Key Takeaways
- Inbound freight, duties and handling become part of inventory cost and only reach the income statement when goods sell, so freight estimated at receipt can distort margins months later.
- The 2026 IEEPA tariff refunds showed that correcting landed cost depends on knowing whether each cost sits in on-hand inventory or in cost of goods sold.
- Keying charges to shipments, accruing from shipment data, allocating to SKUs with documented rules and truing up after close keep transportation actuals tied to product cost.
- Treating freight audit as the system of work and the ERP as the system of record clarifies who owns the freight-to-product-cost number.
In February 2026, the Supreme Court struck down the tariffs imposed under the International Emergency Economic Powers Act (IEEPA). Importers expecting refunds then faced a simple-sounding question about every dollar of duty they had paid. Was that cost still sitting in inventory, or had it already moved into cost of goods sold? Freight landed cost raises the same question every month, with no court order forcing an answer. Here is where freight sits inside product cost, why the number drifts after goods sell, and how to tie transportation actuals back to the SKUs that carried them.
What Freight Landed Cost Includes, and When It Becomes Real
Landed cost is the full cost of getting a product to the place where it can be sold. Under IAS 2, the international inventory standard, the cost of purchase includes:
- The purchase price of the goods
- Import duties and other taxes that cannot be recovered
- Transport, handling and other costs directly tied to acquiring the goods
In practice, inbound freight, customs brokerage and related accessorials generally belong in landed cost. Outbound freight to customers moves goods after the sale rather than bringing them to where they can be sold, so it stays out of inventory, even though some companies report it within cost of sales. The two need separate treatment.
Capitalized costs stay on the balance sheet until the goods sell, then become an expense in the same period as the related revenue. A freight charge booked into inventory in March might not reach the income statement until August, long after anyone remembers which shipment it came from.
CSCMP's 2026 State of Logistics Report puts U.S. business logistics costs at $2.4 trillion, or 7.8% of GDP. A September 2026 KPMG analysis notes that announced tariff rates reached about 17% by February 2026, up from an average effective rate of about 2.2% in 2024. The 462 U.S. supply chain leaders KPMG surveyed also named logistics and transportation costs as their top source of value leakage.
Why Freight Estimates Turn Into Margin Noise
When goods are received, the final freight cost is often still unknown, so inventory gets valued with an estimate such as a standard rate per unit or per pound. The carrier invoice follows days or weeks later and may include accessorials, fuel adjustments or rebills the estimate never anticipated.
That gap between estimate and actual has to land somewhere. If the goods have already sold, the variance can hit cost of goods sold in a later period and spread across products unrelated to the original shipment. Gross margin by SKU then becomes unreliable in both directions, which is why freight belongs on the finance agenda as much as the logistics one.
The gap can be wider than finance teams expect. In one published Trax case study, a global consumer goods company found its inbound freight estimates varied from actual invoices by as much as 40%, because final invoices arrived well after the shipments.
What the 2026 Tariff Refunds Revealed About Landed Cost
After the Supreme Court's ruling, the U.S. Court of International Trade ordered Customs and Border Protection to refund roughly $165 billion in IEEPA duties, paid by more than 330,000 importers across over 53 million entries. EY's March 2026 guidance generally favors recording a refund the same way the original duty was booked. For duties capitalized into inventory, that means reducing the cost of goods still on hand, or reducing cost of goods sold if the goods have already sold. Either way, booking it correctly means knowing where every tariff dollar ended up.
Duty was the easier half of that exercise. Reviewing 2025 tariff data, Steve Beda, Executive Vice President at Trax Technologies, noted that duty charges appeared as distinct items on invoices and, while unplanned, were easily measured. "They turned out to be the smallest part of the story," he wrote. The larger costs came from how tariffs reshaped inventory and transportation, as companies pulled purchases forward and held goods for months.
Freight inherits that harder problem. It often arrives on separate invoices after the goods, and no refund process forces anyone to trace it back to the units it moved.
4 Steps to Connect Transportation Actuals to Product Cost
Closing the gap starts with a shared record that follows each freight charge from shipment to SKU.
- Key every charge to its source. Each invoice line should carry the shipment, purchase order and receipt it relates to, so cost follows the goods.
- Accrue from shipment data. Building month-end accruals from what actually shipped keeps unbilled freight from vanishing at close.
- Allocate to SKUs with documented rules. Whether the basis is weight, cube or value, write the rule down and apply it consistently so anyone can trace a number.
- True up after close. Match late invoices and rebills to the original receipt. Then split the variance between inventory and cost of goods sold based on whether those units have sold.
Timing is the usual obstacle. Carrier invoices can arrive weeks after a shipment closes, and cross-border invoices may wait on customs documentation before they can be finalized. A post-close matching process ties those late invoices back to the original shipment records, which keeps them from distorting the period, as the finance team's view of freight accounting explains.
Who Should Own the Freight-to-Product-Cost Number?
Landed cost spans procurement, logistics, trade compliance and finance, which makes ownership easy to leave unclear. Blake Tablak, CEO of Trax Technologies, framed the challenge in a recent conversation. "If you want to know the total landed cost of an object, you're not getting that from one place," he said. He separates a system of work, where information keeps changing as it is processed, from a system of record such as the ERP, where booked numbers should never change.
That distinction gives each function a role. Freight audit and freight data management act as the system of work, catching rate errors, duplicates and late charges before they reach the ledger. The ERP holds the final record for inventory and cost of goods sold. KPMG lists integrated freight and duty audit among the capabilities that grow more valuable when trade, transportation and finance connect. It also cites one analysis showing U.S. tariff policy has changed more than 50 times since January 2025. Advanced cost allocation turns that connected data into margin clarity for finance and supply chain alike.
Closing the Loop on Freight Landed Cost
Freight landed cost will always be settled after the fact, because invoices follow goods. The companies that handle it well manage that delay as a process. In the case study above, the company built estimates from advance shipment notices and negotiated rates, then allocated freight to SKUs by weight. That cut estimate variance from 40% to 2% and gave finance estimated spend by the second day of the following month.
If your team still reconciles freight to product cost by hand at month-end, contact the Trax team to review how your freight actuals reach product cost today and where the gaps sit.