Working out a landed cost.

The twelve lines.

No figures below, deliberately. Every one of these is quoted per route, per volume and per product, and a number printed on a website becomes a number somebody prices a container against. What is stable is the list.

Goods

The producer's price, at the agreed Incoterm. Establish which Incoterm before anything else, because it decides how many of the lines below are already inside this number.

Inland transport in Indonesia

From the producer to the port or the consolidation warehouse. From eastern Indonesia this can include an inter-island vessel with its own schedule.

Export documents and handling

Certificates, inspection where required, terminal handling and documentation at origin.

Ocean freight

The rate itself, which is the line everybody compares and rarely the largest.

Surcharges

Bunker, congestion, peak season and whatever else is current. Quoted alongside the rate rather than inside it.

Marine insurance

A small percentage of value that becomes the only thing standing between you and a total loss.

Destination terminal handling

Charged at the other end, separately from the ocean rate, and often a surprise on a first shipment.

Customs duty

On your tariff line, at your preference basis, on the value your market uses. Look it up rather than asking the supplier.

Import VAT or sales tax

Usually on the duty-inclusive value, so it compounds. Recoverable in many systems and still a cash flow event.

Broker and clearance fees

Per entry, plus anything unusual your goods trigger.

Inland delivery

Port to your warehouse, plus unloading. On heavy goods this can rival the ocean freight.

Demurrage and storage risk

Not a cost until it is one. Free time is limited and a document delay converts directly into a daily charge.

The four buyers forget.

The domestic leg inside Indonesia is the first. Buyers price from the port and the goods start hundreds of kilometres inland, sometimes on another island. It is invisible in an FOB price and entirely real.

Compliance work in your own market is the second. Registration, a responsible person, packaging obligations, laboratory testing. None of it appears in a freight quotation and all of it is a cost of importing.

Working capital is the third. Money leaves on a deposit and comes back when the goods sell, and the gap on a sea shipment from Indonesia is measured in weeks or months. The cost of that gap belongs in the calculation.

Loss and rework is the fourth. Some percentage of goods arrive damaged, out of specification or short. Pricing as though it will be zero makes the first bad shipment look like a catastrophe rather than a cost of doing business.

Comparing two suppliers honestly.

Build the whole calculation for each, on the same Incoterm, with the same assumptions about your own market. Two factory prices ten per cent apart can land within one per cent of each other once packing, freight volume and document handling are included, and occasionally the cheaper factory price lands higher.

Where a difference persists, find out what causes it. A genuinely cheaper producer is usually cheaper for a reason you can name: closer to the port, better yield, longer runs, less handling. A price that is cheaper for no discoverable reason is a price with a problem inside it.

Questions buyers ask.

Read next.

• Finding your duty rate

  Five steps to your own number, the two dated changes coming to Indonesian preferences, and why this page prints no percentages.

• Getting it on a ship

  FCL, LCL, own consolidation or reefer, and the five costs that appear after the freight quote. Written for an archipelago.

• Incoterms for Indonesian shipments

  Almost every quotation out of Indonesia says FOB. For a container that is the wrong rule, and the body that writes the rules says so.

• Pricing what you import

  Landed cost is the floor, not the price. What sits between, and the four costs that never appear on an invoice.

• Marine insurance certificate

  Whether the seller insures depends on the Incoterm, and the cover level is not what buyers assume. When you need to arrange your own.

• Commercial invoice and packing list

  The plainest documents in the set and the ones that stop the most shipments, because customs and the bank read them against everything else.

• Currency risk on an import order

  Most Indonesian export trade is in dollars, so two currencies move against you. Where the exposure sits and what reduces it.

• Trade finance, in plain terms

  The gap between paying a producer and being paid by your customer is where importers run out of money.

• Door to door or port to port

  Who arranges what, where responsibility sits, and why the simpler-sounding option is not always cheaper.

• What duty is calculated on

  Duty is charged on a value that is not always the invoice. What gets added and what does not.

• Why freight rates move

  The rate from last quarter is gone. What drives container rates and how to buy against that.

• Weights and shortfall

  Goods weighed at origin and at destination rarely match. Which gaps are normal and which are a claim.

• Shipping inland

  No port of your own means a second country, a second leg and a decision about where to clear.

• What the price is made of

  Knowing where the cost sits changes what you negotiate. Which parts move and which do not.

• What it takes to start

  Not a figure, a structure. Which costs come before revenue and how long money is tied up.