How to Calculate Freight + Insurance

Freight and insurance are usually the second and third largest line items on a landed cost report after duty (and sometimes the largest if you are importing low-duty goods). Getting accurate estimates at the quoting stage prevents margin surprises. This guide explains the four major freight modes (FCL ocean, LCL ocean, air, parcel) and the marine insurance market.

Ocean freight: FCL

Full Container Load is the standard mode for high-volume shipments. You book a 20-foot or 40-foot equivalent unit (TEU or FEU). Pricing components:

• Base ocean freight (BOF): the carrier's port-to-port rate. Negotiated per route and per carrier. Major lanes (China-USWC, China-USEC, India-NWE): 1,500 to 3,500 USD per 40-foot container as of mid-2026. Smaller lanes can run 5,000+.
• BAF (Bunker Adjustment Factor): fuel surcharge. Typically 200 to 500 USD per container.
• Origin terminal handling: 100 to 250 USD per container, plus inland transit and origin local charges.
• Destination terminal handling: similar to origin.
• Documentation fee: 50 to 100 USD per BoL.
• Telex release fee: 35 to 100 USD for electronic release.
• Chassis fees (US): about 30 to 50 USD per day from container pickup until return.

Total per 40-foot container, Shanghai to Long Beach, mid-2026: about 2,800 to 4,500 USD depending on carrier and contract.

For container capacity:

• 20-foot: about 28 cubic meters usable, max 22 to 24 metric tons.
• 40-foot: about 58 cubic meters, max 27 to 28 metric tons.
• 40-foot HC (high cube): 67 cubic meters.

Pack density matters: dense cargo fills weight; bulky cargo fills volume. Optimize for the binding constraint.

Ocean freight: LCL

Less than Container Load. Your shipment shares a container with other shippers. Pricing is by cubic meter (CBM) or "weight or measure" (W/M), with a ton-equivalent at 1 cubic meter or 1,000 kg, whichever is greater (so heavy cargo charges by weight, light cargo by volume).

LCL rates:

• Base: 50 to 150 USD per CBM/W/M for major lanes. Minimum 1 CBM (you pay for 1 CBM even if your shipment is smaller).
• Origin and destination local charges: 50 to 150 USD per CBM.
• Documentation: 50 to 100 USD per BoL.

For shipments under about 13 cubic meters, LCL is usually cheaper than FCL. For shipments above 18 cubic meters, full FCL is cheaper.

Air freight

Pricing is by chargeable weight, the higher of actual weight or dimensional weight.

Dimensional weight:

• Standard air: volume (cubic meters) / 0.005 = volumetric weight in kg. Equivalently, cm3 / 5000.
• Express air (DHL, FedEx, UPS): cm3 / 5000 or 6000 depending on carrier.

For example, a package 60x40x30 cm has volume 72,000 cm3. Dimensional weight at 5000 = 14.4 kg. If actual weight is 8 kg, chargeable weight is 14.4 kg.

Rates by chargeable weight:

• Express courier (DHL, FedEx, UPS): 8 to 25 USD per kg on major lanes, with brackets (under 100 kg vs 100+ kg vs 1,000+ kg).
• Air cargo through forwarder: 4 to 12 USD per kg, with higher minimums and longer lead time.

Major surcharges:

• Fuel surcharge: typically 15 to 30 percent of base rate.
• Security surcharge: 0.20 to 0.50 USD per kg.
• Customs clearance: included in many forwarder rates; separate from express carriers.

Total typical: 8 to 12 USD per chargeable kg for medium-sized shipments via forwarder; 18 to 30 USD per chargeable kg via express courier.

Parcel and last-mile

For B2C and small B2B:

• USPS, FedEx, UPS, DHL parcel services: per-package rates by weight bracket and zone.
• International standard: 30 to 90 USD per package for 1-3 kg from Asia to USA.
• International economy: 15 to 40 USD per package, longer transit.

Parcel last-mile in the US: 5 to 15 USD per package.

Marine insurance

Marine cargo insurance covers loss or damage to goods in transit. Coverage levels:

• Institute Cargo Clauses A (All Risks): broadest. Covers loss or damage from any external cause except specifically excluded perils.
• Institute Cargo Clauses B: named perils only (fire, explosion, sinking, overturning, etc.).
• Institute Cargo Clauses C: most restricted; major casualties only.

Premium pricing:

• General cargo, low-risk route, ICC A: 0.10 to 0.30 percent of CIF value.
• General cargo, medium-risk route: 0.30 to 0.50 percent.
• High-risk commodities (electronics, jewelry, pharma): 0.50 to 1.5 percent.
• War risk, strike risk: separate riders, 0.05 to 0.20 percent extra.

Insurance is calculated on CIF value plus 10 percent typically, to cover the importer's expected profit margin.

For a 100,000 USD CIF shipment of general consumer electronics: 100,000 x 1.10 = 110,000 insured value. ICC A at 0.30 percent premium = 330 USD.

Insurance and Incoterms

Under CIF and CIP terms, the seller buys minimum cargo insurance for the buyer. For CIF 2020: ICC C minimum. For CIP 2020: ICC A minimum. Many buyers add their own supplementary cover (warehouse-to-warehouse) on top of the seller's policy.

Under FOB, CFR, FCA, CPT, DAP, DDP: the buyer is responsible for insuring the goods in transit if they want coverage. Many buyers carry blanket open marine policies that auto-cover all their shipments.

How freight and insurance enter the duty calculation

For US imports, the dutiable value is FOB-equivalent. Ocean freight and insurance are typically not part of the dutiable base. They are added to compute landed cost but do not generate duty.

For EU and UK imports, the dutiable value is CIF. Ocean freight and insurance are included in the duty calculation base, increasing the duty bill.

Example: a 100,000 USD product, 4,000 freight, 350 insurance:

The EU pays 217 USD more duty because freight and insurance are in the base.

Strategies to reduce freight cost

• Consolidate shipments: ship larger quantities less frequently.
• Choose port-to-port routing carefully: secondary ports often have higher per-container cost.
• Negotiate annual contract rates with carriers for predictable volume.
• Use LCL when below ~13 CBM: FCL is wasted on partial loads.
• Manage chassis and demurrage by picking up containers promptly.
• Avoid premium services (refrigerated, hazmat) when not required.

How the calculator handles freight and insurance

The LandedFees calculator accepts freight and insurance inputs in two ways:

1. Manual entry: type in the freight quote and insurance premium.
2. Lane estimate: enter origin port, destination port, container type, weight, volume. The engine estimates current market rates for the lane.

The output shows freight and insurance separately, and applies the correct dutiable value rule for the destination country (FOB-based or CIF-based).

Related guides

• Incoterms 2020 vs Landed Cost: A Clear Guide
• FOB vs CIF vs DAP: Which Costs You More?
• Container Tracking: What Each Stage Means
• Reading Your Landed Cost Report
• Commercial Invoice vs Packing List vs BoL
• What Is a Customs Broker and When Do You Need One

Estimate freight and insurance on your shipment in the calculator.