Why choose EXW as an example? Because this is the term that allows the manufacturer to see and control the most costs. Under EXW, no costs are “hidden” in the supplier’s price — from inland transportation at origin, export clearance, to ocean freight, the manufacturer must organize and negotiate everything. In return, the manufacturer must take active control of the entire chain. This is precisely the boundary between cost control and passive cost acceptance.

This article updates how to calculate landed cost (cost to warehouse) in full, according to the cost structure and tax regulations of August 2026, breaking down each cost group — origin charges, freight, insurance, import duties, customs, inland transport, and hidden costs — so manufacturers can see where money goes and where to tighten control.

1. What is landed cost — and why there are TWO figures

Landed cost is the total of all expenses to bring goods from the supplier’s origin point to the manufacturer’s warehouse, ready for production. It consists of eight cost groups:

EXW gives manufacturers maximum cost control

Incoterms (International Commercial Terms — international trade terms) determine who bears which costs:

• EXW (Ex Works — ex-factory): buyer bears costs from supplier’s warehouse door → can see and control every item, but must organize the entire chain (including export clearance in foreign country).
• FOB (Free On Board — free on board): seller handles until goods board the ship; origin fees are buried in seller’s price, hard for buyer to break down.
• CIF (Cost, Insurance, Freight — goods + insurance + freight): seller handles freight and insurance to import port → convenient but many costs bundled into price, easy to inflate hidden costs.

In other words: the closer to EXW, the more clearly the manufacturer can see and negotiate each item; the closer to CIF/DDP (Delivered Duty Paid — delivered with duties paid to warehouse), the more the manufacturer loses cost control. For high-frequency importers, EXW/FOB with a strong forwarder at origin is usually better than CIF on total cost.

Two landed cost figures — for two different purposes

Import VAT (Value Added Tax — value-added tax at import stage) is credited against the manufacturer’s output VAT — it is not a true cost of goods, just cash flow tied up for about one month. Therefore, separate:

• Landed cost COGS (Cost of Goods Sold — cost of goods sold): excluding input VAT, only keeping VAT financing cost. This is the figure for calculating product cost, comparing suppliers, and setting selling price.
• Landed cost cash-out (actual cash paid): including VAT. Used for cash flow planning, payment limits, and working capital.

Including full VAT in COGS → inflates product cost, wrong selling price. Looking only at COGS and forgetting VAT in cash flow → insufficient cash at tax payment time. Both errors are common in FDI factories.

2. Eight cost groups in landed cost — updated for August 2026

Group 1 · Invoice price

Starting point, representing 60–80% of landed cost. Under EXW, this is ex-factory price — excluding any shipping costs. Two notes: (1) standardize all quotes to the same Incoterms point before comparing; (2) inter-company transactions must follow arm’s length price (market price) to avoid transfer pricing risk in customs audits.

Group 2 · Origin charges (costs in exporting country)

This group is nearly invisible under FOB/CIF but becomes clear and is borne by the buyer under EXW — this is where cost control becomes possible:

• Inland transport at origin: from supplier warehouse to port/LCL warehouse. Under EXW this belongs to buyer and is often overlooked.
• Export clearance: customs procedure at exporting country — under EXW the buyer arranges (needs foreign forwarder).
• Origin THC (Terminal Handling Charge — port handling at origin): USD 120–250/container depending on port.
• Documentation and B/L (Bill of Lading — bill of lading) issuance fee, telex/surrender fee: charges for issuing and releasing the bill of lading.

Group 3 · International freight

• Sea freight: FCL (Full Container Load — full container) fixed by container; LCL (Less than Container Load — LCL, shared container) charged by W/M (Weight/Measurement — whichever is greater: weight in tons or volume in CBM (cubic meters)), usually with minimum charge.
• Air freight: charged by chargeable weight = Max(actual weight; volume ÷ 6,000). Bulky light cargo charged by volume.
• 2026 situation: Red Sea/Suez crisis ongoing — Red Sea surcharge/war risk on Asia-Europe and Asia-Americas routes remains USD 300–1,500/container with rapid fluctuations. Intra-Asia routes (Taiwan/China/Korea/ASEAN → Vietnam) mostly unaffected by this.
• Fuel surcharge — BAF (Bunker Adjustment Factor) / LSS (Low Sulphur Surcharge): fluctuates with oil prices — always use current rates.

Group 4 · Cargo insurance

Typically 0.1–0.5% of goods value depending on terms (A/B/C). With high-value electronics, overlooking or using old rates will distort product cost. Under EXW, the manufacturer proactively buys appropriate coverage (Clause A — comprehensive insurance) rather than relying on seller’s minimum.

Group 5 · Import local charges (destination charges at Vietnam ports)

The most surprising group on forwarder invoices — the source of complaints like “invoice was 30–60% higher than quote”. Cat Lai/Cai Mep rates for August 2026:

• Destination THC (import port handling): USD 130–240/container (20’/40′) — fixed item, forwarder can commit upfront.
• D/O Fee (Delivery Order — release order): USD 30–60/container, required before taking delivery.
• CIC (Container Imbalance Charge — imbalance surcharge): USD 50–120/container — very common for imports, often forgotten in estimates.
• CFS charge (Container Freight Station — LCL warehouse): for LCL cargo, charged per CBM/ton for deconsolidation and repackaging.
• Documentation fee + container cleaning: USD 15–35/shipment + USD 10–20/container.

Group 6 · Customs duties and charges (Vietnam)

Dutiable value = goods price + all costs to bring goods to Vietnam’s first import border, i.e., goods price + origin charges + freight + insurance. On this basis:

• Import duty = Dutiable value × duty rate. Duty rate by HS code (Harmonized System code — commodity classification code) and preferences: MFN (Most Favoured Nation — default rate) or FTA preference if valid C/O (Certificate of Origin) is presented. Taiwan has no FTA with Vietnam so typically MFN rates apply.
• Import VAT = (Dutiable value + import duty) × VAT rate. From 01/7/2025 to 31/12/2026, goods normally taxed at 10% are reduced to 8% (Decree 174/2025/ND-CP), expected to return to 10% from 01/01/2027.
• Customs declaration fee: VND 500,000–1,000,000/declaration; inspection fee VND 700,000–2,000,000/time; specialized inspection varies if required.

Group 7 · Vietnam inland transport

Most overlooked item. Cat Lai → Binh Duong/Dong Nai industrial zones currently ~USD 130–180/container depending on route, weight, and timing. Add surcharges for overweight (40HQ), toll station fees, off-route fees, and waiting fees if truck waits beyond allowed time at port/factory.

Group 8 · Hidden costs (D&D + financing)

• D&D (Detention & Demurrage — container detention outside port & demurrage at port storage): for high-frequency importers, 15–25% of shipments incur charges — normal. Incorporate into landed cost by: total D&D actual last 6 months ÷ total shipments same period = average D&D/shipment (expected cost).
• Financing cost (cost of capital): = Shipment value × cost of capital × leadtime days ÷ 365, plus VAT financing cost while waiting for credit. FDI manufacturers typically use: USD financing ~5–6%/year, VND borrowing ~7–9%/year.

3. Real example August 2026 — EXW shipment from Taiwan, broken down

4. Five actions to take now to control landed cost

Glossary — Terminology reference table

Definitions of abbreviations and English terms used in this article, for reference by purchasing, customs, and accounting departments.