When should I consider FCL over LCL?
As an importer or exporter (shipper) of ocean freight, there’s a lot to consider when choosing the mode of ocean transport. Prior to approving a shipment a shipper must decide whether it makes sense to send their precious cargo in a full container (FCL) or whether it’s more economical to share container space with other shippers (LCL).
LCL means = Less than Container Load (Carton, pallets, etc)
FCL means = Full Container Load (Whole containers – 20′, 40′ etc)
As our quest for transparency continues, this article will dive into what things you must take into consideration when making this choice:
Let’s look deeper into the obvious one first. For a lot of shippers, particularly smaller businesses, price is often the key decision maker when deciding how to ship their goods. LCL is usually cheaper as it charges by the weight measure, W/M (e.g. CBM) whereas FCL charges you a flat rate for the container regardless of how much is packed inside.
With that said, it does become cheaper to send FCL after the shipper reaches a certain pivot point for the per w/m charge. For example let’s look at the below freight rate quote scenario;
FCL: US$800 per TEU (Twenty-Foot Equivalent Unit)
LCL: US$100 per w/m (Weight Measure, eg. CBM)
For the freight component, it’s far cheaper to send 1 CBM via LCL (US$100), however the moment that the w/m hits over 8 CBM (US$800) the FCL option suddenly becomes more cost effective. It obviously depends on your origin and destination, however as a rule of thumb, the moment your cargo reaches +8CBM we would recommend sourcing an FCL rate for comparison.
The team at Explorate take this into account for each and every shipment and will provide cost breakdowns to ensure you’re always making the right decision when it comes to price.
Sending cargo via LCL is slow(er) than sending your cargo FCL. The reason for this is that it takes extra time to collect your goods from your manufacturer, deliver it to the co-loader and for them to pack it in with other shipper’s goods, compared to an FCL empty container being packed and delivered to the port directly. The same goes for when the cargo arrives at the destination port, where a FCL is delivered as soon as it’s off the ship and the LCL has to go to the co-loader for de-stuffing.
In a lot of cases you’re likely to face an extra 2 to 3 days waiting at both the origin and destination port for the LCL to be stuffed / destuffed as opposed to the speedier FCL formalities. That’s why we’ll often ask you when the cargo is ready, and when it is required to be delivered – these two details assist us in choosing the right mode of transport to suit your supply chain.
We’ve seen customers ship a single pallet in an FCL before, even though it economically meant no sense to do so. The reason was that the cargo was incredibly expensive and the risk was too high to send it in a container stuffed with other shipper’s cargo.
When you ship LCL you forego the ability to control when/how and in what configuration the container is loaded – not to mention if someone else’s goods get held in a customs border hold. Although this occurrence is rare, depending on the supply chain the risk profile of LCL is too much and the extra cost is written in as a cost of doing business.
If warehouse space and deployable capital aren’t in excess then it is usually far more suitable to send your cargo LCL. LCL allows you to ship smaller quantities on a more frequent basis which keeps your inventory levels and warehouse costs low.
Depending on your production turn around times, it can make a lot of sense to send you cargoes in a steady stream of low quantities – however when business picks up and demand for your goods outweigh the feasibility to send everything via LCL you’ll eventually have to move to an FCL solution.
If you’re still unsure on what mode to book your next shipment, speak to one of our team today.