What Is Landed Cost and Why It Matters in Global Supply Chains
When sourcing internationally, especially when importing from China, knowing the landed cost is critical. Many importers focus only on the factory price, but that is just the beginning. The landed cost, also known as the total import cost, refers to the real overall cost of bringing products from a foreign factory to your warehouse.
At GB INTL FREIGHT, I help businesses navigate the complexities of importing from China, including calculating and reducing landed cost. In this article, I will explain what it means, why it is important, and how to calculate it accurately.
What Is Landed Cost?
The landed cost is the total cost of a product once it “lands” at its final destination, typically your warehouse. It includes the product price, freight charges, customs duties, clearance fees, and inland transportation.
In short, landed cost is the full picture of what it truly costs to deliver your goods.
Why Landed Cost Is Important
If you only look at the supplier’s unit price—for example, $1.00 per unit—you may overlook the real financial impact. After adding shipping, customs duties, and service fees, the actual landed cost per unit might be $1.35 or more.
Moreover, knowing the total import cost helps you compare suppliers fairly. While some quotes may seem cheaper at first glance, they may exclude critical expenses. Consequently, you might end up paying more than expected.
Why Quotes Are Not Always All-Inclusive
You may wonder why suppliers don’t just provide an all-in cost. Usually, it’s not because they want to hide fees but because preparing a detailed cost estimate takes time.
For instance, costs vary depending on taxes, port handling charges, bonds, inland trucking, and even HS code classification. Many suppliers avoid quoting the full price upfront, especially when buyers are only exploring options, comparing multiple factories, or not yet ready to purchase.
Example: Calculating Landed Cost for USB Chargers
Let’s assume you are importing 10,000 USB chargers from China. Here’s how the total import cost breaks down:
| Cost Item | Amount (USD) |
|---|---|
| Product Price ($0.90 × 10,000 units) | $9,000 |
| Ocean Freight | $2,000 |
| Customs Duties (25%) | $2,250 |
| Customs Clearance Fees | $300 |
| Inland Transportation | $500 |
| Total Landed Cost | $14,050 → $1.405 per unit |
Therefore, even though the unit price is only $0.90, the actual landed cost is $1.405, which represents a 56% increase.
How Global Trade Experts Can Help Reduce Landed Cost
I do not just source products—I also help importers lower their total import cost through:
Finding cost-effective and reliable factories in China
Optimizing shipping routes and transportation methods
Consolidating shipments to minimize volume-based charges
Ensuring accurate HS code classification to avoid excessive duties
Providing landed cost estimates before production begins
As a result, businesses can make informed decisions and protect their margins.
Don’t Let Landed Cost Be a Guess
If you plan to scale your business, expand your product lines, or improve profitability, understanding the landed cost is essential. It ensures sustainable pricing and helps safeguard your bottom line.
Ready to Simplify Your Import Process?
At GB INTL FREIGHT, I specialize in supporting clients who import from China. From product development to final delivery, I provide solutions that minimize risks and maximize profits.
Contact me today to learn how my expertise can positively impact your supply chain and help you gain full control over your cost.
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