How LCL Shipping works

Often our clients are asking us if we can also ship less than a full container load. And also in our daily work we encounter the situation that we have cargo, that isn’t enough to fill a container with it. The solution for these situations is quite simple, it is a called an LCL shipment. LCL means nothing else than “Less than Container Load”. In this article we want to explain how LCL shipments work and how we can help you to set up your own LCL shipment.

Introduction

No matter what kind of products you are dealing with, shipping is always an essential part of the purchase process. But what do you do if you purchase your products in China but the total volume is only 2 cubic meters? Surely, you could send this cargo by air freight. But air freight is expensive, so that it might not be worth it to use this option. Especially if you are dealing with heavy products air freight isn’t really an option, as it drastically increases your spending on freight. The  best solution in this case would be to book an LCL shipment.

How it works

LCL is a service that is provided by many freight forwarders. Usually you book a certain space for an LCL shipment, such as 2 CBM. The forwarder will work all of this out for you, as long as you have a prepared packing list and some additional information on hand. He will then give you a quote for the required space, so that you know the cost of your LCL shipment. Weight has no influence on the shipping cost for ocean freight – the prices depend on the volume that your cargo has. Once you have approved the quote, the forwarder will consolidate your cargo with other LCL shipments into one container. This way many traders with lower cargo volume can share one container. As soon as the container is filled, it is being shipped to the port of destination just as a full container load. The transit time is the same, but you need to remember that different LCL shipments are being consolidated in the forwarders warehouse, so that it might take a week longer before the container is leaving. When the cargo arrives in your country, you will need to appoint a local agent to organize the customs clearance and local delivery to your warehouse. Bigger companies can internalize this process almost fully.

Limitations of LCL shipments

If your LCL load is not coming from one factory only, the forwarder will book these as separate LCL shipments. This is more expensive as the main cost driver for LCL shipments are fixed costs for customs and procedures at the ports. This is already the next limitation. Due to these fixed costs not every LCL shipment actually makes sense. Once the total shipment volume of your goods are below 1 cubit meter, the fixed costs are so high, that you might need to consider other options. Fixed costs depend on your INCO terms. We always recommend you to ask for FOB terms. Nevertheless, you will pay no matter how big the volume, or how heavy the cargo, fixed fees for a telex release (65 USD), warehouse charges, port fees at the POD/ destination port, as well as fixed fees for customs declaration and import in your home country. Thus, we do not recommend to set up any LCL shipment below 1 cubic meter. Always remember shipping charges are about economies of scale. Also make sure you understand all shipping terms that you agree on with your forwarder or supplier. The ocean freight does not include port charges, and thus you might be surprised about additional fees you need to cover, once your cargo arrives. If you have the chance you can root your LCL shipment from your home country, so that your agent can give you directly all fees involved locally after arrival.

Alternative Options

There are generally 2 situations in which an LCL freight is not necessarily cost-efficient, so that you will need to consider alternatives.

Firstly as mentioned above if your volume is below 1 CBM and the goods are small and light. Then it is more cost effective to send your goods via a courier service, such as DHL, UPS or FedEx. These companies also do the customs declaration for you and you will receive the goods directly at your office or warehouse, while the delivery time is much shorter as ocean freight shipments.

Secondly, your goods are less than one cubic meter, but the weight is very high. In this case shipping fees with a courier company are also very high. So what to do now? This is where we can help.

How we can help you with your LCL freight

If your cargo has a small volume but is heavy, there is no other cost effective option than shipping your goods by sea. We are consolidating every 2 month shipments either into a full container load or into an LCL shipment for our clients in Europe. This way the actual fixed fees are being distributed to everyone. Just contact us to get a quotation. We are also helping many clients to efficiently consolidate smaller packages from different vendors and suppliers into on shipment. This way you can send all of these goods together as one LCL shipment, which will save you quite a lot of money. Furthermore, we can organize the local transport in China to the port of your choice and organize the export. Some smaller vendors don’t have an export licence, so that they cannot export themselves. This is where we come in. With our export licence in China, we can declare customs and get your goods exported, so you don’t need to worry about these procedures.

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