Why the Invoice Price Is Not the Landed Price

One of the most common financial surprises for first-time importers is discovering that the cost of getting a product from a Chinese factory to a NZ warehouse is substantially more than the price negotiated with the supplier. The supplier's quoted price — typically FOB from a Chinese port — is only one component of the true landed cost. The others are real, significant, and often underestimated.

Understanding your landed cost before you place an order is not optional. It is what tells you whether a product is actually profitable at your target retail price.

The Landed Cost Formula

Landed cost is the total cost to get one unit from the factory to your NZ warehouse, ready to sell: FOB price + international freight + insurance + NZ port and terminal charges + customs broker fees + NZ Customs duty + GST = landed cost per unit. Each component has variables that can significantly affect the final number.

The FOB Price

FOB (Free on Board) is the price you pay the supplier, including the cost of goods and getting them to the named Chinese port — typically Shanghai, Ningbo, Guangzhou, or Shenzhen. What FOB does not include is everything after the goods are loaded onto the vessel. All costs from that point are the importer's responsibility.

International Freight

Ocean freight from China to NZ runs from major Chinese ports to Auckland, Tauranga, or Lyttelton, with transit typically 18 to 25 days. Ocean freight is quoted per container for FCL or per cubic metre (CBM) for LCL. LCL freight is proportionally more expensive per CBM than FCL and involves additional handling at a container freight station, adding cost and transit time.

Air freight from China to NZ takes 5 to 8 days and is typically four to eight times more expensive per kilogram than sea freight. It is appropriate for high-value, low-weight goods or time-critical shipments. For most bulk consumer goods, sea freight is the right choice on landed cost grounds.

Marine Insurance

Marine cargo insurance covers goods against loss or damage during transit. Not legally required but strongly recommended. Standard coverage typically costs 0.3% to 0.5% of the insured value (commercial invoice value plus freight plus 10% uplift). Not insuring to save the modest premium is a false economy — the cost of losing an uninsured shipment is always greater than the insurance cost.

NZ Port and Terminal Handling Charges

When your container arrives, a series of charges apply: port terminal handling charges, wharf cartage, LCL de-consolidation charges if in a shared container, and MPI biosecurity inspection fees if selected for inspection. For a standard LCL shipment at Auckland port, terminal and handling charges typically run NZD $300 to $600 before customs duties and taxes.

Customs Broker Fees

A licensed customs broker prepares and lodges your import entry with NZ Customs and manages communication during clearance. Fees for a standard commercial import entry typically run NZD $150 to $350 depending on shipment complexity. Their fee is a good investment relative to the risk of documentation errors that delay clearance.

NZ Customs Duty

Duty is charged on the customs value of your goods, broadly the FOB price. Many product categories attract 0% duty under the NZ-China FTA (NZCFTA), which has eliminated tariffs on most goods of Chinese origin with the required certificate of origin. Product categories that still attract duty include some textiles and apparel (10% to 17.5%) and some footwear and leather goods. Confirm the applicable rate for your specific tariff code before ordering.

GST

GST at 15% applies to the landed value of imported goods — customs value plus freight, insurance, and any applicable duty. If you are GST-registered, you claim it back as an input tax credit. If not, it is an irrecoverable cost. For most importing businesses, GST registration is worth the administrative burden because of the cash flow benefit from input tax credits.

Hidden and Overlooked Costs

Beyond the standard components, first-time importers commonly miss: storage and warehousing if you cannot take immediate delivery; repacking or relabelling costs if goods require preparation before sale; product compliance testing; currency conversion costs if paying suppliers in USD (exchange rate movements between order placement and payment can materially affect landed cost); and the cost of your own time managing the import process.

Building Your Landed Cost Model

Before placing any significant order, build a landed cost model that includes every component above. Apply it to your supplier's FOB quote to calculate true cost per unit, then work backwards to confirm whether your target retail price delivers the margin your business needs. Epic Sourcing helps NZ importers build realistic landed cost models as part of the sourcing process. If you want help working through the numbers for a product you are considering importing, contact our team. Getting the cost calculation right before you order is the difference between a profitable import and an expensive lesson.