C&T ALLIANCE · 2026-09-12
Total Landed Cost
Freight duties insurance and unit cost
Analysis
Ex-factory price is not landed cost. Inland transport, freight, insurance, duties, port charges, financing and exchange-rate exposure all affect unit economics.
Practical approach
Compare supplier offers using the same quantity, currency, delivery point and duty assumptions. Model uncertain items as ranges rather than presenting false precision.
Unit-cost formula
Total cost equals goods plus inland transport, international freight, insurance, duties and fees, port and clearance charges, financing and other expenses. Divide by the actual saleable quantity received. Customs valuation and recoverable taxes vary by jurisdiction.
Decision framework
Before acting, document the product scope, destination market, verifiable sources, responsible parties and material risks. Compare alternative scenarios and recheck variable information such as regulations and prices at the time of transaction.
Sensitivity calculation
For 10,000 units, a USD 1,000 freight increase adds USD 0.10 per unit if other costs stay constant. Where freight affects customs valuation, calculate any additional duty effect separately.
Implementation checklist
- Document product, destination market and commercial scope.
- Link source documents, specifications and accountable owners.
- Compare at least two cost and delivery scenarios.
- Record risks, approvals and review dates.
- Revalidate current regulations and quotation terms before committing.
Frequently asked questions
What is the first step?
Define the product, target market, quantity and commercial priorities.
Is the information current?
Regulations, prices and logistics conditions change; confirm them with primary sources before transacting.
Is VAT always a final cost?
No. Recoverable taxes should be distinguished from permanent costs.
How is unit landed cost calculated?
Divide non-recoverable total landed cost by net saleable units.
Can freight affect duties?
Yes. Applicable customs valuation rules may include certain freight elements.
Should recoverable VAT count as cost?
Track it for cash flow but distinguish it from permanent costs.
How should FX risk be modelled?
Run sensitivity cases using rates at quotation, payment and customs dates.
Sources and verification
Official and primary references for further verification. These are subject references, not sentence-by-sentence citations.