If you need to ship your goods anywhere – which is usually done by sea – then you may have come across the term LCL freight. But what does this even mean? If you are feeling slightly confused by all the technical jargon and acronyms, then don’t fret. In this article, we are here to explain what LCL shipping is, how it works, as well as its advantages and disadvantages. You will be sure to quickly understand it in no time. Those who are curious about this shipping method should continue to read on down below!
What does LCL mean?
When it comes to shipping and sea freight (meaning transporting goods and cargo across the ocean), LCL is a term that refers to less than a container load. This means that instead of your entire shipment taking up a full container, you share the container’s space with other people’s shipments. At first glance, LCL often looks cheaper, because users share the cost of shipping with others. This means that you only pay for the area your goods take up in a container, which will be in cubic meters. However, depending on factors such as route, destination, and the number of goods you are looking to transport, it can sometimes be more expensive than FCL – meaning a full container load. This option is the complete opposite of LCL, as you have to pay for an entire container, regardless of whether you actually manage to fill it or not.
How does it work?
Because LCL shipping involves you sharing a container with other people’s goods, it is often slightly more logistically complicated. This means LCL requires more coordination to make sure that everything goes smoothly. Here are a few things that you may have to do or keep in mind when using LCL.
Booking: When you have decided to use LCL shipping, you must book the service. This means providing your shipment’s dimensions and weight to a freight forwarder. You also need to prepare and send documents and forms, such as the Bill of Lading, cargo packing lists, commercial invoices, and more. Always be sure to check with your freight forwarder about additional documentation that you may need to give.
Ready merchandise: Most LCL shipments are usually transported regularly so that often means either weekly or every two weeks. This will depend on its destination port, so be sure to do your research. The cargo will then be grouped at a warehouse to be consolidated. Depending on your freight forwarder, they can either arrange for people to help pick up your cargo, or you can deliver the cargo to the warehouse instead. If you choose the latter option, you must package and prepare your cargo so that it is ready to be loaded. You must also ensure that your cargo arrives at the warehouse at least seven days before sailing, though always double-check timings with the warehouse itself.
Transferring: Once people have packed your LCL container, they will then move it to its departure port. Afterward, it is generally moved and then shipped to its destination port.
Transshipment: If your shipments need to go through a secondary port, then your cargo may be unloaded at a transshipment point. This is where it will wait to be transported to another container or wait for more cargo to fill the container before leaving for its destination.
Arrival: Once the containers make it to the destination port, a freight forwarder will then come to collect the container. After that, the container is then moved to a warehouse called the destination deconsolidation warehouse. Then, the cargo is unloaded and transferred into individual shipments.
Receiving: At this point, you will most likely have to go to the warehouse in person to pick up your goods. Or, if you are willing to pay more, you can get your freight forwarder to handle the delivery. This means that your shipment will be transferred, which will later be delivered to you.
Advantages of LCL
So, why would someone choose to pick this shipping method in the first place? Well, there are a few advantages to doing so. First, you only need to pay for the space required, since you have to share the container with other people’s shipments. This is great for small businesses, especially small e-commerce brands that may not have a large number of shipments or may balk at the price of FCL shipping. This option also allows them to be more cost-effective when it comes to shipping goods using ocean freight.
For instance, say that you picked air freight instead. This means you will either have to pay the gross or volume weight of your items, or whichever is higher. This means that costs and fees can truly rack up rapidly! On the other hand, ocean shipping only charges per cubic meter (CBM) – or per 1,000 kg, whichever is higher. This means it is more economical for shipments that are small in size but weigh a lot. If you are someone who does not mind the time taken, then LCL can be a great choice for you!
Disadvantages of LCL
However, with every advantage, come disadvantages, and LCL shipping is no exception. Because you base your shipping fees on a shipment per cubic meter, this means a cubic meter actually costs more in comparison to choosing FCL, even if the total cost of shipping is less. This is definitely something to keep in mind, as depending on how much space your shipment takes in a container, you could wind up paying more than you planned if you are not careful!
Another thing to note is that because you share containers, there is a lot of unloading and loading necessary to get your shipments to their final destination. This means that your cargo has a higher risk of being stolen, mixed up, misplaced, lost, or damaged due to more handling needed. Compared to FCL, where a whole container will be directly transported to its final destination. So, if you need to move any valuable or fragile goods, then it may be best to choose another option.
Furthermore, LCL shipping generally is slower in comparison to FCL. Because you have to consolidate goods, it takes longer for a container to be ready for transportation and delivery. Also, if a particular shipment needs to be inspected by customs, that means the entire container will most likely be flagged for examination before it is moved. If you are looking to deliver something fast or that has a deadline, it may be wiser to pick FCL or another shipping option instead.
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