Calculations in

Logistics

Cost Breakdown of a Mens Woven Cotton Shirt Sold in the US

Market ($)
Fabric
3.00
CMT (cut-make-trim)
2.00
Quota category 340
1.80
FOB price (for completed garment)
6.80
Duty (19.8%)
1.34
Freight
0.30
Clearance and inland transport
0.14
LDP (landed-duty-paid)
8.58
Private label importer price mark-up
3.68
Wholesale price
12.26
Retail price mark-up
18.39
Retail price
30.65
Source: David Birnbaum. 2005.

Sample Cost Plus calculations

Dom Sale
$7.50
0.70
8.20

Factory Price
Dom Freight
Sub total
Export Doc
Sub total
Ocean Fr & Ins
Sub total
Import Duty@
12% of landed cost
Sub total
Wholesaler markup
@ 15%
Sub total
Importer/dist markup
Sub total
Retail markup
@50%
Final Consumer price

Export Sale
$ 7.50
0.70
8.20
0.50
8.70
1.20
9.90

8.20
8.20

8.20
1.23
9.43

1.19
11.09

11.09
2.44
13.53

9.43
4.72
$14.15

$20.30

Method of quoting freight rates

Case: Assuming that an ocean carrier or a freight consolidator
offers an exporter $65 W/M (weight or measurement) for the
shipment of 665 cartons of product DX. The specified weight
is per 1,000 kg and measure is per cubic meter (m). The
gross weight of each carton is 10.5 kg and the dimensions are
0.45 x 0.30 x 0.30 m (LxWxH) which is 0.04 m per carton.
The consignment has a weight of 6,982.5 kg (i.e., 10.5 kg x
665) and a measure of 26.30 m (i.e., 0.04m x 665)
The freight cost by weight is: $65 x (6,982.5/1,000) = $ 453.86
The freight cost by measurement is: $65 x 26.30 = $ 1,729.00
The volume of product DX is large in relation to its weight; the
freight cost by volume gives the carrier or the consolidator a
higher revenue and thus the exporter pays $1,729,00

Calculating airfreight
The basis of calculation of airfreight charges is normally
weight per kilo, the weight being rounded off to the
nearest higher 0.5 kg. When the ratio between weight
and measurement exceeds 6, however (in the UK, it is
5), the basis for calculating cost will be on volumetric
weight.
Example:
A 9.8 kg package volume 40 dm3 = charged at 10.0 kg
A 9.8 kg package volume 75 dm3 = charged at 75/6 =
12.5 kg
Chargeable Weight for a shipment is the greater of the
actual weight and the volumetric weight. It is proper
and customary for the figure to be rounded up to the
next 0.5 kg.