Landed cost calculations is a key step in the identification of supply chain vulnerabilities and charting a course for diversifying supplier sourcing and optimizing logistics networks. It helps to determine the total cost of doing business with a supplier (actual and potential), taking into account the value of goods, along with shipping costs, insurance and tariff treatment.
In essence, landed cost is the total amount that must be paid to import a good into a country. It includes the cost of goods, shipping charges, duties, taxes and related fees. It might also cover foreign exchange conversions, and license and insurance fees, even antidumping and countervailing duties, among others.
The land cost calculation’s start point is accurate HTS classification for the product being imported, which will determine import duties. The general formula is as follows:
Landed Cost = Import Tariffs and Duties + Customs Fees + Shipping Costs + Other Overhead Expenses
Descartes solutions include a landed cost tool that calculates and compares the business viability of importing goods from a range of markets.