What your supplier invoice does not tell you about your true landed cost.

If your business imports products from overseas — whether from China, India, the EU, or anywhere else — there is a gap between what you pay your supplier and what the product actually costs you. That gap is called your landed cost, and understanding it is the difference between profitable importing and expensive guesswork.

This guide explains every element that goes into a true landed cost calculation, the common mistakes importers make, and how to use this information to protect and improve your margins.

What is landed cost?

Landed cost is the total cost of a product arriving at your warehouse or fulfilment point — ready for sale. It includes the supplier invoice price plus every additional cost incurred in transit, at the border, and on delivery to you.

The components your supplier invoice does not tell you

International freight

Sea freight rates are quoted per container (FCL — full container load) or per cubic metre or weight (LCL — less than container load). Rates fluctuate significantly — during COVID, Asia-UK freight rose from approximately $1,500 per 40ft container to over $15,000. As of early 2026, rates have normalised to approximately $3,000–4,000 per 40ft container. This cost can represent 5–15% of product value for lower-value goods.

Import duty

Import duty is calculated as a percentage of the CIF value (cost + insurance + freight) of the goods. The rate depends on the commodity code (HS code) of the product. Rates range from 0% (many electronics) to 12% (footwear and clothing) to 20% (some agricultural products). You can check rates on the UK Global Tariff at gov.uk.

Many importers either do not know their commodity code or use the wrong one — either of which creates risk of underpaying (resulting in HMRC penalties) or overpaying (losing competitive margin).

Port handling and customs clearance

Port handling includes terminal handling charges, customs examination fees, container demurrage (if the container is not collected promptly), and customs clearance agent fees. A typical UK customs clearance costs £150–300 per shipment. Port handling charges vary by port but typically add £200–500 per container.

Domestic delivery

Getting goods from the UK port to your warehouse. Typically £300–600 for a 40ft container for a UK mainland delivery, depending on distance and access.

Currency risk

If your supplier invoices in USD (common for China and Southeast Asia), your landed cost in GBP depends on the exchange rate at the time of payment. A 5% movement in GBP/USD over a lead time of 90 days can significantly affect your margin. Many importers manage this through forward contracts or by building a currency buffer into their cost model.

A worked example

A UK retailer imports a consumer goods product from a Chinese manufacturer at £6.50 per unit (USD converted at current rates). They order 2,000 units per shipment.

If this retailer had used only the supplier invoice (£6.50), they would have calculated a gross margin of 74%. The true margin is 65.4% — still healthy, but an 8.6 percentage point gap that represents £86,000 in overstated gross profit on £1m of this product line's revenue.

How to build your landed cost model

1. Get quotes for every cost element — your freight forwarder can provide freight, insurance, and port handling estimates. Your customs broker can confirm duty rates by HS code.
2. Apply a currency buffer — add 3–5% to USD-denominated costs to account for exchange rate movement over the lead time period.
3. Include a returns allowance — even 2–3% of units returned represents a real cost that should be factored in.
4. Recalculate landed cost every quarter — freight rates and duty rates change. An out-of-date landed cost model leads to incorrect pricing decisions.