Saving Money With LCL Shipments
Deciding whether to ship via full container load (FCL shipments) or less-than container load (LCL shipments) is a simple decision for some companies.
The nature of the cargo carrier marketplace means that LCL shipments will always generally be more costly. However, deciding the economic winner between FCL and LCL shipments requires more nuanced thought.
Though LCL shipments cost more on a per-shipment basis, other considerations might make LCL shipping more affordable for your company in the long-run.
Why LCL shipments are inherently more expensive
In FCL shipping, the cargo carrier needs only to contract and coordinate with one company to fill its container. Once they agree to their terms, the shipment is loaded and it’s ready to go.
With LCL shipping, you’re only reserving a portion of a cargo carrier’s space. That cargo carrier has to do more work to secure and coordinate LCL shipments with multiple companies that need to ship products along that same line.
Cargo carriers must charge more per unit of space to LCL shippers to offset this additional work. The first most logical way to avoid the increased rates of LCL shipping is to forgo it in favor of FCL shipping. However, the balance shifts toward LCL shipping when you consider other factors.
LCL shipments allow more time for delivery before fees
At the receiving port of an FCL or LCL shipment, cargo carriers must wait until all the freight is unloaded at the container freight station (CFS) before they can disembark. Sounds simple, right? As any logistics professional can tell you, however, problems can delay your FCL or LCL shipment at port.
Customs issues could cause your cargo to be held for inspection or you may have issues with your in-country delivery company picking up the cargo.
The whole time, your FCL or LCL shipment is sitting at the CFS in a container owned by your cargo carrier on a vessel operated by your cargo carrier.
When companies send goods through FCL shipping, their cargo is supposed to be removed from the vessel within a contract-specified amount of time. If goods sit too long, a company could be subject to demurrage fees, financial penalties the cargo carrier imposes for the delay.
In the case of LCL shipments, the cargo carrier assumes responsibility for the unloading of freight at the CFS, so demurrage fees are not charged. If an LCL shipment sits too long, the company that sent it may receive storage fees, but the time allowance is more generous than with FCL shipping.
LCL shipments let you keep inventory low
Here’s the thing about full container load shipping—you have to fill the whole container. The very purpose and goal of FCL shipping is to maximize the space within the container by filling it with as much cargo as is safe and practical.
For smaller companies that are still scaling, it may not be financially practical to invest in the manufacture and storage of a large amount of goods.
To remain agile and stay in the black, they forgo the basic financial benefit of lower rates with FCL shipping and opt to send cargo via LCL shipments.
Some companies choose FCL shipping even when they cannot fill an entire container, for various reasons. Speed of delivery or safety may be paramount in their needs and they do not want the potential slowdown or liability of sharing space with other LCL shipments.
Sending such shipments on any kind of regular basis is far from economical, however, as partially filled FCL shipments waste money and precious fuel.
LCL shipments save money when paired with like goods
One disadvantage to LCL shipments lies in their vulnerability to the cargo with which they share container space.
Remember, LCL shipments are kind of like taking the bus, when you’re riding among others with a shared transportation need, as opposed to driving your own car.
If a physical, legal or regulatory problem interferes with the release of other cargo in the same container, your LCL shipment could be at risk of damage or delay.
To avoid this, try to find a cargo carrier that transports goods similar to your LCL shipment. When your LCL shipment is sharing space with cargo like it, you will already have a basic understanding of the problems it might encounter and what inspections it must undergo.
Problems will still pop up from time to time with your LCL shipment, but you can operate from a much more narrow set of potential scenarios.