International freight: from the FOB price to your door-to-door cost

The supplier sends a clean quote: 2,000 pieces at 3.40 dollars FOB Shenzhen. You run the math, convert to pesos, compare it against what your local distributor charges today, and the saving looks enormous. That number goes into your spreadsheet as unit cost and, from then on, everything you decide — selling price, ad budget, which SKU to push — rests on it.

Three months later the forwarder’s invoice arrives with twelve line items, the broker’s with another eight, and inland trucking billed separately. You add it all up, divide by 2,000, and discover your real cost per piece was not 3.40 dollars: it was considerably more. The margin you have been operating on for a quarter never existed.

International freight in an import is not a line item. It is a chain of legs, each with its own charge, and the price your supplier quotes covers only the first one. Understanding where each leg starts and ends is what separates a quote from a cost.

And there is a more uncomfortable part: that cost does not spread evenly across your SKUs. If the same container carries eight products with different weights and volumes, splitting freight “per unit” equally gives you the wrong COGS on all eight.

incoterms decide where your cost begins

Before talking rates you have to talk incoterms, because they are the rules that split costs, risks and obligations between buyer and seller. They do not set the price: they set how far what is already paid actually reaches.

• EXW (Ex Works). The seller only makes the goods available at their facility. Everything else — inland transport at origin, export formalities, international freight, import clearance and final delivery — is on you. It is the incoterm with maximum obligation for the buyer.
• FOB (Free On Board). The seller delivers the goods on board the vessel at the origin port. From that point, international freight, insurance and import clearance at destination are yours. It is the most common term for purchases from Asia, and that is exactly why the FOB price misleads: it covers less than half the journey.
• CIF. Like FOB, but the seller contracts and pays freight and insurance to the destination port. Note the trap: the cost is still there, it is just baked into the price you are quoted.
• DDP (Delivered Duty Paid). The seller delivers to your door with import duties and taxes paid. Maximum obligation for the seller. It looks convenient, but it leaves you blind to how the cost was built and with less control over the tariff classification declared in your name.

The working rule: every step from EXW toward DDP shifts cost and risk from buyer to seller, but the cost does not disappear, it relocates. Comparing a FOB quote against a DDP quote without adjusting is comparing two different things.

the legs of a door-to-door cost

These are the blocks that, added together, form the real cost of getting goods to your warehouse. The concepts are stable even when the rates move:

At origin. Trucking from the factory to the port, loading, export charges, and issuing the transport document — the bill of lading. If you bought FOB, most of this is already included; if you bought EXW, it is not.

The international freight itself. The price of moving the container — or your share of it — from the origin port to the destination port. It is the most volatile item in the entire chain.

At destination. This is the part first-timers do not expect:

• THC (terminal handling charges): handling the container inside the port, at both ends.
• Handling and unloading at the bonded facility.
• Storage at the terminal while clearance is completed.
• Customs broker fees and the costs they advance on your behalf.
• Contributions: duty, customs processing fee and import VAT.
• Inland trucking from the port or the customs facility to your warehouse, or straight to a fulfillment center.
• Cargo insurance, if you bought it, which also counts toward the customs value.

When someone says “freight cost me X”, they are almost always talking about the middle leg only. The door-to-door cost is the sum of all three blocks.

Glossary: inventory valuation, how much capital is tied up →

ocean, air, full container or consolidated

The mode changes both cost and time, and both count.

Ocean in a full container (FCL) has the lowest cost per unit when you actually fill it, but it demands buying volume and waiting weeks. Consolidated ocean (LCL) lets you send a few pallets sharing a container: cost per cubic meter is higher, there are extra consolidation and deconsolidation charges, and it usually takes longer because it depends on the box filling up. Air costs a multiple of ocean and is billed on chargeable weight — the greater of actual and volumetric weight — but delivers in days.

The decision is not only about cost. A product that will run out before Buen Fin can justify air freight for a partial lot, because the cost of being out of stock in peak season exceeds the freight difference. In reverse, flying in slow-moving goods is burning money so they can sit in a warehouse.

There is a third factor that rarely gets quantified: time is also cost. Six weeks of transit are six weeks of capital locked in goods you cannot sell yet, and six weeks your reorder point has to anticipate.

the charges that show up after clearance

These are the ones that break the budget, because they appear in no initial quote:

• Demurrage. The shipping line grants a set of free days to use its container. Past that window it charges per day. Mexican industry publications describe grace periods of just a few days and daily charges that stack up fast; the exact amount depends on the line, the port and what was negotiated in the contract.
• Detention. The same idea applied to the time the container spends outside the terminal before being returned empty.
• Terminal storage. Charged by the facility for holding the cargo while clearance is completed, calculated on weight, volume, value and days.
• Physical inspection. If your shipment is selected for inspection, opening and repacking are billed separately, plus the extra days it adds.
• Document corrections. A wrongly declared field may require an amendment, with its own cost and its own delay.

What matters about these charges is that nearly all of them are a function of time. A clearance that stalls for a week turns a well-quoted import into an expensive one. That is why the quality of your paperwork is not an administrative topic: it is a cost topic.

what moves the price of freight

There is no point quoting you a rate: ocean freight is among the most volatile prices there is, and it changes by lane, by season and by circumstance. What does help is knowing what moves it, so you know what to ask:

• The lane and the port pair. A main port is not the same as a secondary one requiring transshipment.
• The season. Demand peaks ahead of strong consumer seasons and around factory shutdowns in Asia.
• Available capacity. When there is spare room on the vessels, prices collapse; when there is not, they spike.
• Fuel and congestion surcharges. Billed on top of the base rate and moving on their own schedule.
• Events that reroute traffic. Canal closures, conflicts, port strikes. When one of those happens, freight rates and transit times move together.
• Your volume and your relationship with the forwarder. A customer with regular shipments does not pay what a once-a-year shipper pays.

Always ask for the quote broken down by concept and with a validity date. A single door-to-door figure is convenient for comparing, but it stops you from seeing what moved when the next one comes in higher.

from the forwarder’s invoice to COGS per unit

This is the part that decides whether all the research above was worth anything.

The goal is a landed cost per unit, per SKU. The method:

1. Add up every cost of the shipment: goods, international freight, origin and destination charges, fees, non-creditable contributions, handling and inland trucking. Import VAT usually does not belong here if your tax situation lets you credit it; your accountant confirms that.
2. Separate what is direct from what is shared. Each product’s price is direct. Freight and nearly every other charge are shared across the whole shipment.
3. Pick an allocation basis and stay consistent. By volume (cubic meters) is usually the fairest for ocean freight; by weight works better for air; by value is simpler but penalizes expensive, light SKUs. What matters is using the same basis every time so lots stay comparable.
4. Divide by the units actually received, not the units ordered. If 1,960 of 2,000 arrived usable, your unit cost is calculated over 1,960.
5. Load that number as the SKU’s COGS and revisit your prices with it.

An arithmetic example, with invented numbers to show the method. A shipment of 2,000 pieces with a goods cost of $122,400. International freight plus origin and destination charges: $38,500. Duty and processing fee: $14,900. Broker fees and handling: $9,200. Inland trucking: $6,400. Total: $191,400. 1,975 usable pieces arrived. Landed cost per unit: $96.91.

If your spreadsheet carried $61.20 per unit — the goods alone — you were understating cost by nearly 37%. A product you sell at $299 did not have the margin you thought: it had considerably less, and once you layer on the marketplace commission, the fulfillment fee and advertising, the outcome can be something else entirely.

how this reads in iqseller

The panel does not quote freight or clear customs. What it does is keep that cost from getting lost on its way to the decision.

In Profitability, you load COGS per SKU. That is where the landed cost you just calculated belongs — not the supplier’s price. With that figure right, the net margin per SKU already has Amazon settlement commissions and MercadoLibre order fees deducted, along with FBA and Full fees, shipping, advertising and the VAT and withholding breakdown. With an incomplete COGS, all that precision rests on a wrong base.

In Inventory, the valuation uses that same COGS: a badly loaded cost does not just inflate your margin, it also misreports how much capital is tied up. And the module shows stock split across FBA, Full and your own warehouse or 3PL, which is where a freshly released container ends up living.

Forecast closes the loop: international transit time is part of your real lead time, and if you leave it out, your restock recommendations will always run late. The Parent → Model → SKU tree helps spread a lot’s cost across variants, which is exactly where a sloppy allocation does the most damage.

Glossary: real net margin, with everything deducted →

the habit that makes the difference

At the close of every import, build a sheet with the shipment’s total cost and the resulting unit cost per SKU, and compare it against what you budgeted. After two or three shipments you will have something far more valuable than any benchmark: your own factor, the relationship between what the goods cost and what it costs to put them in your warehouse. That factor lets you quote the next product realistically from minute one.

And update each SKU’s COGS whenever a lot arrives at a different cost. A product you imported three times at three different costs does not have a single cost, and continuing to sell on the first shipment’s number is deciding with stale information.

International freight is not an administrative expense you review at year end. It is part of the product’s cost, and until it is loaded there, the margin you see in any report is inflated.