What percentage of unit price do freight and duties typically add?

It varies enormously by mode, weight/volume ratio, and destination. For dense metal parts by sea, freight may be a modest percentage; for small urgent batches by air, freight can exceed part cost. Always build a model with actual quotes for your specific shipment.

DDP rolls all freight, duty, and clearance costs into the unit price. It is predictable and saves logistics time, but the supplier builds a margin into their logistics arrangement. For small orders and buyers without a broker relationship, it is often worth it. For high-volume production, FOB with your own freight usually gives a lower total cost.

How do I account for currency risk?

If your supplier quotes USD and you operate in another currency, consider locking in an exchange rate with a forward contract for large orders, or build a 3-5 percent currency buffer into the landed cost model.

Should I include quality costs in landed cost?

Absolutely. If you expect a rejection rate or incoming inspection cost, amortize that across the batch. A part that fails inspection on arrival costs more than its invoice price.

Can I reduce duties by using a different HS code?

No. Misclassifying parts to pay lower duty is illegal and can result in penalties, back duties, and seizure. Classify honestly based on the actual product and confirm with your broker.

Landed Cost of CNC Parts from China: What You Really Pay

Landed cost is more than the unit price

A buyer once showed me a quote for steel brackets at a unit price that looked 35 percent cheaper than a domestic option. After freight, duties, brokerage, and a surprise last-mile trucking fee, the landed cost per bracket was within 5 percent of the domestic quote, and the lead time was six weeks longer. The part price was right; the total cost math was wrong.

Landed cost is the total cost of a part from the suppliers floor to your warehouse, including everything in between. If you compare quotes on unit price alone, you are not comparing what you actually pay. This breaks down into five main layers.

Part cost: the starting point

The unit price on the quotation covers material, machining, finishing, packaging, and the suppliers margin under the agreed Incoterm. Under EXW this is the factory-door price; under FOB it includes Chinese inland transport and port fees; under DDP it includes everything to your door. When comparing quotes, make sure they are on the same Incoterm, otherwise you are comparing different things.

Freight: the biggest variable after part cost

International freight is the most volatile line item in landed cost. It moves with fuel prices, capacity, season, and mode choice. Air freight is priced per kilogram and is materially more expensive per unit than sea; sea freight is priced per container or per cubic meter for LCL shipments. The exact cost fluctuates, so request a current freight quote from your forwarder rather than using a number you heard six months ago.

Origin charges (China side): trucking to port, terminal handling, documentation fees; included under FOB/DDP, extra under EXW
International freight: air or sea, quoted per kg (air) or per CBM/container (sea); rates vary by season and route
Destination charges: terminal handling fees, port service charges, deconsolidation for LCL, last-mile trucking
Insurance: cargo insurance covering the commercial value plus freight; typically a small fraction of insured value depending on mode and coverage

Duties, taxes, and brokerage fees

Import duties are calculated as a percentage of the customs value (usually CIF: cost plus insurance plus freight), and the rate depends entirely on the HS code classification. Different categories of machined parts carry different duty rates; the rate must be verified against the current tariff schedule for your specific HS code and country, as duty rates change with trade policy.

Import duty: percentage of customs value, varies by HS code and destination country
Import VAT/GST: applied on top of customs value plus duty in most countries
Customs brokerage fee: charged by your broker for filing entries; typically a flat or per-shipment fee
Merchandise processing fees, harbor maintenance fees (US), or equivalent regulatory charges in other countries

Duty rates are specific to the HS code and country and change over time. Always confirm current rates with your broker or the official customs tariff database for your destination country. Do not rely on general guidance or outdated numbers; check the latest official rates for your specific classification.

Hidden costs that catch buyers off guard

LCL minimum charges: small LCL shipments often hit a minimum charge that makes sea freight cost-prohibitive for very small batches
Warehouse storage and demurrage: if goods sit at port or terminal due to incomplete clearance, daily storage fees accrue quickly
Inspection fees: if customs flags a shipment for exam, you may be charged for inspection time and any X-ray or handling costs
Currency fluctuation: if you are quoted in USD and your home currency weakens between quote and payment, the effective cost rises
Rework or rejection cost: if parts arrive out of spec, return shipping and rework costs are almost never included in the initial landed cost model

Calculating landed cost per part

To get a real per-part landed cost, add every cost line on a per-shipment basis, then divide by the number of parts. Start with the part cost under your agreed Incoterm. Add all freight legs and origin and destination charges. Add cargo insurance. Add duties and taxes based on the HS code your broker confirms. Add brokerage and regulatory fees. Add a contingency of 5-10 percent for unexpected charges on your first few shipments until you have real data. Divide by part count. That number is your true cost per part. Compare sourcing decisions on that number, not the quote unit price.

Frequently Asked Questions

What percentage of unit price do freight and duties typically add?
It varies enormously by mode, weight/volume ratio, and destination. For dense metal parts by sea, freight may be a modest percentage; for small urgent batches by air, freight can exceed part cost. Always build a model with actual quotes for your specific shipment.
Is DDP a good deal?
DDP rolls all freight, duty, and clearance costs into the unit price. It is predictable and saves logistics time, but the supplier builds a margin into their logistics arrangement. For small orders and buyers without a broker relationship, it is often worth it. For high-volume production, FOB with your own freight usually gives a lower total cost.
How do I account for currency risk?
If your supplier quotes USD and you operate in another currency, consider locking in an exchange rate with a forward contract for large orders, or build a 3-5 percent currency buffer into the landed cost model.
Should I include quality costs in landed cost?
Absolutely. If you expect a rejection rate or incoming inspection cost, amortize that across the batch. A part that fails inspection on arrival costs more than its invoice price.
Can I reduce duties by using a different HS code?
No. Misclassifying parts to pay lower duty is illegal and can result in penalties, back duties, and seizure. Classify honestly based on the actual product and confirm with your broker.