Calculate the true total cost of sourcing products from China — FOB price, ocean freight, customs duty, port handling, and last-mile delivery. Includes a s

What Is Landed Cost?

Landed cost is the total cost of a product from the moment it leaves the factory to the moment it arrives at your warehouse or fulfillment center. It is the only honest way to evaluate whether a sourcing price is viable.

The formula:

Landed Cost = FOB Price + Ocean/Air Freight + Import Duty + Port/Customs Fees + Last-Mile Delivery + FBA Prep (if applicable)

Most new importers focus only on the FOB price (what the factory charges). This is the biggest mistake in sourcing economics. Landed cost can be 30-80% higher than FOB price.

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Each Cost Component Explained

1. FOB Price (Free On Board)

The factory's selling price, delivered to the export port. This is what 1688/Alibaba listings typically quote for export-ready products.

Includes:

Manufacturing cost
Factory margin
Domestic China freight to the port
Export customs clearance

Find it: Catalayer Source Finder shows 1688/Alibaba FOB pricing by order quantity.

2. Ocean Freight

The cost to ship from Chinese port to your destination port.

LCL (Less than Container Load): Charged per cubic meter (CBM) or per 1000 kg (W/M). Current rates: $50-150 per CBM from China to US West Coast. FCL (Full Container Load):

20-foot container: $1,200-3,500 from China to US (market conditions vary enormously)
40-foot container: $1,800-5,000 from China to US

When to use LCL vs FCL:

Under 15 CBM: use LCL
15-25 CBM: economic crossover, get quotes for both
Over 25 CBM: FCL is almost always cheaper

Air freight: $5-15/kg. Use for urgent restocks, high-value/low-weight products, or first shipments. For most products, avoid air freight as routine practice.

3. Import Duty (Customs Tariff)

US Customs charges ad valorem duty on most imported goods, calculated as a percentage of the FOB value.

Duty rates depend on the HTS (Harmonized Tariff Schedule) code — a 10-digit product classification. Rates range from 0% (books, some electronics) to 25%+ (some apparel, tools).

China-origin goods may face additional Section 301 tariffs (the "trade war tariffs") on top of normal MFN duty. These range from 7.5% to 25% on many Chinese-origin categories. How to find your rate:

Look up your product's HTS code at hts.usitc.gov
Check for Section 301 exclusions at USTR.gov
Ask your freight forwarder to confirm the rate before importing

4. Port and Customs Fees

Flat fees that add up:

ISF (Importer Security Filing): $25-50 per shipment
Port handling / terminal fees: $50-150 per container or per CBM for LCL
Customs brokerage: $75-200 per shipment entry
Bond fee (for first-time importers or large shipments): $300-500 one-time or annual continuous bond

5. Last-Mile Delivery (Port to Warehouse)

Cost to move goods from the US port to your warehouse or Amazon FBA center:

LCL shipment (palletized): $150-400 per pallet
FCL: $300-800 per container drayage + unloading

6. FBA Prep (if sending to Amazon)

If you're sending to Amazon FBA:

Poly-bagging: $0.20-0.50/unit
Labeling (FNSKU barcode): $0.20-0.40/unit
Inspection during prep: $50-150 flat

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Worked Example: Kitchen Organizer

Product: Kitchen drawer organizer set 1688 FOB price: ¥28 per unit ≈ $3.86 USD per unit Order quantity: 500 units Product dimensions: 0.02 CBM per unit (small, lightweight) Total shipment specs:

500 units × $3.86 = $1,930 FOB value
Shipment volume: 500 × 0.02 = 10 CBM
Shipment weight: 500 × 1.5 kg = 750 kg

Ocean freight (LCL, 10 CBM at $80/CBM): $800 Import duty (3% MFN + 7.5% Section 301 = 10.5%): $1,930 × 10.5% = $203 ISF filing: $35 Customs brokerage: $150 Port handling (10 CBM at $10/CBM): $100 Last-mile (2 pallets at $200/pallet): $400 FBA prep (labeling only, $0.30/unit): $150 Total landed cost: $1,930 + $800 + $203 + $35 + $150 + $100 + $400 + $150 = $3,768 Per-unit landed cost: $3,768 ÷ 500 = $7.54

Compare to the 1688 FOB cost of $3.86 — landed cost is 95% higher than the factory price.

This product selling for $22 on Amazon:

Amazon referral fee (15%): $3.30
FBA fulfillment fee: $3.22
Landed cost: $7.54
Gross profit: $7.94 (36% margin) — viable for FBA

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Common Mistakes That Blow Up Landed Cost Calculations

Mistake 1: Forgetting Section 301 tariffs

Many importers only account for the MFN duty rate (listed in the HTS code) and miss that Chinese-origin goods often have an additional Section 301 tariff. The additional 25% can turn a 5% duty into 30%.

Mistake 2: Using per-CBM math on a mix of weight/volume

Freight is charged on whichever is higher — volumetric weight or actual weight. Dense products (metal parts) are charged by actual weight; light but bulky products (cushions, packaging) are charged by volumetric weight.

Mistake 3: Ignoring seasonality on freight rates

Ocean freight rates are highly seasonal. Pre-Chinese New Year (November-January), rates can spike 50-100% above normal. Calculate your landed cost using off-peak rates for the base case, then stress-test at peak-season rates.

Mistake 4: Omitting FBA prep costs

For Amazon FBA, all units need FNSKU labels. If your factory can't apply these, you need a US-based prep center. $0.50/unit in prep costs on a 1,000-unit order is $500 — real money on a thin margin product.

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Building a Landed Cost Tracker

Maintain a simple spreadsheet with these columns for every product you source:

Field	Example
Product	Kitchen organizer
FOB price/unit (USD)	$3.86
Units	500
CBM	10
Freight cost	$800
Duty rate	10.5%
Duty amount	$203
Other fees	$835
Total landed	$3,768
Per-unit landed	$7.54
Selling price (Amazon)	$22.00
Amazon fees	$6.52
Gross margin	36%

Update this for every order. Landed cost creeps up over time as freight rates and duty rates change.

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Key Takeaways

Landed cost is 30-80% higher than the FOB factory price — always calculate it before committing to a product
The main variables: FOB price, ocean freight (highly variable), import duty (check HTS code + Section 301), and last-mile delivery
Section 301 tariffs on Chinese-origin goods can add 7.5-25% to your duty rate — do not forget these
For Amazon FBA, add prep and labeling costs before calculating your margin
Build a landed cost template and update it for every shipment — freight rates change seasonally and year to year

How to Calculate Landed Cost for Imported Products