Profitability of sorting used clothing: how to measure profit from an unsorted container

A low price per kilogram of unsorted used clothing does not determine whether a container will be profitable. For a sorting plant owner, three figures matter more: the full cost of the lot, the revenue actually realised from sales, and the point at which the result falls to zero. Sales time must also be included, because a container can look profitable on paper while tying up warehouse space and capital for several months.

The profitability of sorting used clothing should therefore be calculated across the entire supply cycle: from purchase and transport, through sorting and repacking, to the actual sale of individual categories and the management of the remaining fractions.

Before placing an order, at least three questions should be answered:

• what minimum yield and average selling price are sufficient to cover all costs
• what result does the conservative scenario produce, rather than only the base case
• what will be the largest cash gap between paying for the goods and receiving payment from customers.

There is no reliable universal yield percentage that can be entered into every calculation for unsorted clothing. All sample shares, prices and costs in this report are model values. Before making a decision, replace them with data from your own sorting operation and the terms of the specific offer.

The scale of the used-clothing trade does not determine profitability

WITS/UN Comtrade data for HS 630900 show that used-clothing trade involves large volumes, but they say nothing about the quality of a specific unsorted lot, the structure of its yield or the financial result of a sorting plant. Trade values in WITS are reported in thousands of USD.

For a sorting plant owner, the conclusion is limited: the market is large and Poland participates in significant import and export flows. These figures must not, however, be used as a forecast of yield, selling price or margin for an individual container. Profitability depends on measurements from the specific lot and a full cost calculation.

Which KPIs should a sorting plant actually measure?

The share of items considered “saleable” is not enough on its own. A container may have a high yield but an unfavourable category mix, low realised prices or slow stock turnover.

Yield is not the same as sales

If 6,000 kg of clothing classified for resale is separated from 10,000 kg of input material after sorting, the clothing yield is 60%.

That does not mean that 6,000 kg has been sold. Part of it may remain in stock.

Clothing yield (%)

kg of clothing classified for resale / kg of input material × 100%

Sell-through of clothing yield (%)

kg of clothing sold / kg of clothing yield × 100%

The clothing yield should also be separated from other revenue-generating fractions. If 60% of the input is clothing and another 20% can be sold as material for a different use, this does not mean that 80% of the container consists of clothing suitable for reuse as clothing.

The average price must be weighted by mass

A simple average of category prices can significantly distort the result. A small quantity of an expensive category cannot carry the same weight in the calculation as several tonnes of lower-priced goods.

Weighted average selling price of clothing

total net revenue from clothing sold / total weight of clothing sold

Revenue from residual material fractions should be shown separately.

Full container calculation: what needs to be included?

The most important rule is simple: every kilogram and every cost appears in the calculation only once.

Revenue from mutually exclusive fractions

For each commercial category, record its weight and actual selling price. Other fractions for which a buyer genuinely pays should be recorded separately.

Total revenue = sum of revenue from clothing categories sold + revenue from residual fractions sold

Costs from purchase to final closure of the lot

The calculation should include at least:

Shared costs do not have to be allocated according to one supposedly “industry-correct” method. What matters is adopting one transparent rule and applying it consistently to the containers being compared.

Keep three perspectives separate: the forecast of the container’s full result, the current status of sales and inventory, and cash flow. Subtracting the full purchase cost from partial sales revenue shows how much of the expenditure has been recovered, but without completing sales and valuing the remaining inventory it is not yet the final profit on the lot.

Claims without double counting

If a return or discount has already reduced net revenue, the same amount should not be recorded again as a cost. Additional labour, transport or repacking associated with the claim may, however, be a separate cost.

The same applies to residual fractions: if the buyer pays the sorting plant, this creates revenue and potentially handling costs. If the sorting plant pays for collection, this creates a cost. The same charge should not be shown both as “negative revenue” and as a cost.

Profit, margin, markup and return are not the same thing

Assume:

• P — revenue from the lot
• K — full cost of the lot
• Z — profit or loss.

If someone divides profit by cost and calls the result a “margin”, they are mixing two different indicators.

Markup is also meaningless unless it is clear which cost is used as the base. A markup calculated only against the purchase price of unsorted clothing is not comparable with a return calculated against all delivery costs.

The return on a single container is not automatically an annual return on capital either. The time between expenditure and recovery of the cash matters.

Worked example: a model 10,000 kg lot of unsorted clothing

The example below illustrates the calculation method for the purpose of demonstrating the methodology.

All shares, prices and costs are hypothetical and should be replaced with your own data.

The model assumes:

• 10,000 kg of net material
• settlement in EUR
• completed sale of all revenue-generating fractions
• no closing inventory
• net values as the modelling convention
• no automatic assumption regarding the customs duty rate or VAT treatment.

Mass and revenue balance

Categories A, B and C are model labels only.

The saleable clothing yield in this model is 60%.

Revenue from clothing alone is 12,000 EUR, and the weighted average selling price of the clothing is:

• 12,000 EUR / 6,000 kg = 2.00 EUR/kg
• The remaining 200 EUR comes from another fraction and its mass should not be added to the clothing yield.

Model costs

The 100 EUR item is only a technical assumption in the model. It is not an estimate of customs duty or VAT.

Result

Profit = 12,200 − 10,000 = 2,200 EUR

Sales margin = 2,200 / 12,200 × 100% = 18.03%

Return on cost = 2,200 / 10,000 × 100% = 22.00%

The same container therefore produces in the model:

• 2,200 EUR profit
• 18.03% sales margin
• 22.00% return on cost.
• This is not a forecast of the result of a real container. Among other things, the model assumes that buyers were found for all revenue-generating fractions.

Break-even: what yield is enough to avoid a loss?

The break-even point occurs when:

• Revenue = Cost
• For unsorted clothing, a change in yield can simultaneously increase revenue and reduce the cost of managing the remainder.
• Assume:
• M — input mass
• y — share of clothing for sale
• q — share of residual material sold to a buyer
• p — average selling price of clothing
• r — selling price of residual material
• d — unit cost of managing the remaining fraction
• K₀ — all other container costs.
• Then:
• Revenue = M × y × p + M × q × r
• Cost = K₀ + M × (1 − y − q) × d
• After setting revenue equal to cost:
• Break-even yield = [K₀/M + d × (1 − q) − q × r] / (p + d)
• For the model values:
• K₀ = 9,700 EUR
• q = 0.20
• p = 2.00 EUR/kg
• r = 0.10 EUR/kg

d = 0.15 EUR/kg;

we obtain:

• [0.97 + 0.15 × 0.80 − 0.20 × 0.10] / 2.15 ≈ 49.77%
• The model break-even point is approximately 49.8% clothing yield.
• This is not a threshold for the market or for every sorting plant. Changes in purchase price, selling price, labour cost, the structure of residual fractions or sales time will move this point.

The formula assumes full sale of revenue-generating fractions, constant prices, a constant share q and constant remaining costs. An increase in clothing yield occurs at the expense of the fraction requiring paid management. The conditions 0 ≤ y ≤ 1 − q and p + d > 0 must be satisfied.

Minimum average price at a fixed yield

With 6,000 kg of clothing and 200 EUR of revenue from residual material:

• Break-even price = (10,000 − 200) / 6,000 = 1.6333… EUR/kg
• If prices are entered to the nearest euro cent, only 1.64 EUR/kg exceeds the model break-even point.

Three scenarios instead of a single forecast

A single base-case calculation can easily create a false sense of security.

Below, we keep the following assumptions constant:

• 10,000 kg of input
• 20% of residual material sold at 0.10 EUR/kg
• 9,700 EUR of costs other than paid management
• 0.15 EUR/kg as the cost of managing the remaining fraction.
• Only the clothing yield and its average selling price are changed.

The labels “conservative”, “base case” and “favourable” do not represent probabilities. They are three sets of hypothetical assumptions.

Sensitivity analysis

With the base-case parameters and only one variable changed:

In the same model, reducing the yield from 60% to 50% while keeping the price unchanged at 2.00 EUR/kg reduces profit from 2,200 EUR to exactly 50 EUR.

This is why the decision should not be based on the question “does the base case make a profit?”, but rather:

“What would have to deteriorate for the profit to disappear, and is that deterioration a realistic risk for this delivery?”

Test-container protocol

1Define what the test is intended to determine

Before purchasing, record whether you are primarily testing:

• purchase price
• yield
• category structure
• labour intensity
• actual selling prices
• options for managing residual fractions
• turnover
• capital requirement.
• Also select one previous delivery as the comparison baseline.
• Do not use different cost-allocation rules for the existing and new supplier.

2Define the category dictionary

Each category should have:

• a name
• assignment criteria
• a recording unit
• an expected sales channel or management method.
• If employees classify the same goods differently, a change in “yield” may result from differences in assessment rather than from the quality of the delivery.
• Category and sales status should be separate fields. Category A goods may be sold, reserved or still remain in stock.

3Plan sampling and weighing

If you carry out a preliminary inspection before full sorting:

• take material from different parts of the delivery
• do not base the sample only on packages that are easily accessible or selected by the supplier
• record the selection method
• record the number of units and the sample weight
• record the sample’s share of the entire lot.
• At receipt, packaging weight should also be separated from material weight, and moisture, contamination, damage and differences between documents and measurements should be documented.
• A preliminary sample is an indicator. The final result for the container should come from complete records after sorting.

4Maintain a mass and time balance

Record labour hours separately for:

• unloading
• unpacking
• sorting
• inspection
• re-sorting
• packing
• shipment preparation.
• The balance should satisfy:
• input mass = sum of the masses of mutually exclusive fractions + explained measurement differences
• Discrepancies should be explained. They should not simply be added to a selected category to make the spreadsheet “balance”.

5Link sorting data to sales

For each category, record:

• sale date
• weight
• net price
• discounts
• adjustments
• returns
• date payment is received.
• The list price is not the realised price.
• Unsold goods should not be reported as realised revenue. They remain inventory for which a separate forecast may be maintained.
• Compare lots over the same time window, for example after 30, 60 and 90 days. These periods are only an example of a measurement structure, not an industry standard for turnover.

6Calculate the working-capital requirement

Alongside the profitability calculation, maintain a cash-flow timeline.

Financing gap on day t = cumulative expenditure − cumulative cash inflows from sales of the lot

The largest positive value of this gap indicates the maximum financing requirement for the container under the assumed schedule.

A positive final profit does not solve the problem if the sorting plant cannot finance the period between purchasing the goods and recovering the cash.

7Close the test using the same basis as the baseline delivery

Compare:

• the result for the whole lot
• the result per kilogram of input
• yield structure
• labour cost/kg
• productivity
• realised prices
• closing inventory
• sales time
• the largest cash gap
• the value and cost of residual fractions.
• Do not compare the forecast full sale of a new container with the closed result of an older container.
• One successful test describes one delivery. It does not guarantee repeatability for subsequent deliveries.

What should be confirmed before ordering — minimum RFQ package

Before calculating final profitability, obtain from the seller, exporter or intermediary the data that can be entered directly into the calculation sheet.

The absence of one of these items does not automatically mean that the transaction should be abandoned. It should, however, remain in the calculation as an open risk rather than being silently replaced with a favourable assumption.

How to reduce sorting costs without promises of “magic technology”

Look for process losses first, and only then consider investing in equipment.

Measure unnecessary operations

Time records can reveal:

• reopening packaging
• unnecessary movement of material
• waiting for fractions to be collected
• sorting the same items multiple times
• bottlenecks between workstations.
• Every organisational change should be assessed on comparable lots by measuring cost and time per kilogram.

Standardise criteria before speeding up the process

If employees interpret classes A, B and C differently, a faster workstation will not solve the problem. It may simply produce inconsistent results more quickly.

Clear criteria and classification examples should be introduced first.

Additional sorting must pay for itself

Splitting categories from 5 to 15 is not a benefit in itself.

Additional selection makes sense when:

• additional revenue > additional labour + packaging + storage + sales cost
• The same principle can be applied to repairs, refreshing, additional repacking or manual selection of specific categories.

Calculate the value of residual fractions after all costs

If someone declares that they will buy a specific fraction, calculate:

• revenue from the residual fraction − preparation − storage − transport − other collection costs
• Only the net result shows whether the fraction genuinely reduces the loss.
• There is no basis for assuming that every residual fraction has a positive value or that there is a universal recovery price.

Technology is an investment that needs to be tested

Ergonomics, conveyors, semi-automated solutions and record-keeping systems can improve the process. The benefits of using them depend closely on the solutions already in place at the company before implementation and on the effectiveness of the implementation itself.

An investment decision should therefore be based on your own test:

labour savings + additional sales result − cost of the solution

Canada and the “Canadian sourced credential”: what can actually be assumed?

A different source of supply may produce a different merchandise mix, but the country of origin alone does not automatically imply:

• a higher yield
• a larger share of well-known brands
• better condition of the clothing
• a higher average selling price
• greater profitability.

The practical question is therefore not:

• “Is Canada better?”
• but:
• “Using the same sorting criteria, does the Canadian lot produce a category structure, selling prices, labour cost and turnover that are more favourable for our customers?”

As an initial test, we propose purchasing a 20-foot container with approximately 10,300 kg of goods. This parameter is an offer-based declaration derived from previously completed deliveries, not a guaranteed net weight for every order.

Formalities that affect the calculation

This section does not replace customs classification, tax advice or an assessment of a specific lot. Its purpose is to show which items must not automatically be entered as zero in the spreadsheet.

CN 6309 00 00

PUESC currently lists CN code 6309 00 00 as “used clothing and other used articles” under the SENT regulations.

This does not mean, however, that calling a shipment “used clothing” automatically determines the classification of every possible type of material. The final classification must be based on the actual contents, condition and presentation of the goods.

If there is any doubt, the code should be confirmed before customs clearance.

SENT: the 10 kg threshold is no longer current

The original rules applying from 17 March 2026 used a lower threshold. From 20 June 2026, the rules were changed under the Regulation of the Minister of Finance of 18 June 2026 (Journal of Laws, item 813).

For CN 6309 00 00, monitoring applies to a consignment when its gross weight exceeds 31.5 kg. Exceeding the threshold alone does not replace the need to check the scope of the transport and applicable exclusions, including those provided for certain entities holding AEO status or a co-operation agreement.

At the same time, the scope of the system for the clothing sector was narrowed. Exclusions from monitoring include, among other things, domestic B2B sales, exports and most intra-Community supplies; the obligation remains primarily for imports from third countries, intra-Community acquisitions, specified movements following procedure 42 00 and transit.

For a container imported from Canada, it is therefore not enough simply to say “SENT applies” or “SENT does not apply”. Before transport begins, the specific route, point of customs clearance, responsible entity and required notification must be determined.

TARIC, CETA and origin: shipment from Canada does not automatically mean zero customs duty

TARIC contains current third-country customs duties, tariff preferences and other measures applied to imports. The data are transmitted to national administrations daily; the Polish tool used to check them is ISZTAR4.

For this reason, “customs duty = 0” should not be entered in the calculation solely because the container is shipped from Canada.

The trade provisions of CETA have been provisionally applied since 21 September 2017, but tariff preference depends on compliance with the rules of preferential origin.

The CETA Protocol states that a product originating in Canada may benefit from preferential treatment when imported into the EU on the basis of an origin declaration made out on an invoice or another commercial document that allows the product to be identified.

The conclusion for the calculation is simple:

• place of shipment ≠ automatically preferential origin.
• Before purchasing, confirm the code, origin, document and current tariff rate/measures in TARIC or ISZTAR4 for the date of customs clearance.

VAT: separate economic cost from cash requirement

The standard VAT rate in Poland is currently 23%.

The model should therefore separate:

• the cost that ultimately affects the result
• tax subject to the appropriate settlement
• temporary cash requirement.
• The appropriate treatment depends on the status and tax arrangements of the specific company.

Product or waste? The commercial name does not decide

The EU definition of waste covers any substance or object which the holder discards, intends to discard or is required to discard. The assessment therefore depends on the actual nature of the material and the circumstances, not on whether the invoice uses the term “unsorted”, “used clothing” or “credential”.

If the material is legally classified as waste, waste-shipment regulations also become relevant. Regulation (EU) 2024/1157 applies, as a general rule, from 21 May 2026.

Directive (EU) 2025/1892 was also adopted in 2025, introducing more detailed rules concerning used and waste textiles. Member States have until 17 June 2027 to transpose it, so its new detailed rules should not all be presented as already fully applicable in Poland in October 2026.

Before a transaction that requires such a determination, confirm:

• the status of the specific material
• the required documentation
• the lawful method of transport and subsequent handling.

Risks that should be included in the conservative scenario

A conservative scenario should not be created by applying an arbitrary “minus 20% to everything”.

A better method is to model events that could genuinely occur, such as a lower share of a specific category, a price reduction by the main buyer, an additional month of storage or an increase in labour costs.

Hold, test or scale up?

Hold the decision and complete the missing data

This is the right position if the result depends on an unconfirmed item, for example:

• unknown net weight
• an unconfirmed customs rate or tariff preference
• unknown freight cost
• a hypothetical selling price
• no buyer for a significant fraction
• unresolved product/waste status
• no financing for the required cash gap.
• Close this information gap first.

Run a test when the main uncertainty concerns the actual goods

If price, formalities and financing can be calculated but the actual mix, yield, sorting cost or turnover remain unknown, a controlled test delivery can provide the missing data.

The test should have a predefined comparison baseline and recording method.

Assess scaling only after actual sales

Completing the sorting process alone does not determine whether purchasing the test container is profitable.

Before increasing order volumes, check:

• how much of the yield was actually sold
• at what net prices
• what remains in stock
• how long the full cycle took
• how much capital was required
• whether the result depended on a single exceptional buyer
• whether the terms of the next delivery are comparable.

FAQ — calculating the profitability of used-clothing sorting

Go/no-go checklist before purchasing

GO / TEST if the company can confirm that:

• the scope of delivery and the weight used for settlement are clearly described
• the calculation includes the full cost from purchase to final closure of the lot
• yield and prices are based on the company’s own data or are clearly marked as assumptions
• the conservative scenario remains within the level of risk accepted by the company
• there is a sales plan for the main categories
• it is clear what will happen to the residual fractions
• the maximum cash gap is within the company’s financing capacity
• current formal requirements have been checked
• the claims rules are known
• the test can be compared with an existing delivery using the same definitions.

HOLD if the positive result depends primarily on:

• an unconfirmed high selling price
• an unsupported assumption of a high yield
• automatically assuming zero customs duty
• an omitted cost
• selling residual fractions without a confirmed buyer
• an unresolved material formality
• financing that the company does not actually have.

The objective is not to know the result in advance before running the test. It is to know which variables are still unknown and how much they could cost if they turn out unfavourably.

Evaluate a test container using your own figures

If you want to compare Canadian unsorted used clothing with your current sources, you can check the current terms for a test container from Canada and enter them into your own cost, yield, sales and cash-flow model.

The current offer provides for an initial 20’ container with approximately 10,300 kg of goods, but commercial terms and availability are agreed individually. Target Solutions acts as an agent supporting contact and process organisation; the sales contract is concluded directly between the exporter and the buyer.

The purpose of the test is not to prove in advance that Canada provides better goods. It is to determine whether a specific lot, measured according to the same rules as current purchases, produces a result that meets the requirements of your sorting operation.

Sources and limitations

The report is based on source material covering the financial model, trade data and current official sources. Publicly available materials do not provide reliable benchmarks for average yield, category structure, selling prices or internal sorting-plant costs. The report therefore deliberately does not present such values as market data.

The WITS/UN Comtrade data for 2024 cited in the underlying material describe trade flows in used clothing, not sorting profitability. They were not used as parameters in the financial model.

Prices quoted from individual commercial offers in the underlying material are likewise not treated as current market reference prices.

The 10,000 kg model, the 50–70% shares, clothing prices, the 0.15 EUR/kg management cost and all other amounts used in the examples are assumptions in an educational calculation model. They do not describe an actual offer or the expected result of a specific container.

Current legal and commercial parameters were checked selectively for this report based on information available on 3 October 2026.