EXPLAIN THE CONCEPT OF TOTAL LANDED COST AS IT RELATES TO
TRANSPORTATION. HOW DOES IT INFLUENCE MARKET BOUNDARIES?
Solution
Total landed cost: all the cost elements required to land a product in a destination geography
from different origin geographies, taking into account different currency exchange rates.
Customs tariffs and VAT taxes, carrier rates, inland transportation at origin and destination,
agency fees, logistics service provider fees, and the cost of funds are all included. Capturing and
actively reporting on these costs requires not only full costing of the procurement but all
associated logistics and regulatory costs based on both country of origin and final
destination.Most executives understand the need to both buy (procure) and sell (distribute) in
world markets. The rapid growth in the level of offshoring and outsourcing by North American
manufacturers, retailers, and distributors has been reported frequently in various media.
According to the U.S. Department of Transportation, some 46.3 million TEUs (20-foot
equivalent units) passed through U.S, ports in 2006, more than double that of a decade earlier.
The number of containers entering the U.S. alone in April 2007 approached 1.4 million, which
means that over 35,000 sea containers arrived each day at the nation