Digging Deeper - Actual Landed Costs Examined Part 2 of 3

Sometimes when we dig deeper we only skim the surface. SourceJuice strives to write some great articles, but even the best content sometimes needs a summary of relevant parts. Digging Deeper continues by putting together the pieces of the import puzzle with this week’s “Actual Landed Costs Examined - part 2″.

As a recap from part 1 we will dig a little deeper into examining the different categories that make up your actual landed cost.

Ocean freight : Ocean freight can be quoted a number of different ways depending on your level of import comfort and expertise. Manufacturers many times have resources available to handle logistics for your shipment. Logistics Forwarding and Customs Brokerage houses also have partnerships with ocean carriers and freight lines. You can also go to the source and get quotes directly from ocean freight carriers. Before contacting ocean freight lines, review part 1 of this Digging Deeper article. FreightWorld has a list of ocean freight carriers categorized by region. In relation to ocean freight, one should also weigh the value of purchase terms in using FOB or CIF for their shipments. SourceJuice article “To FOB or CIF, That is the Question” is a quick read and a great source of information.
Customs clearance fee : Entry fees cover customs clearance and processing services relating to your container of goods entering the US, based per entry.
Customs Single Entry Bond : There is substantial information about customs bonds at the bottom of part 1 of SourceJuice’s Digging Deeper article.
Courier/postage : In international trade, there is an incredible amount of document transference both domestically and internationally. Original documentation including bill of lading must come from the factory in China to your customs broker for clearance. US domestic shipping will include communicative documents to and from your customs broker (such as Power of Attorney) and from them to other entities including ports and logistics companies.
Delivery order/coordination fee: These fees are typical customs broker coordination fees.
Customs Duty/ fees : Check out an early SourceJuice article to help you figure out customs duty fees on your shipment, “The Nitty Gritty of United States Import Duty Rates“.
Customs Exams : There are a number of exams that customs and other agencies will require to ensure the safety of US citizens, wildlife and natural resources. If you are new to importing expect an X-RAY examine from Homeland Security to check for contraband and other potentially dangerous items. If you are using wood packaging materials, expect an exam from the USDA. A recent SouceJuice article details this exam best, “Wood Pallets, Crates or Boxes? Avoid Unexpected Costs at the Border!“

Another Examination
In part 1 of this article, we illustrated the import costs of a successful 2007 pre-fabricated granite import. For more information on the incredible profit margins available on fabricating and importing granite from China, check out SourceJuice article “Let’s Talk Granite - Pre-fabricated Granite Import Guide“. Suffice it to say, the numbers are incredible.

For our next trick, we will flip the tables and show how the numbers do not always produce favorable outcomes. Some of the most vital insight comes by learning from your mistakes. Below are some actual figures from a failed 2007 marble tile import venture.

At the time the product was purchased, Floor & Decor was selling the below 12×12x3/8″ marble tile for $1.73 per square foot.

A Chinese supplier was selling an identical marble tile for 63 cents a square foot. 7,500 square feet of marble tile was ordered.

Invoiced Marble (7,500sf)…………………. $4,725
Import Duty fees, steam ship & railroad transportation…………………. $4,989.44
Domestic Delivery (cross-dock, flatbed delivery)…………………. $2,035
USDA Exam…………………. $500
X-Ray Exam…………………. $400
On-site storage container…………………. $1,300

TOTAL $13,849.44
per SF $1.84

Upon review of the concluding landed costs, it was determined that the venture was not cost effective because of the following reasons:

Due to budget requirements for the import, the container was only filled to 75% capacity.
No loading dock availability
Excessive exams
Storage
Large US marble suppliers purchase product in high volume. Supplier product cost at 63 cents a square foot could have been even cheaper if more product was purchased.

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dylan@sourcejuice.com // Dylan Blankenship

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Comments

2 Responses to “Digging Deeper - Actual Landed Costs Examined Part 2 of 3”

Get Rich Quick? Thinking Bigg! | SourceJuice on April 11th, 2008 6:56 pm

[…] Everything you need to know to make sure the numbers will work: Digging Deeper Series - Actual Landed Costs Examined […]
jeff on September 13th, 2008 10:21 am

anybody here know of a good site to find more info on what is a freight broker? I\’ve got this site bookmarked and im gonna keep checking it out, but i still would like to find a site that covers what is a freight broker a little more thoroughly..thanks

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