Over the last few decades, international container shipping has become a critical component of many businesses’ supply chains. The global container fleet reached 50 million TEU in 2021, and that is expected to increase to nearly 55 million TEU in 2022.
When employing container shipping for your overseas goods, you’ll be faced with two major options: FCL and LCL. In this article we’ll unpack what FCL and LCL mean, the differences between them, and how to determine which is best for your shipping needs.
What is FCL?
FCL stands for Full Container Load. As the name suggests, it involves paying for and shipping your goods in a full container. This shipping option makes sense for companies shipping a high volume of goods, as it’s most cost effective when you completely fill your 20- or 40-foot shipping container.
What is LCL?
Conversely, LCL (which stands for Less than Container Load) involves sharing container space with shipments ordered from other companies. This is a more flexible delivery option that is less expensive for smaller shipments. However, it also offers less control over the shipment, as the container will not be holding your goods alone.
How to choose between FCL and LCL
There are many factors that play into whether FCL or LCL container shipping is right for your company. As mentioned above, freight costs for FCL shipping are higher for small shipments, and FCL typically makes the most sense when loads exceed 15 cubic meters. LCL delivers your goods in a shared container, making it appropriate for loads between 1 and 15 cubic meters.
If you have a higher-volume shipment, it generally becomes more expensive to ship using LCL, as local fees are typically more expensive for LCL than for FCL.
Aside from cost and volume, you should consider:
• Lead time. LCL requires additional shipping time to accommodate consolidating, sorting, and separating your goods from those shipped by other businesses. If there is a delay on those other goods, that delay may also affect your delivery time. FCL offers a much speedier turnaround, as the only goods and only shipping destination will be yours.
• Flexibility. LCL is a more flexible shipping option than FCL. This is because LCL is designed to ship multiple goods to multiple destinations. LCL makes scheduling multiple or split deliveries of your product easy, whereas FCL may require additional expenditures for unloading, sorting, and storing of your product.
• Availability. During high-volume shipping periods, wait times for full container availability may be longer. LCL shipping is typically available more quickly, and may be your only option if you don’t have time to plan a shipment well in advance.
• Security. LCL shipping involves more handling than FCL shipping. Although both methods are generally secure, there is a slightly higher risk of damage, error, or theft when using LCL.
• Trackability. Both LCL and FCL containers can be tracked. Using information from the Bill of Lading, you can track your shipment until the port where the cargo is unloaded. It is worth noting that tracking for LCL shipments may be less accurate because of the increased handling that comes with shipping multiple orders.
Inventory management
When deciding which container load is right for your shipping needs, consider how you want to manage your inventory. Increasingly, companies are ordering in advance, instead of JIT (Just In Time) inventory. This is generally a stronger business practice as it ensures that you won’t run out of inventory at a critical moment.
If you order goods in advance, you’re more likely to need the space afforded by FCL. However, it’s smart to develop a loading plan so you’re making the most of the space in your container. If you’re going to pay for a full container, maximizing the space you have makes your investment worth it.
Ultimately, both LCL and FCL come with pros and cons. There isn’t one option that is consistently better — only the option that is better for you. Assess your budget, timeline, volume of goods, and flexibility. Always adjust your strategies and expectations based on your shipping method. For example, FCL shipments should utilize as much container space as possible. And when using LCL, allow time for any unexpected delays.
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