How do you calculate the landed cost of plastic raw materials?
The cheapest offer per tonne is not always the cheapest material in your warehouse. Building the full landed cost is the only fair way to compare origins and suppliers.
Landed cost is the total cost of a tonne of material delivered and cleared at your facility. It is the number that should drive supplier and origin decisions — and it is often well above the FOB price.
What goes into landed cost?
- Purchase price at the agreed Incoterm (for example FOB or CFR).
- Ocean freight, quoted per container and divided by the tonnes actually loaded.
- Cargo insurance, usually a small percentage of the insured value.
- Import duties and taxes, calculated according to the destination country’s rules and the HS code.
- Port, terminal and customs clearance charges at destination.
- Inland transport from port to warehouse.
- Financing cost of the money tied up between payment and use.
- Risk items: demurrage and detention if free time is exceeded, and currency movements.
What does a worked example look like?
The figures below are hypothetical, chosen only to show the method — they are not market prices, freight rates or duty rates for any real route.
| Item (per tonne, 24 t in a 40′ container) | USD |
|---|---|
| FOB price | 1,000.00 |
| Ocean freight (2,400 per container ÷ 24 t) | 100.00 |
| Cargo insurance | 3.30 |
| = CIF value | 1,103.30 |
| Import duty (example rate 10% on CIF) | 110.33 |
| Port and clearance (360 per container ÷ 24 t) | 15.00 |
| Inland transport (480 per truck ÷ 24 t) | 20.00 |
| Financing (60 days at 8% per year on 1,000) | 13.33 |
| = Landed cost | 1,261.96 |
Value-added and other local taxes are excluded; they depend on the destination country and on whether they can be recovered.
In this example, an offer 30 USD per tonne cheaper on FOB but with freight of 3,200 per container would end up more expensive once freight is spread over the same 24 tonnes. The same logic explains why bulky materials such as flakes or fiber carry more freight per tonne than dense pellets.
Which costs are easiest to forget?
- Free time and demurrage: containers held at the terminal beyond the free days are charged per day, per container.
- Detention: the same applies to containers kept outside the terminal before they are returned empty.
- Currency: if you buy in US dollars and sell in local currency, a move between contract and payment changes your margin.
- Quality claims: a lot outside specification costs far more than the price difference that made it attractive.
General information only — not legal, tax or investment advice. Market conditions and regulations change; confirm the details for your case.
