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When to ship LCL rather than FCL? Advice for importers.

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Some importers try to optimize their freight costs. They always make sure they will fill a container up.

Most buyers, however, simply buy what they need. They don’t want to carry extra inventory that might not get sold. If they have, say, 22 cubic meters it is not a problem — it will nearly fill a 20′ container up. So they book an FCL (Full Container Load).

Now, what to do if you only have 12 cubic meters of products to ship? Most freight forwarders offer to consolidate your shipment with those of some of their other clients. Each client books LCL (Less than Container Load), and then the forwarder arranges to put it all together in one container.

What is the cut-off point between LCL and FCL? If you have less than 14-15 cubic meters (half the volume of a full 20′ container), it is more interesting to book LCL.

What are the drawbacks of LCL?

CPG just published The Advantages of LCL versus FCL When Shipping. Here are a few interesting points from that article.

It may take a little longer.

LCL is often in transit for a longer period of time, due to the freight company having to load and unload numerous companies’ items. It is also possible that your shipment will be delayed whilst the shipping company find enough items to fit the container.

Another cause of delay, not mentioned in the CPG article, is the risk that other goods inside the same container are blocked by Customs. One regular reader tells me she saw cases where an importer lost his products completely this way (because Customs had a problem with OTHER products).

The forwarder won’t bring a full container to the factory.

Either you pay the forwarder to send a truck to collect the products, or you ask the supplier to bring the goods to the forwarder’s warehouse (at their costs if you buy FOB).

Insurance is more expensive

When shipping by LCL you are likely to be paying more towards insurance then you otherwise would with FCL. Although the difference in charges is not large, it can add up on the balance sheet as the common 1.5% cost of insurance when using FCL can rise to 3% or more when using LCL.

Your cartons might get damaged

If you ship soft goods, and your loose cartons (not on pallets) are placed aside/under heavy hard goods, your products might get crushed. I would advise to ship LCL with strong protections: a pallet + wood on the sides + reinforcements on the corners.

Anybody has other tips?

Comments

  1. I had 2 special experience in container recently :

    1) total 11CBM, ship to Japan,client request us ship by 20′ container.(too much space …ship Air I think)
    2) total 44CBM, ship to Canada, client refuse to ship by 40′ container.(Luckily they allow us to consolidate with another fty at last). They also refuse ship by 20′ container, because transport cost in 20′ is higher than 40′ in Canada. So strange I think .

  2. Hi Renaud,
    Interesting points about insurance, transit time and damage.
    What is the price difference range for LCL and FCL based on unit cost?
    Is there a guide to suggest what are the products that can be clubbed in one container?
    Any set guidelines to follow?

    • It is impossible to give a general difference in USD “based on unit cost”, because different products have different volumes & weights. You should ask a freight forwarder, based on a real order.
      Any products can be placed in the same container, in theory. That’s why, if you ship LCL, you want to make sure your products are VERY safely packed. They might be placed under heavy products.