Landed cost
Landed Cost Explained: What Imported Goods Really Cost in Australia
Freight rate is not price. Landed cost is. Here is every line that belongs in the number, how each one behaves, and a worked example from Shanghai to Brisbane.
In short
Landed cost is the total cost of getting goods onto your dock: the goods themselves, international freight, origin and destination charges, documentation, insurance, customs duty, GST, and inland delivery. It is the only figure worth comparing between suppliers or logistics providers, because a cheap ocean rate can hide expensive local charges. Controlling landed cost is a core part of international logistics management.
Key takeaways
- Freight is often less than half of the landed cost on a low-value, high-volume container.
- GST is calculated on the value of the taxable importation — customs value plus duty, plus transport and insurance to Australia — not on the invoice alone.
- Your Incoterm decides which of these lines you pay directly and which are buried in the supplier price.
- Duty rate follows tariff classification, and a valid FTA origin claim can take it to zero.
- Demurrage and detention are the two lines most often missing from a comparison, and the two most likely to blow the budget.
What goes into landed cost?
Every import has the same cost skeleton. The proportions change dramatically with cargo type, value and mode, but the lines do not.
| Cost line | What it is | What moves it |
|---|---|---|
| Goods value | What you pay your supplier (ex-works or FOB) | Negotiation, order quantity, currency |
| Origin charges | Pickup, export clearance, terminal handling at origin | Incoterm, origin port, cargo type |
| International freight | Ocean or air carriage | Mode, lane, season, container utilisation |
| Marine cargo insurance | Cover for loss or damage in transit | Value, commodity, packing, route |
| Destination terminal charges | Wharf and terminal handling in Australia | Port, carrier, container type |
| Customs duty | Levied on the customs value of the goods | Tariff classification, country of origin, FTA claim |
| GST | 10% of the value of the taxable importation | Customs value, duty, transport and insurance |
| Clearance and documentation | Entry lodgement, declarations, permits | Complexity, number of tariff lines, permits required |
| Biosecurity | Inspection, treatment, fumigation, delays | Commodity, packaging, container condition, season |
| Storage, demurrage, detention | Charges for time at the terminal or holding the container | Free days, clearance speed, unpack turnaround |
| Inland transport | Wharf or airport to your door | Distance, access, tail-lift or forklift, remote sites |
Anything marked as an estimate should be labelled as one. Read more on what drives freight costs and import duty and GST.
How duty and GST are actually calculated
Customs duty is charged on the customs value of the goods — broadly the price paid, converted at the relevant exchange rate. GST is charged at 10% on the value of the taxable importation, which is the customs value plus any duty payable plus the cost of transport and insurance to Australia. That is why a cheaper freight rate also reduces your GST liability, and why an FTA origin claim reduces both duty and the GST base.
A simplified example
Assume goods with a customs value of AUD 40,000, a 5% duty rate, and transport plus insurance to Australia of AUD 4,000. Duty is 5% of 40,000, which is AUD 2,000. The value of the taxable importation is 40,000 + 2,000 + 4,000 = AUD 46,000, so GST is AUD 4,600. If the same goods qualified for a free trade agreement concession, duty would be nil and GST would fall to AUD 4,400 — a difference of AUD 2,200 on one container, from paperwork alone.
Figures are illustrative. Your actual duty rate depends on tariff classification, and GST-registered importers can generally claim the GST back as an input tax credit — but it still affects cash flow. This is general information, not tax advice.
How your Incoterm changes the number
The Incoterm does not change how much the movement costs — it changes who arranges it and where the margin sits. Buying CIF often looks cheaper on the invoice and ends up more expensive on the dock, because destination charges you did not negotiate arrive separately.
| Incoterm | You typically pay from | Landed cost risk |
|---|---|---|
| EXW | The supplier factory door | Highest control, most admin at origin |
| FOB | Once loaded on the vessel at origin | Good balance for most Australian importers |
| CIF / CFR | On arrival in Australia | Destination charges often uncontrolled and marked up |
| DDP | Nothing — supplier covers everything | You lose visibility of duty, GST and compliance position |
See Incoterms explained and our comparison of FOB versus CIF for Australian importers.
The lines importers most often forget
- Demurrage and detention. Free time is finite. Once it expires, charges accrue per container per day and rise in tiers.
- Biosecurity inspection and treatment. Timber packaging, residues and seasonal measures can add cost and a week of storage.
- Underdeclared volume. LCL is charged on the greater of cubic metres or tonnes; a dense pallet costs far more than its cbm suggests.
- Container weight limits. Dense cargo can be legal at sea and illegal on the road, forcing an extra truck movement.
- Currency movement. Between order and clearance, the exchange rate used for customs value can shift the duty and GST base.
- Tail-lift, forklift and site access. Cheap on a metro dock, expensive at a remote or unloading-restricted site.
- Anti-dumping duties. Some steel, aluminium and chemical lines attract additional duties well above the standard rate.
Landed cost questions
What is landed cost?
Landed cost is the total cost of getting imported goods onto your dock: the goods, international freight, origin and destination charges, documentation, insurance, customs duty, GST and inland delivery.
How do I calculate landed cost per unit?
Total all cost lines for the shipment, then allocate them across units. Allocate freight and terminal charges by volume or weight, and allocate duty by tariff line rather than spreading it evenly, or you will misprice any duty-free items in the same container.
Is GST part of landed cost?
It is part of the cash you must fund at the border. If you are GST registered you can generally claim it back as an input tax credit, so many importers track it separately from true cost — but it still has to be paid before the goods are released.
Why is the cheapest freight quote often the most expensive shipment?
Because the low rate is usually recovered in destination charges, short free time or an optimistic transit that leads to storage and demurrage. Compare landed cost, not freight rate, and insist that estimates are labelled as estimates.
Can landed cost be reduced without changing supplier?
Usually yes. The largest levers are Incoterm change, correct tariff classification, claiming a free trade agreement concession, improving container utilisation, and shifting mode or timing — not renegotiating the ocean rate.
Related guides
Freight costs explained · Import duty and GST · Incoterms explained · Tariff classification · Container shipping · International logistics management
Want this modelled for your shipment?
Send us the cargo details and we will return an itemised landed-cost quote within one business day — modes compared, duty and GST included, delivery to your door.