When you finally decide to dip your toes into the world of international shipping, there will be some terms that you don’t know that could make a huge impact on your business. Two of these terms are FCL shipping and LCL shipping and knowing the difference between these two terms can save you a lot of money. And with all the supply chain issues these days, choosing one type of shipping over another can get your goods to their destinations more quickly as well. Here’s a guide to these two international trade terms and how they can impact your business.
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LCL Shipping – Less Than Container Load
LCL is an abbreviation for “less than container load,” and is the term used for shipments that do not fill a full shipping container. Other terms for this container condition are consolidation and groupage. Essentially, LCL shipping is designed for companies that only want to ship small shipments at a time and don’t want to keep a lot of inventory on hand. Shipping containers are typically 20 or 40 feet in length and 8 feet in width, so if your shipment isn’t large enough to fill a full container, it might benefit you to ship it as an LCL shipment.
In this case, your shipment will be grouped with like shipments that are also being shipped as LCL loads. For example, if you have a single pallet of stuffed animals to be sold through a small toy company, your pallet of goods will be grouped with other small shipments until a container is full. If you have a large order of stuffed animals for a single big box chain, however, you may decide to ship them all together in a single container.
FCL Shipping – Full Container Load
FCL is an abbreviation for “full container load,” and is the term used for shipments that occupy an entire shipping container. With an FCL shipment, everything within the container is owned by the same entity. Many international traders use FCL shipping if they intend to keep a lot of product on hand in a warehouse. They also may use FCL shipping for large items that take up a lot of room in containers or for dangerous shipments that should be loaded and stored separately from other products for the duration of the ocean journey.
In the example above, a shipper that has a full order of stuffed animals from a single big box chain would probably use FCL shipping to keep them in one container. When that container gets to the dock and passes through customs, it will be offloaded onto a truck that will take the entire shipment directly to the big box chain’s warehouse and distributed to the individual stores.
Benefits of LCL Shipping
Both LCL and FCL shipping have their benefits and drawbacks and you will probably end up using both types of shipping for various reasons. In general, LCL shipping is more expensive per unit, but if you only have a small shipment, you’ll actually save money by only purchasing the volume you’ll use instead of an entire shipping container. For small volume shippers who don’t intend to keep a lot of product on hand for inventory, it only makes sense to use LCL shipping because buying an entire container to ship one or two pallets makes no sense.
Another benefit of LCL shipping is that you can ship your goods right when they’re ready to go. This can help immensely with the supply chain issues that have been facing the global marketplace for the last year or so. You don’t have to wait until you have enough product to fill an entire container to get your products moving, which can help you deliver on promised delivery times. Plus, LCL shipments are shipped at regular intervals, which can help you plan your delivery times more accurately.
Benefits of FCL Shipping
The primary benefit of FCL shipping is that you control exactly what goes inside your container. You don’t have to share the space with other shippers, so the likelihood of damage to your goods is much smaller. With LCL shipping, you don’t have the option to choose the cargo your goods share the space with, which can impact your product, especially if those goods are corrosive, odorous, or dangerous. You could end up with goods that smell like another product that was sealed up in the same container and you’ll have no control over that.
If you have enough product to fill an entire container, your costs will be lower per unit. Additionally, importing fees are fixed per container, so you’ll always pay the same amount regardless of how much product you have inside a single container. With LCL shipping, you’ll pay scaled importing fees based on the volume your goods use. FCL shipments usually get through customs more quickly than LCL shipments because there is a single shipper and often uniform goods. LCL shipments can take a while to get through customs because every shipment and every shipper has to be inspected and cleared before the entire container can be released.
Which Shipping Method is Best?
There is no single answer to the question of which shipping method is best because it really depends on how large your shipments are, what your shipments are, your budget, and your delivery time needs. If you’re just shipping a large amount of product to a warehouse, FCL shipping will be more cost effective and you won’t have as many issues with customs. If you’re only shipping a small order on demand, LCL is going to be your best bet because you won’t have to wait to fill an entire container and you’ll only pay for the space you need.
In the end, you’ll probably wind up using both FCL and LCL shipping to manage your shipments according to your business needs. But understanding these terms will go a long way in ensuring you make the right decisions every time you need to get products shipped overseas, whether your shipments are small or large.