When shipping cargo internationally, you’ll have a range of shipping methods to choose from. You’ll often want to ensure you choose a cost-efficient option to make the most out of your supply chain. Less-than-Container Load (LCL) shipping is a useful method of shipping in many circumstances, especially when you are transporting small amounts of cargo.
This complete article will help you understand:
- what does LCL mean
- the process of an LCL shipment
- when LCL is the best option and how it compares to FCL shipping
What Is LCL in Shipping?
LCL shipping involves shipping cargo by sea that takes up, literally, “less than” the full space of a single container. Using this technique, various cargo from multiple suppliers will be consolidated in the same container together.
LCL x FCL
The difference between FCL and LCL shipments is, in a nutshell, the space of a container.
With LCL, many small shipments are consolidated in one container (and not all of those shipments will be yours). With FCL, you’ll have a full container load and won’t share space with any other load. Sometimes, FCL will be a better option for you – it will just depend on your circumstances.
Looking into the difference in more detail, you’ll find that the factors that set the two shipping methods apart include:
- Transit time. LCL shipments generally take longer to organise at the port of origin and to become available at the port of destination. You will often find that the cut off times for FCL shipments are a lot closer to the date of departure and the goods become available a lot quicker upon arrival.
- FCL can sometimes be a cost saver if you have a whole range of smaller shipments that could be sent at once (see our blog on Buyer’s Consolidation which involves consolidating numerous LCL shipments into one larger FCL shipment). If your shipment has between 7-20 pallets, FCL may be more efficient in this regard. LCL is more cost-effective for smaller shipments such as those involving three pallets.
Why use LCL shipping?
LCL shipping has many advantages, and in particular, allows smaller importers to get a foot into the market. Other benefits are outlined below.
LCL shipping is an easy way to reduce costs in your supply chain. Rather than paying for a full container (FCL) – all of which space you may not fill – you’ll be sharing the space – and therefore the cost – with others. Think about it like taking a regular Uber versus UberPool – the latter will always be cheaper.
In our experience, we’ve seen many shippers wait until they can fill a full container before organising their shipment. In many cases, this is unnecessary.
In modern business, not everything goes to plan all the time.
Shipping via LCL allows you to work with multiple schedules and drip-feed your stock into the market. When you have a need to top up your inventory you can ship at short notice by using a consolidation service. You are not tied into a long shipping plan that focuses on filling a complete container load.
Focus on the business
At the end of the day, shipping, whilst critical to your supply chain, is not the core focus of most businesses day to day. You need your shipping to seamlessly work in the background while you’re busy closing sales.
Use a freight forwarder to organise your schedule through LCL shipping across the globe.
How does LCL shipping work?
Step 1: Booking your shipment
The first stage is to book your LCL shipment. If you don’t have enough cargo to fill up one single container, your freight forwarder can book your shipment with an ‘LCL consolidator.’
At this stage, you’ll need to let the freight forwarder know all the shipment details so they can select which option is best for you. This will include the content, the dimensions, weight, number of items that form the cargo and so on. Dependent on the volume of goods you are shipping, your forwarder may complete a cost analysis between FCL and LCL to ensure the most cost efficient method is selected for your consignment.
Once these details are provided, your freight forwarder will go ahead and book your shipment. We recommend that you secure shipping space as early as possible before the start of shipping peak season (which typically starts in August and ends in October). That way, 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 international transport. This can take time depending on exactly what your goods are, so we recommend starting early if your goods must follow complex packaging requirements.
By way of example, lithium batteries are subject to a large degree of regulation when it comes to packaging so you’ll need to factor this into your timetable.
Step 3: Consolidating your goods
Once your goods are collected they will be consolidated with other LCL shipments at a consolidator warehouse near or at the port of departure.
Plenty of time will need to be given for the consolidators to load your cargo into the appropriate containers hence cut off dates (i.e. the last possible date your cargo can be delivered to a certain location), which can sometimes be almost a week prior to departure.
Step 4: ‘Drayage’
After your goods are consolidated, the LCL container in which your goods are stored will need to be ‘drayed’ out of the point of consolidation to the port where your goods will be exported.
‘Drayage’ is simply a logistics term that refers to a specialist service that carries cargo over short distances. This is a critical step in the shipping process because it’s essentially how your shipment will get to where it needs to go for export.
Step 5: Shipping
The next stage will be to actually ship your LCL cargo overseas.
The process of shipping can either be done on a direct route or via a transhipment point. The former simply means your cargo will get to its destination in one journey without stopping. The latter means your cargo will stop over at what is known as one or multiple ‘transhipment ports’ prior to making the final leg of the route. Each method has its own benefits, which you can read more about in our transhipment blog.
Step 6: Deconsolidation
Once your goods arrive at the port of destination, your cargo will be offloaded from the ship and then ‘drayed’ to the destination Container Freight Station (CFS).
At the destination CFS, your goods will be ‘de-consolidated’ (i.e. the LCL container will be taken apart and each consignment separated according to final destination). This process usually takes 3-6 days.
Step 7: Pickup or delivery
Once your goods have been de-consolidated, they’ll be made available for collection by your transport company and, depending on your shipping incoterms will often be delivered to your door.
The person receiving the goods will typically be made to sign an acknowledgement form indicating that they have received the goods upon delivery.
When is LCL the best option?
LCL will be most likely be the best option for your supply chain is in the following circumstances:
Goods won’t fill the container
One of the most obvious reasons to go LCL over FCL shipping is that the goods you want to ship will not fill a full container. There is simply no practical economic reason to pay for a full container if you are going to use less than half the entire space inside it, but depending on your shipping route, it is always worth asking your forwarder to compare both options.
Goods are small
Because the rates for LCL shipments are based on weight and volume, you’ll generally want to ship cargo through an LCL method if your shipment is under 13 cubic metres. However, consider the potential benefits of buyer’s consolidation using FCL if you have many small consignments from multiple suppliers. It will all depend on your individual business needs.
You may have too much cargo to fit into one container. If that’s the case, using an LCL method to ship the rest of your consignment can be a sensible option. It may not be very practical to use two FCLs if you have such a small amount of extra cargo to transport.
Final thoughts – LCL or FCL shipping?
In making the decision between FCL or LCL shipping, it’s important to consider your own ultimate business goals and obtain expert advice tailored to your individual circumstances.
Our LCL experts have had many years’ experience helping clients reduce their overall supply chain costs so they can focus on growing their business. Call us today for a no-obligation discussion or leave a comment below.