The FOB price on a supplier's quote is only a fraction of what you'll actually pay. Importing from China stacks up eight cost layers — product, freight, insurance, duty, VAT, port fees, banking, last mile — and only their sum, the landed cost, tells you whether a product is profitable. This guide breaks down every layer, shows how CBM drives freight allocation, and walks a sample shipment line by line.
The only number that matters: landed cost
On a trade-show floor, a supplier quotes you an FOB price (Free On Board: goods loaded at the Chinese port, export clearance included). That's the starting point, not the real cost. Two products at the same FOB price can land at wildly different costs once freight, duty, and volume are folded in.
Landed cost adds up everything it takes to get one unit into your warehouse. This is the number — not FOB — you use to compute margin and to compare two suppliers. Comparing on FOB means comparing prices that don't include the same things.
Landed cost = Product (FOB)
+ International freight (allocated by CBM)
+ Insurance
+ Customs duty (base: CIF value)
+ Import VAT (recoverable if VAT-registered)
+ Port / THC / customs-broker fees
+ Bank and FX fees
+ Last mile (port → warehouse)
To run the formula line by line with the allocation method, see our landed cost guide. This page is the map; each layer links out to a deeper dive.
1. Product cost (FOB)
The price negotiated at MOQ (Minimum Order Quantity) is the base. Watch the Incoterms: an "EXW" (Ex Works) price excludes trucking to the port and export clearance — you pay those on top. An FOB price includes them. A CIF (Cost, Insurance and Freight) price already includes ocean freight and insurance to the destination port. Never compare two quotes without checking they're on the same Incoterm.
2. International freight, allocated by CBM
CBM (Cubic Meter) is the volume unit that governs ocean freight. You have two modes:
- LCL (Less than Container Load): consolidation, you pay per CBM. On China → North Europe, the all-in rate (freight + THC + CFS + surcharges) sits around $125–$200 per CBM depending on the corridor (Suaid Global, 2026).
- FCL (Full Container Load): a whole container at a fixed price. A 40ft China → North Europe was quoting around $4,500–$5,500 all-in on the spot market in mid-2026 (Suaid Global, 2026).
The key point: freight is allocated in proportion to volume. Each order line "consumes" a share of the container equal to its CBM. A bulky, light product therefore carries a bigger share of freight than a dense one — which can turn a "great FOB price" into an unprofitable product once freight is allocated.
Usable container capacities
| Container | Theoretical volume | Usable in practice |
|---|---|---|
| 20ft | ~33 CBM | ~28 CBM |
| 40ft | ~67 CBM | ~55–58 CBM |
| 40ft High Cube | ~76 CBM | ~60–68 CBM |
Source: CBM Calculator, 2026. Usable volume is always below theoretical (bracing, gaps between cartons, irregular shapes). To see how many cartons fit and switch LCL/FCL at the right threshold, use our CBM calculator and the container loading guide.
3. Insurance
Often overlooked because it's cheap: budget 0.3–0.5% of CIF value. Small in amount but essential — without it, one damaged or lost shipment wipes out the whole order's margin.
4. Customs duty (base: CIF value × HS-code rate)
The HS code (Harmonised System code) classifies each product and sets its duty rate. The calculation base is not the FOB price but the CIF value = product + insurance + freight to the border.
- European Union / France: the MFN rate typically runs from 0% for many raw materials to 12% or more for finished goods (textiles, ceramics, leather…) (Import8, 2026). The exact rate lives in the Commission's TARIC database (ec.europa.eu/taxation_customs). Note for 2026: the duty exemption for low-value parcels (under €150) ends 1 July 2026 (CARVO, 2026).
- United States: a very different regime. Section 301 tariffs on China stand at 25% (Lists 1–3) and 7.5% (List 4A), with heavy sector surcharges (100% on EVs, 50% on solar), and above all the end of the $800 de minimis — every Chinese import, whatever its value, now requires formal entry and carries the full duty rate (Customs Broker USA, 2026).
The rate depends on the HS code: don't guess, look it up.
5. Import VAT
In the EU, VAT applies on (CIF value + customs duty), at the importing country's rate: 20% in France, 19% in Germany, 21% in the Netherlands (Tonlexing, 2026). Crucial point: for a VAT-registered business this VAT is recoverable — it's cash advanced, not a net cost. The landed cost that drives your margin therefore excludes it, while you still watch it for working capital. The US has no federal import VAT (but sales tax on resale).
6. Port, THC and broker fees
The THC (Terminal Handling Charge) at the destination port, the customs broker's clearance fee, delivery-order and ISF/documentation charges: these are fixed per shipment, often $300–$800 in total depending on port and provider. They too get allocated across lines by CBM.
7. Bank and FX fees
The international wire, the FX commission, and your bank's spread on the conversion (often CNY or USD → EUR) shave 0.5–2% off the value paid. On tight import margins that's not trivial; always convert to the same reference rate to compare quotes in different currencies.
8. Last mile
From port to your warehouse: trucking, unloading, possibly storage. A modest but real layer, allocated by CBM like freight.
Worked example: a pallet of lamps, 40ft FCL to France
| Layer | Amount (USD) | % of total |
|---|---|---|
| Product (FOB) | 30,000 | 66% |
| Ocean freight (40ft all-in) | 5,000 | 11% |
| Insurance (0.5% CIF) | 175 | 0.4% |
| Customs duty (~4% of CIF value) | 1,407 | 3% |
| Import VAT (20%, recoverable) | 7,316 | 16% |
| THC + clearance + documentation | 600 | 1.3% |
| Bank / FX fees | 250 | 0.6% |
| Last mile (port → warehouse) | 700 | 1.5% |
| Total cash out | ~45,448 | 100% |
Read it this way: the product is only 66% of the cash outlay. For a VAT-registered French business the VAT (16%) comes back — so the net landed cost that drives margin is ~$38,132, i.e. 27% above FOB. That +27% is exactly what people forget when they compare quotes on product price alone. Re-run the math with your own numbers in the landed cost calculator.
EU/France vs US: the difference in one sentence
In the EU, most of the customs overhead is recoverable VAT (duties often moderate); in the US there's no recoverable VAT but high, non-recoverable Section 301 tariffs that go straight and permanently into landed cost. The same product can be profitable on one side of the Atlantic and not the other.
FAQ
What exactly is landed cost?
It's the total cost of one imported unit once it's in your warehouse: FOB product price, plus freight allocated by CBM, insurance, customs duty, port and bank fees, and terminal transport. Recoverable VAT (EU) is usually excluded. It's the only reliable number for computing margin and comparing two suppliers.
Why is duty calculated on CIF value and not FOB?
Because customs law (EU and US alike) defines the customs value as including cost, insurance, and freight to the border — i.e. CIF. Calculating duty on FOB alone understates the customs bill and the VAT that cascades on top of it. Always check the rate against the product's HS code.
FCL or LCL: at what volume do I switch?
Roughly, below ~13–15 CBM consolidated LCL (pay per CBM) is cheaper; above that, a full FCL container at a fixed price becomes cheaper per CBM and locks in transit time. The exact threshold depends on current rates: compare the total cost in both modes with a CBM calculator.
Is import VAT a real cost?
For a VAT-registered EU business, no: it's recoverable, a cash advance rather than a net cost. It weighs on working capital but not on margin. For a private individual or a non-registered buyer, it becomes a real cost. The US has no federal import VAT.
How do I compare two quotes in different currencies?
Convert both to the same reference rate before comparing, and compare on landed cost, never on FOB. Two quotes "at the same price" can hide different Incoterms, volumes (CBM), and HS codes that change everything once the total is computed.
At a trade show, Fairloop captures each product in under 15 seconds (photo + quoted price + MOQ + supplier), even offline, then computes landed cost and container fill for you so you can decide once you're home. See the plan — $99/year, 24h trial.