How to Calculate Landed Cost for Sea Freight Shipments

Landed cost for a sea freight shipment is the full cost of one unit by the time it reaches your warehouse. It starts with the FOB value from the factory and adds every shipment-level charge — international freight, insurance, duty, US customs fees, broker fees, drayage and any other charges — then allocates those shared costs across the SKUs in the shipment. The method below follows the nine cost pieces and three allocation rules set out in Docklify’s landed cost guide [1].

What sea freight landed cost includes

For a US-bound ocean shipment, the landed cost calculation has nine cost pieces [1]:

• FOB value: factory price × quantity. It belongs to its SKU directly, so no allocation is needed [1].
• International freight: one flat price for the whole shipment. Allocate it by chargeable weight: volume in CBM (cubic meters) versus actual weight, whichever is greater. For ocean freight, 1 CBM = 1,000 kg [1].
• Insurance: cargo value × rate, with a default rate of 0.3% that is editable. Allocated by value [1].
• Duty: the HTS (Harmonized Tariff Schedule) code decides the rate. Multiple duty layers stack as separate lines. Allocated by value [1].
• MPF (Merchandise Processing Fee): cargo value × 0.3464%, with minimum and maximum caps. Auto-calculated and allocated by value [1].
• HMF (Harbor Maintenance Fee): ocean shipments only, cargo value × 0.125%. Auto-calculated and allocated by value [1].
• Broker fee: a flat per-shipment fee, default $200 and editable. Allocated by value by default, or switched to per-unit allocation [1].
• Drayage: port-to-warehouse trucking, default $600 per container and editable. Allocated by value by default, or switched to per-unit allocation [1].
• Other charges: your own line items, such as fumigation, storage or bracing. Name, amount and allocation method are yours to set [1].

Every line can be overridden. If the broker gives a flat package price, enter the real number in that row and the result recalculates [1].

Three allocation rules that drive the per-SKU result

Allocation splits shipment-level shared costs across products. For sea freight, the rules are [1]:

Freight goes by chargeable weight

Freight is the cost allocated by chargeable weight. Compare volume and actual weight, take whichever is greater, and apply the ocean conversion of 1 CBM = 1,000 kg. Bulky-but-light cargo therefore allocates by volume, while heavy cargo allocates by weight [1]. Use the chargeable-weight line on the forwarder’s quote as the shipment-level check.

Value-based charges go by cargo value

Insurance, duty, MPF and HMF are allocated by value by default. Higher-value SKUs take a larger share. For example, splitting $54 of insurance between $8,000 and $10,000 of goods gives $24 and $30 [1].

Flat fees can go by quantity

Broker fees and drayage are flat per-shipment fees that can be allocated by value or switched to per-unit allocation. Splitting $600 of drayage between 2,000 and 1,000 units gives $400 and $200 [1].

The reconciliation rule is strict: everything allocated across SKUs must add up to exactly the shipment total — not a cent more or less [1].

Step-by-step calculation

1. Collect shipment inputs. For each SKU, record FOB unit price, quantity, actual weight, volume in CBM and cargo value. For the shipment, collect the forwarder’s freight quote and chargeable weight, insurance rate, HTS codes and duty rates, broker fee, drayage quote and any other charges [1].
2. Calculate FOB value by SKU. Multiply FOB unit price by quantity. Assign this amount directly to the SKU; do not allocate it [1].
3. Calculate and allocate freight. Determine the freight basis from the forwarder’s chargeable-weight line and the SKU weight and volume data. For each SKU, use the greater of actual weight or CBM × 1,000 as its chargeable weight, then check that the SKU shares reconcile to the forwarder’s shipment-level chargeable weight. SKU freight share = SKU chargeable weight ÷ total chargeable weight, multiplied by the shipment freight total [1]. If the shares do not reconcile, confirm the allocation basis with the forwarder.
4. Calculate value-based charges. Insurance = cargo value × insurance rate. Duty = cargo value × HTS duty rate, adding separate lines for stacked duty layers. MPF = cargo value × 0.3464%, subject to minimum and maximum caps. HMF = cargo value × 0.125% for ocean shipments. For a single duty rate, allocate each charge by SKU value share: SKU FOB value ÷ total FOB value [1]. If HTS rates differ by SKU, calculate each SKU’s duty directly from its own HTS rate and value before allocating the remaining value-based charges.
5. Allocate flat fees and other charges. Split broker fees, drayage and named other charges by value or by quantity, according to the method chosen for that line [1].
6. Sum and divide by units. SKU landed cost = SKU FOB value + all allocated charges. Landed cost per unit = SKU landed cost ÷ SKU quantity [1].
7. Reconcile the total. Add all SKU landed costs and compare with the shipment total. The two must match [1].

Illustrative worked example

The following example is hypothetical and rounded. It assumes one HTS duty rate of 5%, no MPF minimum or maximum is triggered, and all freight and fee figures are illustrative. The method — not the specific rates — is the point.

Freight allocation illustrates the chargeable-weight rule: SKU A gets $2,500 × (2,000 ÷ 5,000) = $1,000, and SKU B gets $2,500 × (3,000 ÷ 5,000) = $1,500. Insurance, MPF, HMF, broker, drayage and other charges are allocated by value. The SKU totals sum to the shipment total, which is the required reconciliation check [1].

Common mistakes and quality checks

Common failure modes in sea freight landed cost calculations include:

• Stopping at FOB. The factory price is only the baseline; freight, insurance, duty, MPF, HMF, broker fees, drayage and other charges often push the true cost well above FOB [1].
• Using actual weight for ocean freight. Freight allocates by chargeable weight, which compares actual weight with volume at 1 CBM = 1,000 kg [1].
• Applying one duty rate to mixed HTS codes. The HTS code decides the rate, and multiple duty layers stack as separate lines [1]. Check classification before allocating a single duty amount.
• Forgetting MPF caps. MPF is 0.3464% of cargo value with minimum and maximum caps; confirm the caps and apply them before comparing manual results with a broker invoice [1].
• Failing to reconcile. Allocated SKU costs must equal the shipment total exactly; a small rounding gap should be resolved in the allocation, not ignored [1].

Before finalizing, check the forwarder’s chargeable weight, the broker’s duty and fee breakdown, and the HTS codes on the commercial invoice. If an invoice differs from the quote, override the auto-calculated line with the real amount and recalculate [1].

Scope and limitations

This method is grounded in the US import cost structure described by Docklify: US customs fixed fees, broker fees and port-to-warehouse drayage are explicit lines [1]. Other countries have different fees, tax treatment and duty rules, so do not transplant the MPF and HMF percentages to non-US imports. Duty rates, MPF caps and freight quotes change; verify them for the specific shipment and date. The calculation is only as reliable as the inputs — especially chargeable weight, HTS classification and the completeness of the invoice. This article uses the ocean chargeable-weight conversion; air freight uses 1 CBM = 167 kg and is outside this sea-freight method [1].

Next step

Build a shipment cost sheet with the nine lines above, populate FOB value and units by SKU, attach the forwarder’s chargeable weight and the broker’s duty breakdown, then allocate and reconcile. A landed cost calculator that supports overrides and self-checks the allocation total can reduce manual errors [1].