Within international trade in great dynamics, businesses are more often obliged to ship non-container loads. That’s where LCL shipping plays a huge role. At less than the container load cargo, there is an easy sharing opportunity of the containers by several shippers which optimizes cost and efficiency. In this blog, we go into great details: how it works, LCL’s advantages, points to consider, and optimal practices for LCL shipment in businesses who want smooth logistics.
Less than Container Load: Understanding LCL Shipping
less than the container load (LCL) cargo shipping refers to the process of transporting cargo that a whole container cannot fill. For example, under this kind of arrangement, shipments from many exporters are consolidated into one single container by sharing the space as well as the costs. Businesses, which have a lesser quantum shipment volume not enough for investing in FCL, rely upon this mode of sending shipment.
Advantages of LCL Shipping
- Cost-effectiveness: Since several shippers share the container space, they pay only for the volume their cargo occupies, making LCL cost-effective for smaller shipments.
- Flexibility: The LCL can accommodate the shipping of cargo even before enough cargo for a full container is accrued, thus investors can ship more frequent cargo to improve their inventory management.
- Reduced Inventory Costs: More frequent, smaller shipments can also reduce inventory holding costs since businesses will be able to operate on a just-in-time basis.
- Environmental Sustainability: In consolidating cargo, it leads to reduced numbers of containers in transit; hence, carbon emission is minimized and leaves a smaller print on the environment.
Things to Consider When Choosing LCL Shipping
While LCL shipment is highly advantageous, there are a number of factors that need to be considered:
1. Transit Time: The time may be longer since LCL involves consolidation and then deconsolidation in the process of delivery. This calls for planning in advance for meeting delivery schedules.
2. Handling and Risk: More consolidation means more handling, which means a greater chance of damage. Properly packaging the item, along with insuring it, may help a business mitigate this risk.
3. Cost Implication: The LCL option is somewhat economical, especially for light shipments; however, nearer the shipment size gets close to a full container, cost-wise FCL may seem more economic. It gives a decent look at one’s economy by analyzing every cost against benefit in ratio to the size of shipments.
Best Practices for Successful LCL Shipping
For a customer to maximize LCL shipping, one has to consider the following best practices:
1. Verifying Volume and Weight: Precise measurement of cargo dimensions and weight is crucial for proper billing and space utilization.
2. Robust Packaging: Invest in good strong packages that can bear all stages of handling. Use pallets or crates for easy loading and unloading.
3. Full Documentation: Ensure that all shipping documents are completed and accurate to avoid delay in customs clearance.
4. Partner with freight forwarders specializing in LCL shipments and who can handle the complexity involved, ensuring smooth processes.
5. Insurance Coverage: Due to the higher handling involved, it would be prudent to take adequate cargo insurance against potential losses.
Overview of when to choose LCL shipping:
1. Small Shipment Volumes: If your cargo does not occupy a full container, then LCL allows you to pay only for the space used, hence it’s cost-effective for smaller loads.
2. Frequent Shipments: If you are a business dealing in regular dispatches, then LCL offers flexibility by not having to wait until one has enough goods to fill up a container.
3. By cost management: LCL is sometimes cheaper compared to air freight for small shipments, finding a great balance between cost and delivery time.
4. Inventory Control: Smaller and more frequent LCL shipment reduces inventory holding costs and justifies the implementation of a just-in-time inventory system.
By balancing these factors, a business can carefully weigh the options for shipping to find the most appropriate one to optimize its supply chain operations.
How much is an LCL shipment?
Less than a Container Load charges depend basically on the volume of your cargo in cubic meters (CBM). In most LCL shipments, the quote one would be asked to pay is based on space that your goods will be taking up inside a consolidated container. While weight matters, volume usually plays a major part in the overall cost.
LCL Shipping: Key Factors Affecting Costs:
Ocean Freight Charges are the main costs paid directly to the shipping line for your goods to be carried from port of origin to the final destination port.
- Pickup and Delivery Fees: These include the transportation of your cargo from the origin warehouse to the consolidation center and from the deconsolidation center to the final destination.
- Consolidation and Deconsolidation Fees: Charges for handling your shipment along with processing at origin and destination CFS where the consolidation or deconsolidation is affected.
- Warehousing charges: Sometimes storage charges might be payable in instances where your shipment has to be held at the CFS pending or after consolidation/ deconsolidation.
- Customs Clearance Fees: The costs of preparation and presenting relevant customs clearance documentation at the port of arrival.
- Insurance: You can insure your cargo against any damage or loss to be incurred during transportation.
Calculations of LCL shipping costs:
Estimate the cost of your LCL shipment by:
1. Measure Your Cargo: Multiply the length, width, and height to get the total volume in cubic meters (CBM) of your cargo.
2. Request a Quote: Employ some of the freely available online LCL shipment calculators or call a freight forwarder to request a quote using your cargo volume and weight.
3. Other Charges: Add in any ancillary charges, such as pickup, delivery, consolidation warehousing, customs formalities clearing, and insurance.
Volume Calculation:
Suppose your shipment consists of 1 box with the following actual dimensions:
• Length: 2.5 meters
• Width: 1.5 meters
• Height: 2 meters
• Gross Weight: 600 kg
Volume Calculation:
• Volume = L × W × H
• 2.5m × 1.5m × 2m = 7.5 CBM
Weight-Based Volume:
• Actual weight = 600 kg (0.6 ton)
• Weight-based volume = 0.6 tons x 1 CBM /ton = 0.6 CBM
Chargeable Volume
As the gross volume is greater than the weight-based one, 7.5 against 0.6 respectively, the chargeable volume will be 7.5 cbm.
Cost estimation:
Assuming a freight rate quoted at USD 50 per CBM:
Total cost = 7.5 CBM × USD 50/CBM = USD 375
Conclusion
Less than Container Load, or LCL, shipment acts like a strategic advantage that businesses can avail of when shipment by volume is smaller. Since LCL offers more expensive and flexible alternatives that are most often environmentally friendly, key success factors in LCL include identification of the nuances associated with LCL and their successful application in optimizing the supply chain process improvements aimed at improving global trade efficiency.
