What landed cost is
Landed cost is everything it took to get a product onto your shelf: the supplier's price plus every charge between the supplier's door and your warehouse. For a UAE importer that usually means sea or air freight, cargo insurance, customs duty, clearing-agent and delivery-order fees, and the truck from the port.
Those costs belong to the stock, not to the month. Record them as ordinary expenses and your cost of sales is too low, your margins too high, and your stock valued at less than you paid for it.
The container
A Dubai trading company imports one 40-foot container from China with two products, bought FOB in US dollars:
| Product | Units | Price | Value (AED) | Volume |
|---|---|---|---|---|
| LED panels | 1,000 | USD 12.00 | 44,070.00 | 12 CBM |
| Ceiling fans | 400 | USD 45.00 | 66,105.00 | 48 CBM |
| Total | 110,175.00 | 60 CBM |
Converted at the fixed dirham rate of AED 3.6725 to the US dollar.
Step 1: add up the charges
| Charge | How it's worked out | AED |
|---|---|---|
| Sea freight | USD 2,200 × 3.6725 | 8,079.50 |
| Cargo insurance | Insurer's invoice | 450.00 |
| Customs duty | 5% of CIF value (goods + freight + insurance = 118,704.50) | 5,935.23 |
| Clearing agent & delivery order | Agent's invoice | 1,850.00 |
| Trucking to warehouse | Transporter's invoice | 650.00 |
| Total charges | 16,964.73 |
The container's full landed cost is AED 127,139.73: 15.4% more than the supplier invoices on their own.
Step 2: decide how to split the charges
This is where most spreadsheets go wrong. The simplest method spreads every charge by value: fans are 60% of the value, so they take 60% of every charge. Easy, but it doesn't match how the charges actually arise:
- Freight and trucking are priced by space. The fans fill 48 of the 60 CBM, so they caused 80% of the freight, not 60%.
- Insurance and customs duty are charged on value. Duty is literally 5% of each product's CIF value, so value is the right basis.
- Clearing fees are per shipment. Splitting by value is a fair, simple choice.
Step 3: compare the results
| LED panel | Ceiling fan | |
|---|---|---|
| Selling price | AED 60.00 | AED 240.00 |
| Cost if you ignore charges | AED 44.07 (26.6% margin) | AED 165.26 (31.1% margin) |
| All charges split by value | AED 50.86 (15.2% margin) | AED 190.71 (20.5% margin) |
| Each charge split by its own driver | AED 49.03 (18.3% margin) | AED 195.28 (18.6% margin) |
Three lessons from one container:
Ignoring charges overstates margin by 8 to 13 points
Both products looked like 27–31% earners. In reality both make about 18%.
The wrong split flips which product looks better
Split by value alone, the fans appear to earn 20.5% and the panels only 15.2%. Push the "better" product and cut the "worse" one, and you'd be deciding on numbers the container never produced.
Bulky, low-value goods hide their real cost
The fans take 80% of the space but only 60% of the value. Any method that ignores volume makes them look cheaper to bring in than they are.
Step 4: book it in your accounts
When the container arrives, each product's stock is valued at its landed cost: 1,000 panels at AED 49.03 and 400 fans at AED 195.28. The freight, insurance, duty, clearing and trucking invoices are posted against the shipment, not to expense accounts, so they flow into cost of sales only as the stock is sold. The import VAT goes to your recoverable input VAT account.
Charges often arrive weeks apart: the clearing invoice before the freight bill, a demurrage charge after that. Your system should let you add a late charge to the shipment and re-spread it, with the adjustment landing on whatever stock is still on hand.
How Mizo does it
In Mizo, a container shipment carries its own charges. Attach the freight, duty and clearing bills to the shipment, and Mizo spreads them across the items on it, so each item carries its true cost. That cost feeds FIFO stock valuation, and your margin reports show what each product really earned. Foreign-currency supplier bills use real exchange rates, with the FX gain or loss worked out when you pay.
See how Mizo works for trading companies →
Figures are illustrative. Duty rates, exemptions and the customs value basis vary by product and origin (GCC-origin goods, for example, are generally duty-free), so confirm your own with your clearing agent or tax adviser.