Landed cost of body parts: a FOB, CIF and DDP walkthrough

Landed cost is the number that tells you whether an imported body part can compete with the local wholesale price. It is not the FOB price, and it is rarely the number on the first invoice: goods, freight, insurance, duty, taxes, terminal charges, brokerage and inland delivery all sit between the supplier and your shelf.

This walkthrough builds the number line by line, compares the three common terms, and shows a clearly labelled illustrative example. It is arithmetic, not a quotation — your HS code, destination and forwarder set the real figures.

The three terms in one paragraph

FOB means the supplier delivers the goods on board at the named Chinese port; you pay freight, insurance, destination charges, duty and inland delivery. CIF means the supplier pays freight and insurance to your port; you still clear customs and pay duty and inland delivery. DDP means the supplier delivers to your door and covers freight, destination clearance and duty — a higher invoice, but a smaller number of unknowns at the destination.

Risk and control move with the terms. FOB gives you the most control and the most work; DDP gives you the least of both. The EXW vs FOB vs DDP comparison goes deeper on risk transfer; this article stays on the arithmetic.

The landed-cost lines

1. Goods value — SKU, quantity, unit price and the MOQ tier the price belongs to.
2. Origin handling — export clearance and terminal charges at the Chinese port (included in FOB).
3. Main freight — ocean or rail, priced per container or per CBM for LCL.
4. Insurance — marine cargo cover, usually a percentage of the CIF value.
5. Destination charges — terminal handling, document fees, customs broker and, where required, cargo tracking or conformity inspection costs.
6. Duty — the HS-code rate for the product family, applied to the customs value.
7. Taxes — VAT or sales tax at import, which may be recoverable depending on your business.
8. Inland delivery — port to warehouse; the last mile is often the most underestimated line.

A useful habit is to put each line in its own spreadsheet row and let the total — not the unit price — decide the supplier.

Illustrative worked example

Hypothetical mixed order, used only to show the structure. All numbers are rounded and illustrative, not a quotation:

Line	Amount (illustrative)
Goods value, FOB Shanghai	USD 12,000
Ocean freight, 20ft	USD 1,800
Marine insurance	USD 90
Duty at 10% of customs value	USD 1,200
Import VAT at 15% (illustrative rate)	USD 1,800
Destination terminal + document fees	USD 450
Customs broker	USD 250
Inland delivery to warehouse	USD 350
Approximate landed cost	USD 17,940

The same goods on a DDP quote might arrive as a single invoice of about USD 17,500–18,500 depending on the lane — sometimes cheaper, sometimes not, because the DDP seller is absorbing the duty and destination work. The point is not that DDP is better or worse; the point is that the invoice line and the landed line are different numbers.

If VAT is recoverable for your business, the cash landed cost falls by that line; do not compare an FOB price that excludes VAT with a DDP price that includes it.

Where the packaging data changes the answer

Freight is sold per container or per CBM, so CBM per SKU is part of the cost model:

• Lamps ship one pair per foam-lined carton at roughly 0.09–0.12 CBM per pair.
• Mirrors ship at roughly 0.05–0.08 CBM per pair.
• Bumpers and steel panels are voluminous: 0.12–0.20 CBM per bumper is a planning band, and panels depend on the carton.

Two consequences follow. First, the same goods value can produce very different freight costs depending on how the cartons are packed. Second, mixing high-value, low-volume SKUs with bulky repair panels usually produces a better freight per unit than a container of one heavy family. The mixed-container guide covers the CBM plan; the container loading guide has the per-family numbers.

Comparing quotes apples to apples

Before comparing two suppliers, normalise three things:

1. Incoterm and named place — convert both quotes to the same basis, or ask each supplier for FOB and DDP on the same lines.
2. Quantity tier — compare at your real order volume; a 100-pc price is not available at 20 pcs.
3. Packing basis — measured CBM per unit, not a catalogue estimate.

Then check the boring fields: validity date, payment terms, HS code per line, what documents are included, and whether the price includes packing, labels or inspection. A quote that omits those fields is a starting point, not a comparison.

When the landed number says no

If the landed cost is above your local wholesale price, the fix is rarely a cheaper unit price. It is usually one of these:

• Volume and container fill. Consolidating SKUs into a fuller container spreads freight.
• Packing density. A carton redesign can reduce CBM more than a price negotiation.
• Freight mode. LCL is right for a first small order; a 20ft becomes cheaper per CBM once the load fills. The LCL vs FCL comparison covers the crossover.
• Duty classification. Confirm the HS code with your broker; a different family can carry a different rate and different conformity requirements.
• Destination charges. Ask your forwarder for the destination fee schedule before you book, not after arrival.

The import process guide shows where these decisions sit on a first order.

FAQ

Does the landed cost include duty and VAT? Yes — landed cost is the cost of the goods at your door after freight, insurance, duty, import taxes, destination charges and inland delivery. Whether VAT is a real cost depends on your business’s recovery position.

Is DDP always more expensive? Not always. The DDP invoice is higher than FOB, but the landed difference may be small if the DDP lane is efficient. Compare landed numbers, not invoice numbers.

How do I estimate freight before ordering? Ask for measured carton dimensions and CBM per SKU, then price LCL per CBM or FCL per container. A forwarder can quote from that data without the goods being packed.

What is the most forgotten line? Destination terminal handling and brokerage. They are not in an FOB quote and they vary by port and forwarder. Send the SKU list with destination and incoterm and we will quote FOB, CIF and DDP on the same lines so you can compare.