A Complete Guide to LCL (less-than-container) Shipping

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What Is LCL Shipping?

LCL stands for less-than-container load, so LCL shipping is the process of shipping a load that takes up less volume than one single ocean container. This load is then consolidated into a “shared” container, with other Less Than Container Loads.

 

The LCL Process:

Phase  1

The LCL process begins when the shipment is booked. Most people who ship LCL consignments do not have enough cargo to warrant an entire container, and are therefore using an LCL consolidator to ship their cargo. This is usually consolidated and/or arranged through an international freight forwarder. The customer will provide the details of the shipment, including the shipping dimensions, weight, and number of pieces to the freight forwarder. For example, a shipment may include 2 pallets, with dimensions of 48x40x40 inches for each pallet, and 1,500 kg total weight. Once the documents and forms are submitted, the consignment can be booked.

 

Phase 2

The goods must then be prepared for shipping. As the container will be shared, each shipper’s cargo must be properly packed beforehand to keep it separate from other shipments in the shared container. If the shipper has already packed the goods properly for export purposes, then the cargo is ready for the next step.

 

Phase 3

  • The next step is consolidation, which typically takes place at the departure port. The goods must arrive at the consolidation point, typically known as a CFS (container freight station), before the cargo cutoff date. This is usually (but not always) a bonded warehouse that receives the cargo. Delivery must be completed with plenty of time to spare to give the consolidators (also known as groupage operators) time to log them into their specific containers.
  • Following consolidation, the LCL container is “drayed” or trucked out of the consolidation point and transferred to the port of export. The load must arrive at the port before the cutoff time and date in order to be loaded onboard the vessel in time for sailing.
  • The cargo may be offloaded at an intermediate point, and transferred to a different form of shipping before it continues on to its final destination. This is known as the transhipment point.
  • On arrival at the port of discharge, the container will be drayed (aka trucked) to the destination CFS and deconsolidated. This is the process of unloading all of the individual cargoes and holding them for pickup. In some cases, the freight forwarder may arrange final mile trucking to the recipient’s door. The majority of the shipment process is now complete, and each customer’s cargo can now be delivered to their final destination.
  • When the item is received, the recipient will usually need to sign for them to acknowledge that the item has reached them. This completes the process.

How Does LCL Compare to FCL?

LCL is an alternative to FCL (Full Container Load) shipping. As you might imagine, FCL refers to a load that takes up an entire container, and is therefore not sharing space in a container with any other load.

Containers range from 20′ and 40′ standard containers to 40′ high cube and 45′ containers. Of course, the container chosen for the job depends on the volume of cargo the consolidator has to ship out on that particular week. To give you a sense of how much volume (cbm which equals cubic meters) is in various FCL containers assuming ALL the space in the container is completely filled up (which is only possible if loose cartons are loaded) see below:

 

20′ standard container: 33.2 cbm

40′ standard container: 67.5 cbm

40′ high cube container: 76.2 cbm

45′ high cube container: 86 cbm

 

Take a look at the key points of comparison between the two options:

  • Shipping time: The FCL option is likely to be completed more quickly, simply because there are fewer intermediary points along the way. This assumes all else is equal such as cargo availability at time of loading for both LCL and FCL.
  • Load size: FCL shipping is usually for larger loads that fit into a dedicated container of their own (e.g. 7-20 pallet). LCL options are usually better for smaller loads (e.g. a few pallets).
  • Cost: The FCL option will be more cost effective for shipments with a larger volume such as 7, 10 or 20 pallets because of the fixed costs involved with FCL shipping diminishes on each additional pallet loaded in the FCL. LCL is more cost effective on smaller shipments such as 3 pallets since you are not paying for the ocean freight of a FCL.

 

A Closer Examination of Costs

Let’s look at costs in a bit more detail as they can become confusing. In many cases, costs will be derived from the volume of the shipment.

So, let’s say that an FCL 20′ container costs $2,000 to ship.

Your shipment is only 8 cbm (cubic meters), and you are quoted a price of $800. This is far more cost-effective than booking an FCL such as a 20′ container for $2,000.

However, the price of LCL shipment may not be directly proportional to the percentage of space you are taking up in the container. This is because there are other charges to consider, such as:

  • Origin consolidator charges
  • Origin CFS charges
  • Ocean Freight charges
  • Destination CFS and consolidator charges

 

Perhaps your shipment is 12 cbm, far less than the full container volume. You are quoted $1,200, including the charges. You are still saving money.

But maybe your shipment is 16 cbm. The price will have increased, and may now be close to $2,000. You are now experiencing little cost advantage by using LCL.

Usually, when you are quoted an ocean freight rate, you have to confirm if the destination charges are included in the quote. Typically, if your freight forwarder is quoting you to a destination door address, the destination CFS and destination consolidator charges are included in the quote. But, if you are quoted only up to the CFS of discharge, the destination CFS/consolidator charges are not included. If you are the shipper and you are only responsible to ship up to the CFS at destination (typically a CFR, CIF/CPT incoterm), then the buyer is responsible for the destination charges.

There are other factors that may influence cost, too, and dense loads of more than 1,000 kg per cbm may be priced differently. The weight may be factored into the per w/m charge.

 

For example:

For a shipment with a volume of 3.5 cbm and a total weight of 1,800 kg, this will not be considered a dense load. The cubic meter volume will be used to set the per weight or measure (per w/m) charges (i.e. 3.5 cbm times the per w/m rate)

For a shipment with a volume of 2.2 cbm and a shipment weight of 3,400 kg, this will be considered a dense load, and the charges will be calculated using the 3,400 kg weight (i.e. 3.4 metric tons times the per w/m rate).

This rule will be applied to the calculation of origin charges, ocean freight, and destination charges that are based on a per w/m rate.

When Is LCL the Best Option?

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LCL shipping is the best option for you in the following cases:

  • If you are shipping a relatively small consignment, because LCL rates are based on weight and volume – As a general rule of thumb (and this is highly dependent on the origin/destination since the origin and destination charges can vary considerably), if your shipment is under 13 cubic meters (cbm), you’ll be better off shipping it as LCL.
  • If you are seeking to make a last-minute shipment – You will often find available space to be filled with a consolidator when a shipment is due for departure, and this can save you money.
  • If you have a cargo overspill – In this case, sending part of your consignment FCL, and the remaining cargo LCL, may be the least expensive option.
  • If you do not need an urgent delivery – If you are booking in advance and there is no urgency, LCL may be the best bet.

 

For urgent deliveries that are low-volume, air freight might also be an option. This is likely to carry a higher cost unless it is very small, such as a 1 cbm shipment (because the destination cfs and destination consolidator charges can make the total freight charges more on LCL compared to air freight).

LCL Terms Defined:

  • Consolidation / Deconsolidation: The process of bringing together different consignments into one shipment / breaking that shipment down into individual consignments
  • Grouping agents: The team that will carry out the consolidation
  • CFS: Container Freight Station, where containers are consolidated and deconsolidated
  • LCL: Less than container load
  • FCL: Full container load – typically a 20′ standard, 40′ standard, 40′ high cube or 45′ high cube container
  • CBM: Cubic meter, which is the dimensions in meters multiplied together (e.g. 1.2 L x 1.0 W x 1.2 H = 1.44 cbm). This is the volume factor used in the majority of ocean LCL rates unless they are fairly dense, in which case it will be quoted based on the weight (see definition of per w/m below for more information).
  • Per W/M: Per weight or measure, which is how a consolidator charges certain fees such as ocean freight – typically, there is a density factor that determines if the quote is “per weight” or “per measure.” If your shipment is based on a per w/m factor of 1 cbm to 1,000 kg, that implies that if the shipment is 1 cbm but weighs 1,200 kg, the per w/m rate will be multiplied by 1.2, not by 1. But if the shipment is 1 cbm and weighs 970 kg, then the per w/m rate will be multiplied by the cubic meter volume, which is 1.
  • Air freight: Sending consignments by air

AEL provides worldwide LCL shipping services

American Export Lines is a global logistics company that offers international freight forwarding, warehousing, customs brokerage, logistics, and transportation consulting services to companies around the world. We offer cost-effective LCL shipping solutions to keep your goods moving. Please Contact Us or Request a Quote to find out how we can resolve your supply chain issues now.