When you ship goods, landed cost is one of the most important figures to consider in your planning.
The number on your supplier invoice is only the starting point. By the time your goods move from origin to destination, clear customs, and arrive at your warehouse, the total cost can be much higher.
In this article, we break down what landed cost means, how it differs from freight cost, and what to typically include when calculating it.
This will help you plan your shipments with confidence and price your goods more accurately.
Landed cost is the total cost of purchasing, shipping, importing, and delivering goods to their final destination.
If you look at product cost alone, you may underestimate what you are really spending to import the goods. A landed cost calculation gives you a more complete view, which can help with pricing, budgeting, planning, and comparing sourcing options more accurately.
Landed cost can vary from one shipment to another. The final amount depends on factors such as the type of goods, shipping mode, Incoterms, destination, and any extra charges that arise during transit or customs clearance.
No. Freight cost and landed cost are not the same.
Freight cost is only one part of the landed cost. It usually refers to the cost of moving your goods from one place to another, whether by ocean, air, rail, or truck.
Landed cost is broader. It includes the freight cost in addition to other expenses related to importing and receiving the goods in Canada.
While the exact total depends on the shipment, landed cost commonly includes:
1. The product cost: The amount you pay the supplier for the goods themselves.
2. Freight charges: The transportation costs for moving the goods.
3. Insurance. If the shipment is insured during transit, the insurance cost is often included in the landed cost.
4. Customs duty: Duty may apply depending on the tariff classification, origin, and tariff treatment of the goods. In Canada, duty is calculated based on the value for duty.
5. GST and excise tax/excise duty: GST is payable on most imported goods. Some goods may also be subject to excise tax or excise duty.
6. Customs clearance and brokerage fees: These are the costs related to customs processing and the services of a customs broker acting on your behalf.
7. Handling and port charges: These may include loading, unloading, terminal handling, storage, documentation, or other shipment-related service charges.
8. Delivery to the final destination: The cost of moving your goods from the port, airport, or terminal to your warehouse or facility.
Depending on how detailed you want the landed cost calculation to be, you may also include inspection fees, packaging costs, currency conversion, and other shipment-specific charges.
At Cole International, we offer freight forwarding services to help Canadian businesses plan their shipments with a clearer view of the costs involved from origin to final delivery.
Reach out to one of our trade professionals to plan your next shipment and help you build a clearer picture of your landed cost.