Calculating the landed cost of an olive oil import

In brief. The landed cost of an olive oil import is obtained by adding up: FOB price + ocean freight + insurance + customs duties and VAT + demurrage and port charges + inland logistics, all brought back to a per-kilo delivered-to-warehouse basis. An FOB of ~3.80 €/kg can become 4.50 to 5.20 €/kg delivered depending on the destination and incoterm. The rule: never reason on the FOB price alone — it is the full cost that determines your margin.

Many importers compare two offers on FOB price and pick the cheaper one. Mistake: the FOB price is only the starting point. The real cost — the one that eats into your margin — is the landed cost, the cost of the goods arrived at your warehouse, cleared through customs. Here is how to calculate it line by line.

What is landed cost and why it changes everything

Landed cost is the real total cost of a kilo of oil once it reaches you. It covers everything added to the negotiated price: transport, insurance, taxes, port charges, handling. Two offers at the same FOB can end up with very different landed costs depending on the incoterm, the port and the destination.

This costing method is distinct from the FCL vs LCL choice (see importing a full container) and from the incoterm choice such as DDP (see DDP on import): here we are not deciding what to choose, we are learning how to price the full cost whatever the choice.

The six lines of landed cost

1. The FOB price (goods loaded on board)

This is the price of the oil loaded at the port of departure, excluding main transport. Origin Tunisia: from ~3.80 €/kg FOB in bulk extra virgin, organic a little more. This is your base.

2. Ocean freight

Cost of port-to-port transport. Depends on the shipping mode (flexitank in container, IBC, drums), distance and market conditions. To be brought back to the kilo transported.

3. Transport insurance

Premium covering the goods at sea (damage, loss, contamination). Often 0.1 to 0.5% of the CIF value depending on the coverage. Essential on bulk food products.

4. Customs duties and VAT

Depending on the country and the trade agreement. Key point for the EU: Tunisian olive oil benefits from a reduced/zero-duty tariff quota within the quota limit, then full duty beyond it. Import VAT is recoverable if you are a taxable business, but it weighs on cash flow.

5. Demurrage and port charges

Handling, THC, storage, and above all demurrage (delay charges) if the container is not cleared in time. A missing document can make this line explode.

6. Inland logistics

Transport from the port to your warehouse, unloading, possible repackaging. Often underestimated.

Worked example (low end, illustrative)

On a flexitank of about 22,000 L, i.e. ~20,090 kg (density 0.913 kg/L), FOB Tunisia → EU port. Rounded figures, against your actual quote.

Line	Estimated cost	€/kg delivered
FOB (base)	~3.80 €/kg	3.80
Ocean freight + flexitank	flat rate / container	~0.25
Transport insurance	~0.3% of value	~0.02
Customs duty (under EU quota)	reduced/zero	~0.00
Port charges + handling	flat rate	~0.10
Inland logistics (port → warehouse)	flat rate	~0.08
Indicative landed cost		~4.25 €/kg

Outside the quota, with full duty, or to a distant destination (USA, Gulf), the landed cost can rise toward 4.80 to 5.20 €/kg. Import VAT adds to cash flow but is recoverable if you are a taxable business. These amounts are indicative and to be verified: only a quote by format and incoterm is authoritative.

The traps that distort the calculation

• Comparing different incoterms: an FOB and a CIF cannot be compared raw. Bring everything back to the delivered-to-warehouse cost.
• Forgetting demurrage: it only appears in case of delay, but it can wipe out a margin. Anticipate the full document set.
• Ignoring density: oil is often traded per liter but resold per kilo (or the reverse). At 0.913 kg/L, the conversion changes your displayed price.
• Neglecting VAT cash flow: recoverable does not mean free to disburse.

To automate this line-by-line calculation, use the export cost calculator and track the origin price on the price observatory.

From landed cost to resale price

Once the landed cost is known, your resale price must cover: the delivered cost, any packaging, storage, your margin and the distributor discount. Reasoning on FOB alone means believing you sell with 30% margin when only 12 remains. Landed cost is the only honest basis for setting a price and defending profitability.

FAQ

What is the difference between FOB price and landed cost?

The FOB price is that of the oil loaded on board at the port of departure. The landed cost adds freight, insurance, duties, VAT, port charges and inland logistics: it is the real cost of the kilo arrived at your warehouse, cleared through customs. It is the landed cost, not the FOB, that determines your margin.

What does a kilo of oil imported from Tunisia cost in total?

From ~3.80 €/kg FOB, the indicative landed cost is around 4.25 €/kg to the EU under quota, and can rise to 4.80-5.20 €/kg outside the quota or to distant destinations. Only a quote by format and incoterm gives the exact figure.

Does import VAT enter into the landed cost?

It weighs on cash flow at import but is recoverable if you are a taxable business: it is therefore not part of the final cost for a professional. It must nonetheless be advanced, which counts in your working-capital requirement. Distinguish real cost from cash-flow cost.

How do you convert a per-liter price into a per-kilo price?

Use the density of olive oil: 0.913 kg/L. A price of 3.47 €/L equals about 3.80 €/kg. This conversion is essential because purchase and resale may be expressed in different units, which distorts margin comparisons.

Should demurrage be included in the calculation?

Yes, at least as a provision. Demurrage is a delay charge that only arises in case of a customs block, but it can wipe out an entire margin. Prepare the full document set upstream to avoid it, and keep a safety provision in your calculation.

How do you compare two offers with different incoterms?

Bring each offer back to the delivered-to-warehouse cost (landed cost). A cheaper FOB may cost more than a CIF once freight and insurance are added. Never compare a raw FOB price to a CIF or DDP price: convert them first to the same delivery point.

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Want to cost your delivered price before buying? Request a quote: we quote by format and incoterm, with the detail of each line down to the delivered kilo. Also try the export cost calculator to simulate your landed cost.