An inside look at the current state of FCL vs. LCL ocean freight and how to make the best choice for your shipment.
Much like over-the-road carriers that offer both truckload and less-than-truckload options, ocean shipping falls into two primary categories: Full Container Loads (FCL) and Less-than-Container Loads (LCL). With FCL, all of the goods in one container are owned by a single shipper, regardless of the total container volume that’s actually used.
LCL cargo shipping, on the other hand, shares the space with other shippers and is usually booked by a freight forwarder that arranges the FCL by “consoling” various shipments and ensuring that they reach their final destinations (i.e., by “separating” disparate shipments into individual ones at the final destination).
Making the Right Choice, Every Time
There are pros and cons to each option, and selecting the right one will depend on how much freight you’re shipping, where it’s going, and how quickly it needs to get to its final destination. Current freight volumes and rates also come into play. For example, companies exporting freight from the U.S. East Coast right now are seeing low FCL rates.
Put simply, you won’t need a whole lot of cargo in a container to make it pay for itself. However, the more expensive containers become on an FCL basis, the more attractive LCL becomes. For this reason, a good starting point is to figure out exactly where the FCL market is (is it high or low?) and use that to guide your decision. If you have 10 cubic meters (CBM) to fill, for instance, the break-point will change dramatically depending on FCL costs.
Other key factors to consider when choosing between FCL and LCL are:
Where the shipment is coming from or going to.Is it import or export? And where is the shipment originating and/or going to? These are important considerations in the current ocean shipping environment, where exporting to Europe vs. importing from Asia are two very different scenarios in terms of rates and available capacity.
The cost of smaller containers versus LCL.Because it takes ocean carriers the same amount of money, time, and effort to ship 20-foot containers versus 40-foot containers, they try to avoid the former at all costs. That’s why prices on 20-foot containers—which tend to be best for very heavy cargo (e.g., granite, tile, fasteners, etc.)—are high. So, where exporters might assume a 20-footer is half the price of a 40-footer, that’s not the case. If you’re importing from Asia, for example, the cost of shipping a 20-foot container is roughly 90% of the cost of a 40-foot container. Because of this, it nearly always pays to explore the LCL opportunities before securing space in a 20-foot container.
The goods that you’re shipping.Shipping relatively lightweight cargo in a 20-foot container via FCL doesn’t make sense in an environment where LCL offers a better deal (and faster transit times). Our suggestion in this case would generally be to use the consolidated load in order to leverage the better deal.
Your firm’s production levels.If your company is manufacturing enough product to fill a container load every week, for instance, then FCL will be the obvious choice. However, if it’s not producing at that level—and if losing transit time is a concern—then LCL will be the more attractive choice.
Container utilization. This is a particularly important point for FCL users who should study their patterns and ensure that they’re best utilizing the space that they have to work with. Even though certain geographical areas may feature lower FCL costs right now, your overall strategy should always be to find the most economical, efficient way to get your goods from Point A to Point B. In many cases, LCL can help to fill in the “gaps” and keep your global supply chain running more smoothly.
Frequency of shipments. If you’re shipping 20-foot containers on a regular basis, there will come a time when you should ask yourself whether you have a good base load for LCL. Work with your freight forwarder to create a more affordable alternative to FCL. Now, if you’re shipping very heavy, dense cargo then this may not make sense. Again, this will usually be most viable for lightweight cargo (as opposed to dense, heavy goods).
Research Before You Buy
If you’ve always used 20-foot containers to move freight via FCL, it’s time to look more carefully at the options and determine if LCL presents a better opportunity to save money and speed up transit times. As you consider your options, keep these points in mind:
With FCL, you…
- Keep contained cargo all in your own sealed and secure container
- Are the only importer of record
- Can leverage the most cost-effective way to ship cargo
- Will have the least amount of touches on the goods (once loaded at origin and sealed does not open until the seal is broken at the importer’s door)
- Will handle the loading yourself, thus allowing you to block and brace and package to your desired specifications and needs for unloading
- Can hotshot or divert cargo as needed (with LCL it is very difficult to divert, stop, or expedite cargo once it is loaded into an inbound CY-specified consolidated container)
And with LCL, you….
- Will have no waiting for production to catch up to fill a full container – weekly or in some cases, multi weekly sailings to major base ports (LAX, CHI, NYC)
- Can keep your global supply chain moving
- Upon the cargo’s arrival at the base port, be able to move it to expedited services (be that airfreight, tandem driver trucks, regular truck vs the standard rail transfer)
- Can take advantage of LCL, which becomes more attractive particularly for 25 CBM or less (20-foot containers are seldom cost effective) as ocean rates rise.
- Diminish the risk of getting bumped because during peak season, consolidated containers have priority loading with the carriers, both for DB Schenker consolidators and our co-loaders
At DB SCHENKER, tailor-made solutions are our specialty, particularly when it comes to ocean freight delivery. We provide fully-integrated transport for FCL as well as a global LCL network that make managing your ocean freight easy and straightforward. Whether you need a logistics partner for one section of your supply chain or multimodal services, we’ve got you covered.
