There are various modes of transport that can be utilized to ship cargo across international borders. It is important for the importer or exporter to select the most suitable method and routing depending upon the size of the shipment, cost and how urgent delivery of cargo is required.
There is also so much terminology encompassing the importing and exporting industry as well. With all methods of transit having their own set of documentary and customs requirements.
One major factor always is the size of the shipment and as a rule for shipments that are sourced from outside of Europe, it is more cost effective to ship by sea.
If you move your cargo by sea you could have Either FCL or LCL goods. Like all things related to transporting cargo from one country to another, it’s best to have as much knowledge under your belt as possible. FCL and LCL are two of common terms used in shipping when it comes to International business, but what do they mean?
FCL
If an exporter has enough goods to fill one full container load, then they would book an FCL (Full Container Load) to transport their cargo. In FCL cargo, all the goods in this specific container are most commonly owned by one shipper. They are not consolidated and loaded along with goods that belong to separate companies.
If an FCL is owned by one shipper, the container doesn’t need to be completely full and loaded entirely with cargo. The container can be half loaded, or quarter loaded with cargo. If booked by one shipper as one shipment, the said shipment is called an FCL shipment. 20-foot containers accommodate up to10 standard pallets, while 40-foot containers can carry up to 21 standard pallets.
FCL gets delivered faster than LCL as the whole container doesn’t need to be unpacked into the various loads before it gets delivered. It also means that there is less potential for port and customs authority delays due to holds on other people’s cargo packed along with yours.
It’s considerably more complicated for LCL, which requires additional steps. When different shipments are consolidated multiple documents must be processed for each container, and then the goods are sorted for each customer. This takes longer as all goods need to be offloaded from the container for customs clearance and onward delivery.
LCL
LCL (Less than container load) cargo is when a shipper or importer does not have enough cargo to fill one full container, so then they book cargo with a consolidator to transport their goods along with goods of other shippers. This type of shipment is called an LCL shipment and is a way of shipping lower volumes without incurring the freight cost of a full container.
The consolidator arranges a fully loaded container comprised of cargo from various shippers, consolidates the shipments, and delivers each shipment to the final destination by separating the cargo at the final destination. LCL costs more than FCL per unit of freight but is cheaper for importers and exporters if they only have a small consignment. The costs are dependent upon the CBM and weight of the consignment.
One issue with this is that if you buy the goods from the shipper to arrival destination port you will not know what the charges will be levied by the shipper’s representative at the port. This often means that the LCL market is not always transparent and whilst freight charges can be minimal, the Terminal handling charges and documentation fees at the destination can be expensive if not agreed with the shipper beforehand.
Conclusion
There are advantages to both LCL and FCL. LCL lets you keep maintain a low inventory
If you don’t have the money or space to accommodate a full container of cargo at your warehouse. LCL also allows you to ship in smaller volumes so that you can keep your inventory small yet with a steady flow.
FCL is the option if your shipment is large enough to warrant using a full container. It is easier for freight and customs agents to process an FCL from a single shipper than and LCL comprised of multiple shippers. Do your research and figure out what’s best for your business to maintain optimal inventory levels.
If you start to go above 10 CBM for example it may be worth comparing the costs for both LCL and FCL shipment due to the issue with destination charges mentioned above.