Landed cost is the total amount it takes to get a unit of imported product onto your shelf, and a landed cost calculation is not the same exercise as arriving at the customs value. Confusing the two is the most expensive routine error in importing, because it does not fail loudly. It simply overstates the dutiable base on every ocean entry, quietly, for years.
The mechanism is simple. Many importers take a CIF invoice, which already contains the freight and insurance, and calculate duty on that total. The United States appraises on a transaction value basis that excludes international freight and insurance, so the correct dutiable figure is lower. On ocean freight the difference routinely runs 5 to 15% of the invoice, and because the merchandise processing fee rides on the same value, the overpayment compounds. This guide sets out the complete build-up, with the current fee figures verified as of 26 August 2026.
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Landed Cost and Customs Value Are Different Numbers
Customs value under 19 U.S.C. 1401a is the price actually paid or payable for the merchandise when sold for exportation to the United States, plus specific statutory additions. Landed cost is everything you spend to get the goods delivered, which is a much longer list.
Section 1401a(b)(4)(A) is explicit that the price actually paid or payable is exclusive of costs, charges or expenses incurred for transportation, insurance and related services incident to the international shipment. US duties and federal excise taxes are also excluded when identified separately, as is post-importation construction, erection, assembly, maintenance or technical assistance.
This holds regardless of the Incoterm. On a CIF sale the freight and insurance are inside the invoice price, and they must be deducted to reach the customs value. The deduction has to be actual and documented, not estimated, which is why the commercial invoice should break the components out rather than showing a single delivered figure. The valuation hierarchy behind all of this is set out in our guide to customs valuation.
The Complete Build-Up
The sequence below runs from the factory gate to the shelf. Lines 1 through 4 produce the commercial CIF value. Lines 6 onward are the government and service charges, and the duty and fee lines are assessed on the customs value rather than on CIF.
| Stage | Line item | Notes |
|---|---|---|
| Commercial | Product cost, EXW or FOB | The basis of customs value |
| Commercial | Origin haulage, export clearance, origin terminal handling | Applies if buying EXW |
| Commercial | International freight | Excluded from customs value |
| Commercial | Cargo insurance | Excluded from customs value |
| Government | Customs duty | Customs value multiplied by the Column 1 rate |
| Government | Chapter 99 additional duties | Section 301, 232, 201 in CBP's reporting order |
| Government | Merchandise Processing Fee | 0.3464% with a floor and cap |
| Government | Harbor Maintenance Fee | 0.125%, ocean arrivals only |
| Government | Other agency fees | FDA, USDA APHIS AQI, EPA where applicable |
| Compliance | ISF filing, broker entry fee, customs bond | Filing charges are small; the penalty exposure is not |
| Destination | Terminal handling, chassis, congestion surcharges | Vary by port and season |
| Destination | Drayage, demurrage, detention | Two of these are avoidable with planning |
| Destination | Deconsolidation, warehousing, final mile | Where the cost per unit is usually decided |
MPF and HMF: The Current Numbers
The Merchandise Processing Fee is authorised by 19 U.S.C. 58c(a)(9) and governed by 19 CFR 24.23. It is charged ad valorem on the entered value of formal entries, with a floor and a cap that are adjusted for inflation each fiscal year.
For fiscal year 2026, running from 1 October 2025 to 30 September 2026, the rate is 0.3464% with a minimum of $33.58 and a maximum of $651.50, set by CBP Decision 25-10 at 90 FR 34665. For fiscal year 2027, beginning 1 October 2026, the rate is unchanged at 0.3464% and the minimum and maximum rise to $34.58 and $670.86 under CBP Decision 26-14. Only the caps move; the percentage does not.
A note on a figure that circulates in trade coverage: percentages in the low-to-mid thirties are sometimes reported as an MPF increase. They are the cumulative adjustment factor measured against the 1986 statutory base, not an annual rise. The actual year-on-year movement was 2.59% for fiscal 2026 and 2.84% for fiscal 2027.
The Harbor Maintenance Fee is a different animal. Authorised by 26 U.S.C. 4461 and governed by 19 CFR 24.24, it is 0.125% of the value of commercial cargo with no minimum and no maximum, and it applies to ocean arrivals only. Air, truck and rail shipments do not pay it. Exports are not subject to it either, following United States v. United States Shoe Corp., 523 U.S. 360 (1998), which held the export fee unconstitutional under the Export Clause. Both fees are reported on CBP Form 7501.
| Fee | Rate | Floor and cap | Applies to |
|---|---|---|---|
| MPF, FY2026 to 30 Sept 2026 | 0.3464% | $33.58 to $651.50 | Formal entries, all modes |
| MPF, FY2027 from 1 Oct 2026 | 0.3464% | $34.58 to $670.86 | Formal entries, all modes |
| HMF | 0.125% | No floor, no cap | Ocean arrivals only |
The Charges That Cost More Than They Look
The Importer Security Filing is a modest broker charge, typically thirty to fifty dollars. The number that matters is the penalty. A late, inaccurate or incomplete filing carries up to $5,000 per violation and up to $10,000 per shipment, which turns a clerical omission into a four-figure event.
Demurrage and detention are routinely conflated and they are not the same charge. Demurrage is charged by the terminal for cargo sitting inside the terminal past its free time. Detention is charged by the carrier for a container held outside the terminal past its free time. Both accrue per day, both are avoidable with planning, and confusing them makes disputes harder to win because the counterparty is different.
Duty deferral belongs in this conversation too. Where goods will sit in inventory before sale, admitting them to a foreign-trade zone or a bonded warehouse moves the duty payment to the point of withdrawal rather than the point of arrival. On a line carrying a high sectoral rate the financing value of that timing is a real component of landed cost, not an accounting nicety.
A Worked Example on an Ocean Entry
Take a shipment invoiced CIF at $110,000, comprising $100,000 of goods and $10,000 of freight and insurance, entering by ocean at a 3.4% Column 1 rate with a 25% Section 232 derivative duty applying.
The customs value is $100,000, not $110,000, because the freight and insurance are deducted. Duty at 3.4% is $3,400 and the Section 232 line at 25% on full customs value is $25,000. MPF at 0.3464% is $346.40, within the floor and cap. HMF at 0.125% is $125. Government charges total $28,871.40.
Run the same entry off the CIF figure and duty becomes $3,740, the Section 232 line becomes $27,500, MPF becomes $381.04 and HMF becomes $137.50, for a total of $31,758.54. The error is $2,887.14 on a single shipment, just under 10% of the government charges, and it repeats on every entry filed the same way.
The sectoral line is what makes this expensive now. Before 2025 a valuation error of this size moved a few hundred dollars. With a 25% or 50% duty layered on top, the same error moves thousands, which is why the how a tariff is calculated sequence and the valuation step underneath it deserve the same scrutiny as classification.
Building a Model That Stays Right
Separate the two values explicitly in your system. Carry customs value and commercial landed value as distinct fields rather than deriving one from the other with a percentage, because the relationship between them changes with Incoterm, route and mode.
Require component-level invoicing from suppliers. A single delivered price makes the freight deduction unsupportable, and CBP expects deductions to be actual and documented. Getting the invoice format right at onboarding is far cheaper than reconstructing it during a review, and it is the same discipline that supports a customs valuation position under audit.
Date every duty rate in the model and rebuild the sectoral lines on a schedule. The additional-duty layer changed twice between February and August 2026, and any model still carrying an IEEPA line is overstating cost while any model still assessing Section 232 on metal content is understating it. Where the exposure is significant, a trade advisory services review rebuilds the full stack against current rates rather than against whatever was correct when the spreadsheet was written.
Frequently Asked Questions
What is included in landed cost?
Product cost, origin charges, international freight, insurance, customs duty and any additional Chapter 99 duties, MPF, HMF where the arrival is by ocean, other agency fees, ISF and broker charges, the customs bond, destination terminal charges, drayage, any demurrage or detention, and warehousing through to final delivery. It is a much longer list than the customs value.
Is landed cost the same as customs value?
No. Customs value under 19 U.S.C. 1401a is the price actually paid or payable plus statutory additions, and it excludes international freight and insurance. Landed cost includes those and everything else it takes to deliver the goods. Calculating duty on landed cost rather than customs value overstates the dutiable base.
Does the US include freight in the customs value?
No. Section 1401a(b)(4)(A) excludes costs incurred for transportation, insurance and related services incident to the international shipment. This applies whether the sale is FOB or CIF. On a CIF invoice the freight and insurance must be deducted, and the deduction must be actual and documented rather than estimated.
What is the current MPF rate?
0.3464% of entered value on formal entries. For fiscal year 2026, through 30 September 2026, the minimum is $33.58 and the maximum $651.50. From 1 October 2026 the rate stays the same and the minimum and maximum rise to $34.58 and $670.86. The percentage has not changed; only the caps are adjusted for inflation.
Does the Harbor Maintenance Fee apply to air freight?
No. HMF is 0.125% of cargo value and applies only to ocean arrivals at listed ports. Air, truck and rail shipments are not subject to it. It also has no minimum or maximum, unlike MPF, so on high-value ocean shipments it can exceed the merchandise processing fee.
What is the difference between demurrage and detention?
Demurrage is charged by the terminal for cargo remaining inside the terminal beyond its free time. Detention is charged by the carrier for equipment held outside the terminal beyond its free time. They are billed by different parties on different clocks, which matters when disputing either one.
