Landed Cost•

Total landed cost

Q: Does Zonos offer shipping rates or logistical services?

No, Zonos is not a shipping service or reseller of shipping rates; however, Zonos closely partners with highly capable international shipping providers to produce a landed cost inclusive of their brokerage and other clearance fees.

Learn what makes up a total landed cost.

A total landed cost is the final price paid for an international order or shipment and includes the sum of the products and the calculation of duties, taxes, and other export or import fees.

Total landed cost graphic

Taxes and duties alone do not constitute the total for a landed cost calculation. Other fees could be applied to the import cost from shipping carriers, brokers, customs, or other government agencies.

This guide will break down the different types of import taxes, duties, and clearance fees.

Landed cost breakdown

In this example, the following amounts are needed to calculate a landed cost shipment to the UK with a generic carrier.

Product total = 180 USD
Shipping total = 30 USD
Duty rate = 4.5%
VAT = 20%
UPS advancement fee to UK customs = 11 GBP or 2.5%, whichever is greater
UPS Duty and Tax Forwarding surcharge = 15 USD
1 USD = 0.76 GBP British pound sterling

Example landed cost breakdown

Line item↕	US dollar↕	British pounds↕
Product total	180 USD	136.80 GBP
Shipping total	30 USD	22.80 GBP
Subtotal	210 USD	159.6 GBP
4.5% duty on product	8.10 USD	6.16 GBP
4.5% duty on shipping	1.35 USD	1.03 GBP
20% VAT on product	36 USD	27.36 GBP
20% VAT on shipping	6 USD	4.56 GBP
20% VAT on duty charge	1.89 USD	1.44 GBP
11 GBP UPS advancement fee	14.47 USD	11 GBP
20% VAT on UPS advancement fee	2.89 USD	2.20 GBP
15 USD UPS Duty and Tax forwarding surcharge	15 USD	11.40 GBP
Total landed cost	295.70 USD	224.75 GBP

Taxes

Import taxes are not necessarily a one-to-one match with domestic taxes. Import taxes vary by country, region, HS code, and de minimis value.

Country taxes

Every country has a unique country-level tax rate. Some countries have a general consumption tax, typically referred to as VAT (Value Added Tax) but also as GST (Goods and Services Tax).

Australia and Canada both have GST; Canada also has Harmonized sales tax (HST), provincial sales tax (PST), or Quebec's sales tax (QST), depending on the province. Even VAT and GST can be calculated differently, depending on the destination.

In the EU, VAT is calculated on the entire order total, including VAT on shipping costs and duty costs. Some destinations (e.g., Hong Kong) do not have taxes applied to their imports.

Country import taxes examples

Country↕	Tax rate (% percentage)↕	Type of tax↕
Canada	5%	GST
United Kingdom	20%	VAT
India	28% (though often reduced)	IGST
Australia	10%	GST

Regional taxes

Tax calculations will include any region-level import tax. The tax rate may vary depending on the final destination within the country. For example, Canada has differing tax rates (PST, HST) depending on the province, and Brazil has different tax rates depending on the state.

Import taxes do not always apply local taxes the same way as a domestic tax in the country. De minimis and simplified tax regime considerations are taken into account in the import tax calculation.

Tax de minimis

When the good's value in a single import or shipment is below the de minimis tax amount, the item will clear without any tax collection or other import charges.

To help demonstrate the effect of the tax de minimis on a 20 USD t-shirt, see the example below of how some countries will apply duty to the shirt, and others will not apply duty to the same shirt based on the de minimis values.

Tax de minimis examples

Destination↕	Tax rates↕	20 USD FX rounded↕	Tax de minimis↕	Tax due↕
United Kingdom	20% VAT	17 GBP	0 GBP	Taxable
France	20% VAT	19 EUR	0 EUR	Taxable
Canada	5% GST + PST	27 CAD	20 CAD	Taxable
Australia	10% GST	29 AUD	1,000 AUD	Nontaxable
Denmark	25%	133 DKK	0 DKK	Taxable

Duty

Import duty can vary by the destination country, the country of origin, the item HS code, possible de minimis thresholds, and other laws that can affect the duty rate of an import. It's not always as straightforward as a single harmonized code tariff.

Duty de minimis

When the value of goods in a single import or shipment is below the de minimis duty amount, the item will clear without any duty collection; however, the tax may still be collected if the tax threshold is lower than the duty threshold. The value of an item can exceed the tax threshold and not exceed the duty threshold. The opposite is not true because countries don't set a lower threshold for duty and a higher threshold for tax.

To help demonstrate the effect of the duty de minimis on a 20 USD t-shirt, see how some countries will apply duty to the shirt and others will not apply duty to the same shirt based on the de minimis examples below.

Duty de minimis examples

Destination↕	MFN duty rates↕	20 USD↕	Duty de minimis↕	Duty due↕
United Kingdom	20% Duty	17 GBP	135 GBP	Duty free
France	20% Duty	19 EUR	150 EUR	Duty free
Canada	5% Duty	27 CAD	20 CAD	Duty applied
Australia	10% GST	29 AUD	1,000 AUD	Duty free
Denmark	25%	133 DKK	1150 DKK	Duty free

Import fees

Import fees vary and can be applied by brokers, government agencies, customs, and carriers. They can change based on many factors like the type of good or even the shipping service level used on the import. Learn more about different import fee types below.

Collect on Delivery (COD) fee

If duties and taxes are not prepaid, the carrier must collect these from the end consumer when they deliver the shipment. The carrier typically charges a fee for this service, called a COD fee.

This fee is common—UPS, FedEx, DHL, and delivery entities for postal couriers all charge this fee. For example, USPS delivery partners, such as Canada Post or Royal Mail, charge COD fees on all First Class and Priority United States (U.S.) mail that incurs duties and taxes.

If you request estimated duties and taxes from Zonos' API, COD fees are included. However, these are only estimates. If you request a guaranteed landed cost from Zonos' API, COD fees are typically not included, as they will not be charged (there will be nothing for the carrier to collect upon delivery). Instead, all duties and taxes will be prepaid.

Disbursement fee (also called an advancement fee)

Requiring the consumer to pay extra fees when their shipment is delivered often leads to upset customers. To avoid this, some shippers either subsidize these costs or collect them upfront (such as in the checkout alongside shipping costs). The end consumer gets their package delivered without being asked to pay anything extra first.

This change in process requires the carrier to front the money for duties and taxes to pay the local customs agency during transit. They usually charge a disbursement fee for this service. The fee is usually a percentage of the amount they fronted or a flat rate (in the destination currency), whichever is greater. These fees can frustrate shoppers because they are not well-disclosed by carriers or online retailers.

Tomato `(to-may-toe)` or tomato `(to-mah-toe)`?

Each shipping carrier uses different terminology to define their disbursement fee. To help you decode these fees, below you will find a cheat sheet for shippers and the jargon they use for a disbursement fee. This information can be helpful when asking for the proper international fee waivers in a negotiation with a carrier like UPS, FedEx, or DHL.

Disbursement fee terminology by carrier

Carrier↕	Term for fee↕	Service level↕
UPS	Disbursement fee, sometimes called a "Bond fee"	All services
FedEx	Disbursement fee, sometimes called an "Advancement fee"	All services
DHL	Duties and Taxes Paid (DTP)	DHL Express

The impact of disbursement fees on your international customers' imports can be very high. It can sometimes be higher than the taxes, duty, or both combined. Also, to compound the issue, these charges are subject to VAT. In the UK, FedEx will charge 12 GBP plus VAT on the fee, so it can be very cost-prohibitive if you do not waive these fees. Below, you will find some examples.

Disbursement fee examples

Carrier↕	Destination↕	Minimum amount or percentage↕
FedEx	United Kingdom	2.5% of the advance or 12 GBP (whichever is greater)
UPS	France	2.5% of the advance or 14 EUR (whichever is greater)
DHL DTP Fee	Japan	2% of the advance or 1,000 YEN (whichever is greater)

In most cases, international mail and parcel providers, such as DHL eCommerce, RR Donnelley, APC Logistics, and Landmark Global, do not charge an advancement/disbursement fee.

Duty and Tax Forwarding Surcharge

As explained in the disbursement fee section, the carrier still has to front money to the local customs authority when duties and taxes have been prepaid. Most carriers collect their fee for this service through the disbursement fee. However, when this money is fronted, the carrier also has to handle billing the duties and taxes back to the shipper. One carrier (UPS) charges for this service separately, while the other carriers consider it to be included in their advancement fee.

Forwarding surcharges by carrier

Carrier↕	Fee description↕	Fee amount↕
UPS	Duty and Tax Forwarding Surcharge (DDP)	15 USD
DHL	There is no additional fee to bill duty and tax back to the shipper	0 USD
FedEx	There is no additional fee to bill duty and tax back to the shipper	0 USD

Brokerage fee

UPS and FedEx both have brokerage fees on ground shipments into Canada. UPS Standard to Canada charges a brokerage fee called an “Entry Preparation Fee,” and FedEx charges a “Clearance Entry Fee.”

Brokerage fee examples

Carrier service↕	Shipment value (CAD)↕	Brokerage fee↕
UPS Standard to Canada	60.01 CAD - 100 CAD	19.95 CAD
FedEx Ground to Canada	60.01 CAD - 100 CAD	19.30 CAD

UPS and FedEx do not charge brokerage fees on international air shipments into Canada, but they will still charge disbursement fees (see "Disbursement fee" above).

Country-specific fees

The importing country may have fees assessed on certain shipments. These fees can be assessed for a wide variety of reasons, but usually represent services rendered by various government departments for things such as clearance, approval, inspection, storage, quarantine, processing, etc.

Country-specific fee examples

Country-specific fees↕	Cost↕
Australia Import Declaration Charge	45 AUD or 66 AUD
Australia Import Processing Charge	Varies, usually 50 AUD

Additional tariff line item fee

A broker usually spends more time clearing a shipment with a long list of items compared to a shipment with a single item. To account for this, many carriers (who use brokers to clear goods) will add fees when more than a certain amount of items are in a shipment. This is usually called an additional tariff line item fee.

Zonos includes additional tariff line item fees in our calculations when applicable.

Additional tariff line item fee examples

Carrier↕	Destination Country↕	Cost↕
UPS	Japan	400 JPY per additional tariff line exceeding five lines
FedEx	Norway	55 NOK per additional line item beyond five entries

Currency conversion fees

Most carriers have a foreign exchange (FX) fee when converting from the destination currency back to the billing currency. These FX fees are usually mentioned in the carrier's terms and conditions, not listed as a separate line item. The fee varies from carrier to carrier, and from country to country.

Zonos has chosen to take a simplified approach to foreign exchange costs. We calculate a transparent 4% FX fee that is built to absorb the carrier's fees and account for FX risks that happen when currencies get exchanged multiple times on a transaction, e.g., Converted at import by the broker and then again by the carrier for billing.

Zonos also guarantees our calculations for 90 days, given that the journey from order placement to order delivery can take time, during which FX can change. The 90-day window allows our customers to present a quote to their shoppers with cost certainty and have 90 days to fulfill the order before the order needs to be re-quoted.

Other fees

Carriers or customs may apply other fees to an international shipment. For example, the clearance of certain goods into the United States may involve government bureaus like the U.S. Food and Drug Administration (FDA). This additional handling could result in additional charges from those agencies.

Other fee examples

Fee↕	Carrier↕	Movement↕	Cost↕
Agriculture Processing Fee	UPS	US -> Canada	12 USD
Other Government Department (OGD) Fee	UPS	US -> Canada	12.50 USD
Participating Government Department and Agency (PGA) Processing Fee	UPS	US -> Canada	16.00 CAD
Other Government Agency Fee	FedEx	US -> Canada	16.50 CAD

If you are aware of a fee that could be charged on your import, please notify us to ensure the correct landed cost calculation.

Duty and tax calculators

If you are looking for a landed cost calculator, here are some questions to ask a potential solutions provider.

Do you require a harmonized code or country of origin to calculate duty and tax?
How do you calculate duties if an HS code is only 6 digits or less?
Do you calculate carrier fees by service level, not just duty and tax?
Do you guarantee your duty and tax calculation?
Can I receive the full details behind the duty and tax calculation, including taxes, tariffs, and fees per item?

Frequently asked questions

Does Landed Cost support different ship-from countries?

Yes, Landed Cost will support exports from the United States, Canada, Europe, Australia, and more. The Landed Cost API, Hello, and Quoter all support these varying regions. Checkout, which also includes payment solutions, is not supported in every region. If you are using a plugin on Shopify, BigCommerce, or Magento, read more on each platform's documentation page to determine supported ship-from countries.

Does Zonos offer shipping rates or logistical services?

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