Freight Cost per Piece Estimator (Landed Cost Allocation)
Allocate sea or air freight invoice costs accurately to individual garment pieces for margin calculation.
Freight is often the line that turns a profitable order into a loss, because it is quoted as one lump sum while margins are judged per piece. Spreading the invoice evenly over pieces and cartons gives every style in the shipment the same freight logic, so FOB prices, landed costs and buyer quotations all carry the same freight basis. Use it with the Duty and Tariff Estimator, where the freight figure feeds the CIF value that duty is charged on.
What is Freight Cost Allocation?
Freight cost allocation spreads one total freight invoice across the pieces and cartons of a shipment, producing a freight cost per piece and a freight cost per carton. It exists because freight is bought as a lump sum, by container or by airwaybill, while garment business is priced per piece: a merchandiser needs to know what each piece carries of the freight bill before confirming a price or a margin.
The allocation is deliberately simple. It divides the invoice by pieces, and optionally by cartons, with no weighting by style, size or weight. That simplicity is its strength for a single-style shipment and its limit for a mixed one, which the assumptions below state plainly.
Formula
Freight per piece = Total freight / Total pieces Freight per carton = Total freight / Total cartons (optional)
- Total freight: the full freight invoice amount for the shipment, in the currency entered. The tool labels it USD, so enter the invoice in USD or convert it first.
- Total pieces: total garment pieces in the shipment, across all cartons.
- Total cartons: optional. Leave it blank and the per-carton figure shows as not available; enter it and the tool divides the same invoice by cartons as well.
- Results: per-piece cost to three decimals, per-carton cost to two decimals.
How to Calculate
- Take the freight invoice total for the shipment, for one mode and one route. Do not mix sea and air invoices in one calculation.
- Enter the total garment pieces in the shipment, counted from the packing list, not the order quantity, if the two differ.
- Optionally enter the total carton count to get the per-carton figure as well.
- Read freight per piece and per carton. Add the per-piece figure to the FOB value, with insurance, when building landed or CIF cost.
- Compare the per-piece figure across order sizes before quoting: the same invoice on a small order produces a far higher per-piece freight, as the example shows.
Example
Take the illustrative shipment used across this batch: a freight invoice of USD 4,500 for 12,000 pieces packed in 500 cartons. Freight per piece is 4,500 / 12,000 = 0.375 USD per piece, freight per carton is 4,500 / 500 = 9.00 USD per carton, and by the dozen the freight is 0.375 × 12 = 4.50 USD per dozen. On a piece with an illustrative FOB of 6.50 USD, freight adds about 0.375 / 6.50 = 5.8 percent to the piece cost before insurance and duty.
The same invoice on a small order tells the opposite story. Spread over only 2,000 pieces, the same USD 4,500 gives 4,500 / 2,000 = 2.25 USD per piece, six times the 0.375 of the large order. That is why a freight-inclusive quotation that works at 12,000 pieces can lose money at 2,000 pieces, and why the per-piece figure must be recalculated for every order size rather than reused from the last shipment.
Assumptions
This calculation assumes one freight invoice spread evenly over all pieces, with no weighting by style, size, weight or volume. It assumes the entered total is the complete freight charge for the shipment; inland haulage, documentation fees, insurance and duty are not included unless they are already inside the entered total, so state what the total covers before comparing figures. It assumes the currency entered is USD as labelled, and that pieces and cartons are counted from the same shipment. With cartons blank, only the per-piece figure is meaningful.