Landed cost can add up quickly, especially for businesses that import and/or export products. Landed cost incorporates various fees, not all of which may apply to every business or shipment.
- Shipping/freight cost: This is the price of physically transporting a product to its destination, whether by land, air or sea. It makes up the bulk of landed cost.
- Insurance and compliance costs: Insuring merchandise protects a business if its goods are stolen, damaged or lost en route to their destinations. Insurance costs vary, depending on the type and value of the goods being shipped.
- Customs and import costs: Each country has different custom-related fees, taxes, regulations and possible licensing requirements for importing goods. In addition, fees such as value-added tax (VAT) can vary, depending on the type of product or service.
- Handling and payment processing fees: Shipments may be subject to special handling surcharges that cover the costs of packing and storing an order, as well as fees for processing credit and debit card payments.
- Export license: U.S. businesses that export goods typically don’t need an export license to do so, though some additional costs may still be involved. Check the product’s Export Control Classification Number (ECCN) to determine requirements.
- Demurrage fees: Shipping lines charge a penalty, or demurrage, fee for full containers sitting inside a port or terminal for longer than the free time allotted.
- Exchange rates: Currency rates are fluid and should be monitored when planning long-range product pricing.
- Port charges: Port charges cover the use of a port’s facilities. A shipment’s early or late arrival or its cancellation can affect charges.