Landed cost: the same order to the UK and to the EU

Course outline

The first lesson is open to read. The rest are included when you enrol.

1. 1Every line from factory price to delivered12 min Preview

   General information, not legal advice. Rules change; check the sources below before you act.

   Landed cost is everything you pay to get a product to the place you need it, divided by the number of units you can use. It is the number that decides whether a quote is good.

   The cost lines

   1. Product price. The unit price times quantity, including any set-up costs: screens, embroidery digitising, moulds, plates.
   2. Samples. Pre-production and approval samples, and the courier to send them.
   3. Origin charges. Trucking to the port, export clearance and terminal handling in China. Included by the seller under FOB and FCA; paid by you under EXW.
   4. International freight. Sea (full container or LCL), air or courier. Includes fuel and security surcharges.
   5. Insurance. Cargo insurance, often quoted as a small percentage of the insured value. Included by the seller only under CIF and CIP.
   6. Destination charges. Terminal handling, port or airport charges, delivery order fees and, for LCL, deconsolidation.
   7. Customs clearance. Your customs agent's fee per entry, plus extra lines, and any duty deferment or guarantee costs.
   8. Customs duty. Rate for your commodity code times the customs value, plus any trade remedy duty.
   9. Import VAT. Recoverable for most VAT-registered businesses, but a cash-flow cost unless deferred; a real cost if you cannot recover it.
   10. Inland delivery. From the port or airport to your warehouse or event venue.
   11. Testing. Laboratory tests needed for the market (chemical, food contact, toy safety).
   12. Inspection. Pre-shipment or during-production inspection, and any re-inspection after a failure.
   13. Currency. The rate you actually pay at, bank charges, and the risk of the rate moving between quote and payment.
   14. Contingency. Storage, demurrage, re-work, air freight to rescue a late order.

   Who pays what

   The trade term (Incoterm) decides which of lines 3 to 6 are in the supplier's price. The Incoterms course explains each rule. Whatever the term, duty, import VAT and clearance fall on the importer unless you buy DDP.

   Two habits that prevent surprises

   • Ask for quotes in the same shape. Price, currency, trade term, named place, included items, validity. See the "Exporting from China" course.
   • Get destination charges in writing from your forwarder before you book, not after arrival.

   Where this sits in the 13 steps

   Build the landed cost at step 5 (Quote), fix it at step 8 (Order), and compare it with the actual invoices at step 13 (Review).

   Checklist

   • All 14 lines considered, even if some are zero
   • Set-up and sample costs spread over the right quantity
   • Destination charges quoted in writing
   • Currency and payment dates noted
2. 2How duty and import VAT are calculated14 min
3. 3Where the UK and the EU differ12 min
4. 4Worked example: 2,000 T-shirts to Felixstowe and to Rotterdam16 min
5. 5Budgeting, currency and comparing quotes10 min
6. 6References5 min