax, often calculated on the value including duty.
- Clearance and documentation: customs broker fees, inspection, certificates and permits.
- Finance costs: letter of credit and bank charges, and interest while cargo is in transit.
- Inland transport: from the port to your site.
- Losses and currency: moisture or handling losses, and exchange-rate movements between contract and payment.
A simple way to calculate it
Start from the price on your delivery terms, add every cost the seller does not pay, then divide by the quantity that actually arrives:
Landed cost per tonne = (goods value + freight + insurance + port charges + duties + taxes not recoverable + clearance + finance + inland transport) ÷ tonnes received
Duties are a percentage of the customs value, and the customs value is defined differently by country. The European Union, for example, includes freight and insurance to the EU border in the customs value, while the United States generally values imports excluding international freight. Check your own country’s rules and the tariff code with a customs broker.
A worked example (illustrative figures only)
An importer buys 10,000 tonnes FOB at 300 per tonne. Freight is 25 per tonne, insurance 1 per tonne, port charges 4 per tonne, and the duty is 5% of a customs value that includes freight and insurance. Duty is then 5% × 326 = 16.30 per tonne, and the landed cost before VAT, finance and inland transport is 300 + 25 + 1 + 4 + 16.30 = 346.30 per tonne. These numbers are only an example of the method, not market prices or tariff rates.
Tips for accurate estimates
- Use the tariff code and origin to look up the duty, and check whether a trade agreement lowers it.
- Separate recoverable VAT from real costs if your business can reclaim it.
- Ask for freight quotes for the actual vessel size and discharge port.
- Allow for demurrage if the discharge port is congested.
When you request an offer from Agromer, tell us your destination port and preferred terms so you can compare like with like. Request a quote, or read FOB vs CIF first.