April 13, 2026
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Landed cost is the total cost of getting a product from the point of manufacture to the customer, including production, transportation and all associated fees. These costs typically include freight charges, customs duties, taxes, insurance and any additional fees incurred while moving the product through the supply chain.
It’s imperative for businesses, especially those with a global supply chain, to calculate landed costs to make sure pricing is accurate and operations are running efficiently, both financially and pragmatically.
Why is it important to know what your landed costs are?
Calculating landed costs is important for both the day-to-day running and wider operational planning of a business.
Without understanding the true landed costs of your product, you won’t be able to accurately price your products based on spend across the supply chain. Underpricing products may mean shipping expenses aren’t covered, leaving your financial situation vulnerable, as well as eating into profit margins to cover unexpected charges.
Having transparency on your landed costs over time will allow you to recognise where savings could be made. There may be opportunities to switch shipping providers or transportation methods that would provide financial value to your business long-term.
What affects landed costs?
Landed costs will fluctuate over time and across different types of freight, especially if using intermodal transportation. Therefore consistently monitoring and calculating landed costs will set your operations in good stead.
The following factors may affect your landed costs:
- Raw material pricing: The materials used when manufacturing your product may be susceptible to price changes, either due to supply and demand imbalances, or external global challenges. Increases or decreases in price, along with the associated fuel costs will affect the landed cost of that delivery.
- Freight costs: Variations in size and weight of the goods will change the overall cost and, as a result, will affect the landed cost.
- Customs and taxes: The fees applicable when entering and transporting goods across borders will alter depending on country and border requirements. Regulatory fees may also apply. Customs duties are subject to change over time so monitoring any shifts will help maintain an accurate landed cost calculation.
- Insurance and compliance: Insurance is a required cost for any delivery and transportation method. The cost of both insurance and compliance will differ depending on the goods onboard, the route taken, and the destination country. Adding insurance and compliance into the landed costs calculation covers you for the risks that may incur along the journey.
- Add-on fees: Factoring in the additional payments that can arise, such as handling and payment processing fees, or port charges, will be essential for an accurate landed cost.
How to calculate landed cost
Understanding how to calculate landed costs requires looking beyond the basic product price and considering every expense involved in getting goods from the manufacturer to their final destination. A simplified formula is:
Product cost + shipping + customs + risk + overhead = landed cost
Product cost: The base price paid to the manufacturer or supplier. This may also include packaging, handling at origin, or factory-related charges.
Shipping costs: Cover the transportation of goods across the supply chain. This can include ocean freight, air freight, road or rail transport, fuel surcharges, and handling fees at ports or warehouses.
Customs duties and taxes: Apply when goods cross international borders. These charges vary depending on the product classification, country of origin, and the destination country’s import regulations. VAT, tariffs, and import duties are common examples.
Risk-related costs: Things like insurance protect shipments against potential damage, theft, or loss during transit. Depending on the value and nature of the goods, insurance premiums can be a significant factor in total landed costs.
Overhead costs: May include compliance fees, brokerage services, currency conversion, administrative expenses, and other operational costs associated with moving goods through the supply chain.
If your business relies on international shipping, understanding and managing landed costs is essential to protecting margins and keeping supply chains efficient. AGI Global Logistics works with businesses to provide transparent freight solutions, customs expertise and end-to-end logistics support, helping you maintain visibility over the true cost of moving goods internationally.
Speak to the AGI team today to see how we can support your global logistics operations.