When transporting your goods overseas, it makes sense to choose a cost-effective and safe option whilst keeping costs down throughout your supply chain. Full Container Load (FCL) shipping is a useful option in many cases, especially when you need to deliver a large volume of product.
Below we’ll explain:
- What FCL is
- The process of an FCL shipment
- When FCL is the option you should choose and
- How it compares to LCL shipping
What is FCL shipping?
FCL involves shipping goods using, literally, a “full” container. The container is used exclusively for a full single shipment. You won’t share the container with any other cargo – the whole thing will be yours. However, this also means you bear the cost of the complete shipment.
Why use FCL shipping?
In the right circumstances, FCL shipping has many advantages – we outline some of the benefits below.
Shipping large volumes of product in an FCL is generally cheaper than LCL. This is because LCL shipping levies charges on a cubic meter basis whereas FCL rates are typically flat rates charged per the container. Whilst LCL works for small volume (anything under 10CBM), you normally benefit from cost efficiencies in an FCL over this amount.
An example of how this works can be explained through port charges. A typical 20GP may introduce $550 – 800 in port charges in Australia holding 28 CBM of cargo. The cost per CBM for port charges would be just $28.50.
LCL port charges can cost in the region of $125 per CBM. To ship the same amount of volume by FCL, port charges would increase to $3,500, this is a whopping $2,700 more to ship the same volume by LCL.
It is worth noting, however, that customs fees will always need to be paid no matter what shipping method you use.
Less risk of damage
Because you will have one container full of your own goods with FCL, you can ensure that the integrity of your product is maintained because your goods will not be mixed with other cargo.
Furthermore, FCL requires less handling because goods are not consolidated. Your container will likely be sealed at your supplier’s warehouse and not opened again until you receive the cargo at the final destination.
Using FCL through buyer’s consolidation is an effective way of shipping multiple smaller consignments from the same location. Rather than shipping multiple LCL shipments, it can be more efficient to consolidate the cargo together into one larger FCL shipment.
You can save money using this technique as you won’t have to pay multiple sets of Export Handling Fees, Doc Fees and Delivery and Collection Fees. You’ll also benefit from tracking just one shipment. You can read more about the benefits of buyer’s consolidation in our blog.
How does FCL shipping work?
Step 1: Booking your shipment
The first stage is to book your FCL shipment. Your freight forwarder is able to do this for you, although you’ll need to ensure you give all the right documentation to them to ensure your order is managed with ease.
At this stage, you should provide the freight forwarder with all relevant shipment specifications so they can confirm the most efficient way to ship your cargo, including whether or not buyer’s consolidation is feasible. This information includes the content of the cargo, dimensions, weight and number of packages.
Once these details are provided, your freight forwarder will book your shipment. We recommend securing a shipping space as early as possible prior to shipping peak season (August to October). By doing this, you can avoid delays and added costs to your supply chain.
Step 2: Prepare goods for shipping
The next step will be to prepare your goods for shipping. This can take time depending on the nature of the goods. We recommend starting early and seeking advice as to whether your goods require special packaging.
By way of example, there are a range of regulations regarding the packing of lithium batteries. You’ll need to take this into account when developing your schedule.
As your goods will go into one container, it’s important to consider the type of container that best suits your goods.
Step 3: ‘Drayage’
After your goods are packed into the container and are ready to go, the FCL will be ‘drayed’ out towards the port where your goods will be exported.
‘Drayage’ is logistics term meaning a specialist service that carries cargo over short distances, in this instance to the port of export.
Step 4: Transit
Once at the port, the FCL will transit to its destination on the appropriate vessel.
Your cargo can either be shipped on a direct route or via a transhipment port. The former means your cargo will get to its destination in one journey without making any stops. The latter means your cargo will stop at one additional, or multiple ports prior to the final leg of the route. There are advantages to using both methods depending on your circumstances, which you can read more about in our blog about transhipment.
Step 5: Pickup or delivery
Once your goods arrive at the port and offloaded from the vessel, they’ll usually be delivered directly to the final destination point (depending on the incoterms).
On arrival, the person receiving the goods will usually sign an acknowledgement form indicating that they have received the goods.
What is the difference between FCL and LCL shipments?
LCL involves consolidating smaller shipments from multiple consignors in one container and in most – if not, all cases – your consignment will share the space with goods that don’t belong to you. With FCL, you can make use of a full container load and won’t share space with anyone else. Sometimes, LCL will be a better option for you – it will just depend on the size of your shipment and individual circumstances.
When is FCL the best option?
FCL will be most likely be the best option for your supply chain is in the following circumstances.
When goods fill a container
You’ll most likely use FCL for larger loads that can fit into their own container. LCL shipping is typically better for smaller loads. Unless, of course, you have chosen buyer’s consolidation and are placing multiple LCL shipments in one FCL container.
Goods are large
FCL rates are charged per container or per twenty foot equivalent unit (TEU), so you’ll probably want to ship cargo using an FCL method if your shipment is over 15 cubic metres. Even when goods are small, the option of buyer’s consolidation may still be available. It will depend on your own commercial circumstances. FCL is a cost saver if you have a whole range of smaller shipments that could be sent at once. If your shipment has between 7-20 pallets, FCL may be more efficient in this regard.
If you are shipping goods regularly, FCL is the most cost-effective way to transport cargo (assuming your goods can fill a whole container). Last-minute shipments, however, of small volume will be more cost effective sending via LCL.
Final thoughts – LCL or FCL shipping?
In making the choice between FCL or LCL shipping, consider your own objectives and what is important to your business. We recommend seeking expert advice tailored to your specific requirements.
At ICE, we can speak to you about your supply chain in detail. Our FCL freight specialists have had significant experience assisting clients across Australia to reduce their supply chain costs and develop a robust shipping strategy. Call us today or leave a comment below.