Landed Cost of Machined Parts from Turkey: Cost Model

The landed cost of a machined part from Turkey is everything you pay to have the part at your receiving dock, not only the quoted price: unit price, packaging, transport, insurance, customs clearance and any duty. A full comparison adds the cost of stock in transit, currency movement and quality failures. Within the EU–Türkiye customs union the duty line for industrial goods is zero when an A.TR movement certificate accompanies the shipment, so what is left to model is mainly freight, brokerage, cash tied up in stock and the cost of poor quality.

What does landed cost include?

Landed cost adds every cost between the supplier's quote and your dock to the unit price. Total cost of ownership goes one step further: it adds what the route does to your balance sheet and what a nonconforming lot costs you after it arrives. This article keeps the two apart. A forwarder and a customs broker can quote the first group. You have to estimate the second.

Fix four things before comparing any two quotes: the delivery place, the Incoterm, the invoice currency and the quantity per shipment. Each of them moves a cost from the supplier's line to yours, or back.

How do you calculate landed cost per part?

Divide every shipment-level cost by the number of accepted parts in that shipment, then add the lines. Dividing by accepted parts, not shipped parts, puts scrap and rejected parts into the price per part. Table 1 is an empty template: formulas and data sources, no prices. Fill the last column once per quote.

Table 1. Landed cost and total cost of ownership per accepted part, blank template

Source: structure by Ertaş Engineering, based on Incoterms 2020 (ICC), Zoll customs value and import VAT pages and § 11, 12, 15 UStG. Formulas only, no prices. Lines 1 to 9 give landed cost; lines 10 to 13 extend it to total cost of ownership.

Which costs does the Incoterm put in the supplier's price?

The Incoterm decides which of lines 4 to 8 are already inside line 1. Table 2 shows what FCA, DAP and DDP assign.

Table 2. Who bears which cost under FCA, DAP and DDP (Incoterms 2020)

Source: ICC Academy, articles on FCA/FOB, DAP/DDP, C rules vs D rules, DDP/EXW and tariffs (Incoterms 2020).

Two points are easy to miss. First, insurance: ICC states that only CIF and CIP oblige the seller to insure for the buyer, so a DAP or DDP price does not contain cargo insurance for you. Second, DDP: ICC notes that the seller is ultimately responsible for import clearance and that this can be hard for a foreign seller. The ICC pages cited speak of duties and tariffs, not of VAT, so agree in writing who is declarant and who carries import VAT. Incoterms 2020 for Turkey–EU shipments compares the three rules in more detail.

What do customs duty and import VAT add?

Customs duty is zero for machined parts that are industrial goods in free circulation and travel with an A.TR. The Commission states "zero customs duties and zero quotas" for goods covered by the EU–Türkiye customs union, which covers industrial products. The goods must be accompanied by an A.TR movement certificate as proof of customs status. Raw agricultural products and coal and steel products under the ECSC Treaty are outside it. Check the tariff code of the part and of any steel you supply to the workshop in TARIC, the Commission's integrated tariff database.

Import VAT is not a cost for a business with input tax deduction. The German rate is 19% of the tax base (§ 12 Abs. 1 UStG). The base is the customs value (§ 11 Abs. 1), plus duties, plus transport costs up to the first destination in the EU (§ 11 Abs. 3 Nr. 3). The customs value itself includes transport and insurance costs that are not already in the price. Zoll counts transport up to the place of entry into the Union, so the freight from the border to your plant enters only the VAT base. A business can deduct the import VAT as input tax (§ 15 Abs. 1 Satz 1 Nr. 2 UStG), and Zoll names the import duty notice (Einfuhrabgabenbescheid) as proof.

What stays is the financing cost: you pay the VAT at import and recover it later, which is line 10 of Table 1. Other EU member states set their own rates and procedures, so redo this line for each country of destination. Importing machined parts from Turkey into Germany walks through the German clearance in full.

How much do stock in transit and safety stock cost?

Goods on the road are inventory you have paid for or committed to. The cost per part is unit value × annual carrying rate × days ÷ 365, and the days are the transit time plus the safety days you hold against delivery variation.

Hypothetical example, not a quote: a part worth EUR 50 and an annual carrying rate of 10%. Seven days in transit cost 50 × 0.10 × 7 ÷ 365 = EUR 0.10 per part, or 0.19% of its value. Sixty days cost EUR 0.82, or 1.64%. The transit days of a road route from Bursa, typically 5–10 days to central Europe, are the first term in the formula. Safety stock and the batch size you order drive the cost as well, so model those with your own planning data. The components of delivery time are covered in lead time from Turkey to Europe.

How do currency and quality costs enter the model?

Currency: if the quote is in euros, the supplier carries the exchange-rate movement and prices a buffer into it. If the quote is in Turkish lira, you carry it. Either way, name the reference in the contract. The ECB publishes a euro reference rate for the Turkish lira with a daily update, which gives both sides a neutral rate to point at. In Table 1 this is line 12: an allowance in percent of the unit price, or the cost of a forward contract, set by your treasury and not by this article.

Quality: put the price of a bad lot on the same basis as freight. Count incoming inspection, sorting, rework, scrap, return freight and the hours of an 8D report, then divide by accepted parts. Use your own inspection records or the supplier's history, and ask for the documents that make the lot checkable on arrival, such as an EN 10204 3.1 certificate and a measurement report. Quality documents for machined parts explains which ones to request.

Which costs are easy to miss?

• CBAM: the Commission states that CBAM applies in its definitive regime from 1 January 2026 and lists iron and steel and aluminium among the sectors. Whether a machined part is in scope depends on its tariff code. See CBAM and steel or aluminium parts from Türkiye.
• Trade defence: TARIC lists anti-dumping, countervailing and safeguard duties per code, and it does not list national taxes such as VAT.
• Brokerage: Zoll states that a customs declaration is not restricted to one person and that declarants can generally be represented. If a broker files it, the broker's fee is line 7.
• One-off costs: fixtures and first article inspection are paid once but belong in the first orders' price per part.
• Packaging: packaging that protects machined surfaces in transit is a cost on line 3.

How do you compare a Turkish quote with another supplier's?

Run every quote through Table 1 with the same Incoterm, delivery place, currency and quantity, and compare the result per accepted part at your dock. A cheaper unit price with a worse Incoterm can lose against a dearer price that already includes carriage. For a supplier outside the customs union, line 8 is not zero by default: look up the duty for the tariff code and country of origin in TARIC. Every input comes from your quotes, your forwarder, your broker and your own planning data.

Frequently asked questions

What is landed cost?

The total cost of a part at your receiving dock: unit price plus packaging, transport, insurance, customs clearance and any duty. Total cost of ownership adds stock financing, currency effects and the cost of nonconformances.

Do machined parts from Turkey attract customs duty?

Not if they are industrial goods in free circulation and an A.TR movement certificate accompanies them. The European Commission states zero customs duties and zero quotas for goods covered by the EU–Türkiye customs union. Coal and steel products as covered by the ECSC Treaty and raw agricultural products are outside it.

Is import VAT part of landed cost?

For a business with full input tax deduction, no. German import VAT is 19% of the tax base (§ 12 Abs. 1 UStG) and deductible under § 15 Abs. 1 Satz 1 Nr. 2 UStG. It remains a financing cost for the days between payment at import and recovery through the VAT return.

Does the supplier's price include transport insurance?

Not by default. ICC states that none of the D rules (DAP, DPU, DDP) obliges the seller to arrange insurance for the buyer, and that only CIF and CIP do. Under FCA the buyer carries the risk from the handover in Türkiye, so the buyer decides on cover.

Is DDP the simplest way to get one all-in price?

DDP puts export and import clearance, duties and main carriage on the seller. ICC notes that import clearance can be difficult for a foreign seller, so check who is declarant and who bears import VAT in writing before ordering.

Sources

1. ICC Academy: DAP and DDP, Incoterms 2020 explained
2. ICC Academy: FCA and FOB, Incoterms 2020 explained
3. ICC Academy: Incoterms 2020 C rules vs D rules, risk transfer and insurance
4. ICC Academy: Including tariffs in your Incoterms training sessions
5. ICC Academy: DDP and EXW, Incoterms 2020 explained
6. European Commission, Access2Markets: EU–Türkiye customs union
7. Zoll: Beförderungs- und Versicherungskosten sowie Lade- und Behandlungskosten (customs value)
8. Zoll: Ort des Verbringens (transport costs up to the place of entry)
9. Zoll: Bemessungsgrundlage der Einfuhrumsatzsteuer
10. Zoll: Vorsteuerabzug bei der Einfuhrumsatzsteuer
11. Zoll: Zollanmeldung (ATLAS, Vertretung)
12. § 11 UStG, Bemessungsgrundlage für die Einfuhr (Gesetze im Internet)
13. § 12 UStG, Steuersätze (Gesetze im Internet)
14. § 15 UStG, Vorsteuerabzug (Gesetze im Internet)
15. European Commission, DG TAXUD: Carbon Border Adjustment Mechanism
16. European Commission, DG TAXUD: EU Customs Tariff (TARIC)
17. European Central Bank: euro reference exchange rate, Turkish lira (TRY)

Questions on a drawing? sales@ertas.engineering

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