What Is FCL & LCL Shipping? & How Do These Shipping Terms Work?
Ocean freight shipments are a regular part of the service provided by international shipping companies.
Depending on circumstances, a company might create an FCL or LCL contract. Furthermore, these two shipping types may be combined. Understanding the difference between the two will be vital for keeping company operations optimal.
This article will discuss what is FCL shipping, what is LCL shipping, how they differ, and how they’re used in practice.
FCL is short for “full container load”. This means the entire container is dedicated to a single shipper and won’t be shared with other consignees. By choosing FCL shipping, a company gets the advantage of having its cargo transported exclusively. This comes with the benefits of easier logistics and improved security. Of course, the shipping cost will be larger.
An FCL shipment will usually arrive sooner than LCL. While this makes FCL the preferred method for time-sensitive shipments, speed isn’t the only factor that may make a company opt for this method. Bulkier cargo will also be more convenient to transport using FCL.
LCL stands for “less (than) container load”. As the name suggests, LCL shipping means the exporter doesn’t require a full container. Instead, the shipper will share the container with others. This method is mostly suitable for shippers that transport relatively small cargo which won’t take up too much space. It should come as no surprise that an LCL shipment will be less pricey than an FCL shipment.
Since LCL shipping includes transporting several shipments in a single container, exporters opting for this method shouldn’t count on precisely timed delivery. The cargo will need to be off-loaded and sorted before it can reach its final destination, which might be taxing time-wise.
Differences Between FCL and LCL Shipping Containers
FCL and LCL containers will differ according to the cargo type. Since FCL includes bulkier and often heavier items, the containers will be designed to support particular dimensions and weight. On the other hand, an LCL shipment will require less space, so it will be suited for more compact containers.
Specialised containers are often used for specific cargo. For instance, particularly heavy items will often be transported in half-height containers, while granular cargoes will be packed into so-called bulkers. Car transportation will usually be done using collapsible racks.
It’s worth noting that cargo volume will affect the container size and, in turn, the pricing. While an LCL shipment may be more affordable in general, its cost might surpass FCL after a particular point.
How Does FCL and LCL Shipping Work
For FCL, it will be necessary to book an entire container. Of course, multiple containers may be booked if needed, but each one will need to be reserved solely for the shipper. Since the cargo is in the ownership of a single subject, it won’t need sorting upon arrival at a delivery port. Customs and ports will also less likely create delays for FCL shipments.
An LCL shipment will require the shipper to book a portion of a container. The goods within will belong to different businesses, which will mandate additional work around document consolidation and processing, as well as cargo sorting. LCL may also involve longer loading and unloading times.
Shipping via LCL will be less expensive in terms of the freight charges. However, documentation fees and terminal handling expenses may even out the final cost with that of FCL.
Calculating the Costs
Whether the question is how to calculate LCL ocean freight or how to calculate FCL ocean freight, the answer will be similar. Both shipping methods involve two primary factors: carrier charges and handling costs.
However, when broken down into more detail, the expenses will start to differ significantly.
The first consideration will be the cost of hauling the cargo to the port or export warehouse. This will be a lump sum in both cases and may include a surcharge for fuel.
Next will be the terminal handling charge, which means the work around the shipment while it’s in the port or warehouse. For FCL, this expense will also be a lump sum, but LCL shippers will need to pay based on weight or volume.
Documentation costs have already been mentioned. They’ll represent a lump sum for FCL and LCL shipments and may include various certificates, shipping bills, etc.
Customs and security clearance will be charged as a lump sum in both cases, on account of customs declaration lodging and individual port security measures.
When it comes to the ocean freight itself, this is where the price difference will be most obvious. FCL shipments will have a lump sum per container size, while LCL will be charged based on kilograms or cube meters. It’s important to note that, in the case of LCL, the higher value will be considered.
Ocean transport will also include a fuel surcharge. This will again be calculated by unit size for FCL and by weight or volume for LCL.
The final expense will be related to currency adjustments. Although this factor will depend on the forwarder, it will most often be calculated as the percentage of the freight.
The two shipping modes can be combined, depending on the particular requirements. The FCL/LCL model means the goods are first sent in a full container, which is usually smaller. Then, upon arrival, the shipment is combined with others and continues in LCL mode. The opposite model is also possible, i.e., where the shipment arrives as LCL and is then forwarded in a single container.
When a single mode is used, many companies will simply use the term FCL or LCL. However, if they wish to signify that several stages will be involved, these methods may be named FCL/FCL or LCL/LCL.
Understanding Shipping Modes for More Cost-Effective Transportation
Minimising transport costs is one of the primary considerations in shipping and logistics. Understanding the difference between FCL and LCL will play a massive role in that regard, since the two methods may have a large price gap.
While LCL will usually be cheaper, it’s worth calculating the exact cost beforehand. Larger shipments may turn out to be more affordable when sent as FCL.
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