A landed cost model is not complicated. It is just rarely done, because each component belongs to a different department and nobody owns the total.
The components
- Goods value: the invoice. The only number most buyers compare.
- Freight: ocean, air or inland, to the port of discharge.
- Insurance: typically 0.1% to 0.4% of the CIF value, depending on the commodity and the market.
- Duty: the ad valorem rate under the applicable HS classification.
- Special levies: anti-dumping, countervailing, safeguard, excise. These are the ones that surprise people.
- VAT or GST: recoverable in most jurisdictions, but it is a cash-flow cost, not a cost at all if you are honest about timing.
- Port and terminal handling: often quoted as a fixed charge per container, occasionally as a percentage.
- Customs brokerage and entry filing: usually fixed.
- Pre-shipment inspection: per shipment, per inspector day.
- Documentation: certificates, legalisation, chamber attestation.
- Demurrage and detention exposure: not a cost if the cargo moves on time. A very large cost if it does not.
Why the last one is the interesting one
Every other line is knowable before you commit. Demurrage exposure is knowable only if someone is actively managing it, and it is the only line that can exceed the sum of the others.
Demurrage exposure is the one line we manage directly rather than estimate: our team drafts the document pack, checks cutoff times, and confirms sailing dates against the vessel rather than against the booking. Every quotation states the free time and the daily rate beyond it, so the exposure is visible before you commit.
How we quote
Every quotation we issue is built as a landed cost through your destination port, on a single basis, so that two options can actually be compared. Where a preferential tariff may apply, we model both the preferential and the standard rate, and tell you what evidence you will need to claim it.
A caution on preferential rates
A preferential duty rate you cannot evidence is worse than no preferential rate at all. You carry the cash-flow of the duty, you carry the penalty exposure, and you carry the audit. We model the standard rate as the default and treat the preferential rate as an opportunity, because that is what it is.
If you would like our landed cost template for your specific route and commodity, send us the details and we will send it back with the numbers filled in.
Applying this to an order
If the point in this briefing affects a shipment you are planning, send the product, quantity and destination port. We will tell you how it applies to that order.