Shipping Container 101: Should You Ship by LCL or FCL? | Are you wondering what the best way to ship products or large shipments around the world is? There are many options when shipping internationally.
The most common and cost-effective method is container shipping. This allows you to fill an entire container or share container space with other merchants.
LCL vs. FCL, what are the benefits of each, and which should choose? It all depends on what you are shipping, how often you would like to receive shipments, and what your inventory management strategy is.
Keep reading to understand FCL vs. LCL container shipping pros and cons and which is right for your business.
What Is Container Shipping?
Container shipping is the most common way of transporting large shipments internationally. For example, many companies have products manufactured and assembled in Asia.
Once complete, the products need to be shipped to their warehouse in the US before individual distribution to their wholesale customers or individual consumers. When shipping such a large amount of goods, shipping via a courier service or air freight quickly becomes cost-prohibitive.
While these options are usually faster, they are better suited to smaller shipments, as the cost can be quite high.
When using ocean cargo services, you have the option of filing an entire container or just a portion of a container. Containers can be either 20 or 40 feet long.
Dozens and dozens of these containers are loaded up onto cargo ships and sail across the ocean to the appropriate port. For US suppliers shipping from Asia, this is usually in Los Angeles or Long Beach in California, or Seattle in Washington.
LCL vs. FCL
When shipping via cargo containers, the space you use is measured by cubic meters or CBM. Shipments under 1 CBM might be better suited to ship via air freight.
20-foot containers have a volume capacity of 33 CBM. 40-foot containers have a useable volume between 67.5 CBM and 76 CBM.
Ocean LCL vs FCL, what’s the difference when shipping with containers?
LCL stands for Less Than Container Load. When your shipment isn’t quite large enough to fill an entire container, you’ll ship using LCL. If your shipment is under 15 CBM, LCL is usually the best option.
When using this method, the extra space inside the container can be used by other companies with small shipments. That way, containers are still shipping full, but you get to split the cost with other companies.
FCL stands for Full Container Load. If you are shipping enough products to fill an entire container, you’ll use FCL and won’t need to share container space with other merchants.
Even if your shipment doesn’t quite fill the container, you have the option of shipping FCL. You’ll just have to pay for the entire container rather than splitting the cost, but this could make sense for you. Generally, if your shipment is larger than 15 CBM, you should consider shipping FCL.
FCL vs LCL Shipping Pros and Cons
Choosing a shipment type might seem obvious at first, right? If you don’t have enough goods to fill a container, ship LCL. But there are other factors to consider before choosing your shipping preference.
FCL Pros and Cons
Shipping via FCL comes with more benefits than LCL. Sure, the upfront cost is a bit higher, but everything about the process becomes easier.
You’ll experience faster departure times, as your container won’t have to await other merchants’ shipments to arrive and be loaded. Plus, the local fees charged to the container will end up being lower when compared to the CBM used.
And you’ll generally experience faster processing times at the port of destination. Because a container only contains your goods, you won’t experience delays based on suspect goods or complications of other merchants’ shipments.
Once processed through customs, the container can then head directly to your warehouse, as the shipments on board don’t need to be separated. So while FCL shipment costs are higher, it might be worth it to receive your container faster and with less hassle.
LCL Pros and Cons
If you don’t enough goods to fill a container, shipping LCL can save money upfront, as you won’t need to pay the full container price. However, local fees remain the same, whether shipping LCL or FCL.
So shipping a 3 CBM shipment via LCL and shipping a 33 CBM shipment via FCL will incur the same local fees, as they are priced per container. As an LCL shipment, that means the cost per CBM goes up.
However, smaller shipments are generally cheaper when shipping LCL, depending on the route taken by the ship.
Another thing to be aware of when shipping LCL is the additional time it takes to process and receive your shipment. When your container arrives at the port, it will take longer to inspect and unload than an FCL. This is because other shipments are involved.
If goods inside your container are considered suspect, the entire container will be delayed while an inspection happens. And once the container passes through customs, it will need to travel to an additional facility to have shipments separated and loaded onto separate trucks before traveling to your warehouse.
When considering LCL, you’ll have to factor in additional time when deciding if the savings are worth it.
Why LCL Might Make More Sense
Even with the obvious advantages of shipping FCL, many companies still prefer to ship LCL. Why is that?
They might be prioritizing a lean supply chain and inventory strategy. This means they want to have less inventory on hand at all times.
With less inventory on hand, they won’t need as large of a warehouse. Larger warehouses cost more money to own, maintain, and staff, than smaller facilities.
Plus, sitting on less inventory poses fewer cashflow risks. It just means you’ll likely have to order multiple LCL shipments per year rather than one or two FCL shipments, but the ongoing management costs might be lower.
Deciding on a Shipping Strategy
LCL vs. FCL; which option comes out on top? It depends on a variety of factors, as well as your business goals and inventory management strategies.
If you are always ordering more goods and want to receive them quicker, FCL is the better option. For those who are more concerned about over-ordering inventory, shipping LCL can prove to be more beneficial.
It helps to work with a freight forwarder who can advise you on the best situation for your particular shipment.
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