Landed Cost
Landed Cost is the total delivered price of an imported shipment at the buyer's destination warehouse or project gate, combining the supplier's factory or port price (under the agreed Incoterm) with origin drayage, international ocean or air freight, marine cargo insurance, customs brokerage, port handling, import duties, trade-remedy tariffs, VAT/GST, and inland haulage.
How it is measured and specified
A landed-cost calculation builds upward from the commercial invoice value along four sequential cost blocks: (1) Supplier Price at the contracted Incoterm (such as EXW factory gate, FOB Chinese port of loading, or CIF destination port); (2) Export and International Freight, covering origin customs clearance, terminal handling, ocean container freight (including Dangerous Goods surcharges for Class 9 batteries), and marine cargo insurance; (3) Border Clearance and Taxes, encompassing customs value assessment, ad-valorem MFN or preferential import duty, anti-dumping/countervailing or safeguard tariffs, customs brokerage fees, and import VAT or GST; and (4) Destination Delivery, covering port terminal handling charges, container demurrage/detention buffers, and inland haulage with crane unloading to the project site.
Whereas total cost of ownership (TCO) models asset performance over 10 to 25 years of operation, landed cost stops at the site gate and establishes the true Year-0 capital expenditure baseline.
How it matters when sourcing from China
When sourcing clean-energy equipment from China, an EXW or FOB unit price per watt or per kilowatt-hour represents only the first line of the delivered budget. As set out in how landed cost is calculated and our general landed cost and TCO modelling process, the single largest source of estimation error between a factory proforma invoice and delivered cost is tariff classification at the destination border.
At the international 6-digit Harmonized System (HS) level, clean-energy shipments generally fall under four core headings showcased across our landed-cost method and tariff guides:
- HS 8507.60: Lithium-ion electric accumulators (covering LFP cells, rack modules, and containerized BESS).
- HS 8541.43: Photovoltaic cells assembled in modules or made up into panels.
- HS 8504.40: Static converters (covering solar string inverters, hybrid inverters, bidirectional storage PCS units, and DC fast EV chargers).
- HS 7610.90 / 7308.90: Aluminum or steel solar mounting structures and balance-of-system racking.
Because customs authorities assess duties at the 8- or 10-digit national tariff line—and because trade remedies can stack multiple regimes onto a single shipment, as illustrated in the 5 MWp US factory solar 25-year TCO study where US HTSUS 8541.43.0010, 8504.40.95, and 7610.90.00 involve MFN duty alongside Section 201, Section 301, and AD/CVD inquiries—Tradvolt models record destination duty and VAT rates as pending open items until confirmed with the destination customs portal and a licensed customs broker.
What to confirm before procurement
- Confirm the exact Incoterm® 2020 rule (EXW, FCA, FOB, CIF, or DAP) on the supplier quote so neither origin drayage nor destination port handling is double-counted or omitted.
- Obtain the 8- or 10-digit national tariff code and written duty determination from a licensed customs broker in the destination country before signing the supply contract.
- Decide whether hybrid systems (such as solar panels, hybrid inverters, and LFP racks) will be declared under separate HS headings on the commercial invoice to prevent the entire container from being assessed at the highest component tariff rate.