The unit price a packaging supplier quotes is rarely what your packaging actually costs once it lands at your warehouse. Freight, duties, insurance, and currency conversion can add a significant percentage on top of the factory price, and brands who only budget against the quoted unit price are often surprised by the final number. This guide breaks down what “landed cost” actually includes when sourcing custom packaging from China.
What Landed Cost Actually Includes
Landed cost is the total cost of getting your packaging from the factory floor to your warehouse door, ready to use. Beyond the unit price you’re quoted, it typically includes freight (sea, air, or express), customs duties and import taxes, customs brokerage fees, insurance, and sometimes inland trucking on both ends. Two suppliers quoting the same unit price can result in very different landed costs depending on packaging weight, volume, and how efficiently the order ships.
Freight: Sea vs Air vs Express
- Sea freight — the standard choice for full container loads (FCL) or less-than-container loads (LCL) of packaging. Cheapest per unit but slowest, typically 25–45 days port to port depending on destination.
- Air freight — much faster (5–10 days) but significantly more expensive per kilogram, generally reserved for urgent orders or lightweight, high-value packaging.
- Express courier — fastest and most expensive, typically used only for samples or very small orders, not bulk production.
Packaging is often bulky relative to its weight, so freight cost calculations frequently use dimensional (volumetric) weight rather than actual weight — worth confirming with your freight forwarder before assuming sea freight will always be the cheapest option for your specific box dimensions.
Duties, Taxes and Customs
Import duty rates for paper-based packaging vary by destination country and the product’s HS (Harmonized System) code, and can range from duty-free to double-digit percentages depending on your market and trade agreements in place. VAT or sales tax is typically calculated on top of the goods value plus freight and duty, not just the goods value alone. Ask your freight forwarder or customs broker for the applicable HS code and duty rate for your specific packaging type before finalizing your budget.
Incoterms: Who’s Responsible for What
- EXW (Ex Works) — you’re responsible for everything from the factory door onward, including export clearance. Lowest quoted price, highest logistics responsibility on your side.
- FOB (Free on Board) — the supplier handles export clearance and delivery to the port; you take over once goods are loaded onto the vessel. The most common term for ongoing packaging orders.
- CIF (Cost, Insurance, Freight) — the supplier arranges and pays for freight and insurance to your destination port; you handle import clearance and delivery from there.
- DDP (Delivered Duty Paid) — the supplier handles everything, including duties, to your final destination. Highest quoted price but simplest for the buyer.
FOB is the most common arrangement for repeat packaging orders, since it gives the buyer control over freight forwarder selection while keeping export logistics with the supplier who’s local to the port.
Currency and Payment Considerations
Most China-based packaging suppliers quote in USD or RMB. If your business operates in a different currency, factor in exchange rate movement between deposit and balance payment, which are typically split (commonly 30% deposit, 70% before shipment). For larger recurring orders, some brands lock in pricing agreements to reduce exposure to currency and raw material price fluctuation over a contract period.
A Simplified Landed Cost Example
As a rough illustration: a box quoted at $1.00 per unit FOB might land at $1.15–$1.35 per unit once sea freight, duty, and brokerage are included, depending on order volume, destination, and applicable duty rate. Smaller orders or air freight can push this ratio significantly higher, since fixed logistics costs are spread across fewer units. Always ask your supplier or freight forwarder for a landed cost estimate specific to your order size and destination rather than relying on general rules of thumb.
Questions to Ask Before You Commit to an Order
- What Incoterm is this quote based on, and what does that mean for my responsibilities?
- What’s the HS code for this packaging type, and what duty rate applies in my destination country?
- Is the quoted price based on sea, air, or express freight?
- What’s the estimated total landed cost per unit for my specific order size?
- Are there ways to reduce freight cost by adjusting box dimensions or packing density?
FAQ
Is FOB or DDP better for a first-time packaging order?
DDP is often simpler for a first order since the supplier handles freight, customs, and delivery, even though the quoted price is higher. Once you have a working relationship with a freight forwarder, FOB typically becomes more cost-effective for repeat orders.
How much should I budget on top of the unit price for landed cost?
It varies significantly by destination, order size, and freight method, so there’s no universal percentage. Get a landed cost estimate specific to your order from your supplier or freight forwarder rather than assuming a fixed markup.
Does order volume affect landed cost per unit?
Yes, significantly. Larger orders spread fixed freight and brokerage costs across more units, lowering the landed cost per piece. This is one reason MOQs matter beyond just the factory’s tooling requirements — see our MOQ guide for more on how order volume affects overall cost.
Caiye Packaging works with brands across the EU, UK, US and Australia to plan freight terms and order volumes that make sense for their landed cost budget. Get in touch with our team for a quote that includes freight guidance for your destination.