Ocean Freight Shipping from China: FCL and LCL
Sounds easy enough. But in our years forwarding practical experiences, we have heard many sad stories about how importers are shocked by the invoice they had to pay at the LCL destination. Since there are LCL destination fees, more than you prepaid in most cases.
My shipment volume was about 14 cbm, and I chose LCL.
It ended we had to pay much more when it arrived.
What did I do wrong?
In fact, if you can’t reach a full container volume, FCL shipping might still make sense. Actually, LCL shipment larger than 15 cubic meters cost more than a 20 feet container, even if half the container is empty.
Keep reading and find out how to make the right choice between FCL and LCL.
FCL = Full Container Load
LCL = Less than Container Load, aka Groupage or Consolidation
They are two of common shipping terms used in the international logistics industry for export and import ocean freight cargo.
LCL means you share space with others, also share cost
LCL enables importers to ship smaller amounts of cargo that’s not of a large enough volume to make FCL a viable option. This means your cargo is combined with other shipping consignments headed for the same destination.
Unlike FCL, which usually has a flat rate per container, LCL is charged based on the volume, set in cubic meters. LCL shipping is a cost-effective solution for smaller shipments as you only need to pay for the volume space used. At the same time it almost always cheaper than air freight.
When it comes to FCL, three most common container types list below for your evaluation. Most businesses importing from China are only concerned with these three standard sizes that make up most of the container volume shipped worldwide.
FCL container volume
|20ft Container||40ft Container||40ft High Cube|
(28 cbm in practical)
(58 cbm in practical)
(68 cbm in practical)
- 20ft container = 20′ container = 20’GP
- 40ft container = 40′ container = 40’GP
- 40ft high cube container = 40’HQ = 40’HC
You may have to learn to be comfortable with CBM measurements (cubic metres = Length*Width*Height in meter), if you do not use the same unit in your country. Also please note the difference between the volume in theory and in practical. Most Chinese suppliers could advise the exact quantity loading in a full freight container. If you don’t have a clear idea on that, just feel free to ask.
LCLs in one container like this
1. FCL shipment will be loaded and sealed at origin by your supplier or the manufacturer, then shipped by a combination of ocean, road or/and rail to your final destination.
The LCL shipment will be exposed for consolidating once at the loading port, and for sorting out again at the destination port.
2. The bill of lading of FCL shipment will be issued directly by the official shipping line.
The bill of lading of LCL shipment will be issued by the freight forwarder.
3. LCL service charges more than FCL when it comes to shipping cost per unit.
4. Shipping mark, which is written symbol or symbols that are printed on outer package, is mandatory for LCL shipment.
The purpose of the marks is to identify your goods from those of other shippers. They should be made boldly, with waterproof ink, so that they can always be easily read. They should be in black, with red or orange for dangerous cargo.
The marks should be in both English and the language of the country of destination. The package can be easily identified with the corresponding shipping documents and easily located for customs clearance and delivery.
Why LCL charges more than FCL?
Most times, using LCL logistics, the freight agents often charge 2~3 times as much per cubic meter, compared to FCL logistics.
Sometime the prepaid rate is cheap, but there are various destination fees to be collected, which listed below for reference only.
- PSC fee (Port Service Charge)
- SCA fee (Service Charge due Agent)
- D/O fee (Deliver Order)
- THC fee (Terminal Handling Charge)
- TSF fee (Terminal Security Fee)
- IPF fee (Import Processing Fee)
For the steamship carriers, they only accept full container booking.
A freight agent has to combine several LCLs into a full container. It makes sense. The workload is actually higher when managing LCL transportation. While FCL shipments can be unloaded and delivered directly to the buyer’s location, LCL shipments must be unloaded at the Port of Destination.
Especially for the split process at the port of developed countries, owing to many manual labor which is necessary for different kinds or shapes of goods.
That’s why you have to pay more shipping cost at the destination of 15 cbm LCL than a full 20ft container.
Advantages when you buy FCL
Importing by the container load is not always as expensive as one might think, and a full container load results in lower shipping costs compared to small volumes.
1. FCL can be tracked directly from the shipping company.
You can track the location and estimated arrival date of your container shipment from China, through the shipping carriers’ websites.
In order to track your goods, you need to know which shipping line is transporting your cargo, and the container number, booking number or document number (any of them is usually good enough).
2. Buy FCL means your shipment will be safer.
In the LCL arrangement, the shipper is required to deliver the cargo to the forwarder’s warehouse for containerisation. The forwarder will use the same container to pack in more cargo from other shippers to make a complete container load at the warehouse. This action is also called freight consolidation.
Your cargo will be exposed to a higher risk of damage or loss, as it will be exposed when the carrier consolidates it with other cargo at the port of loading, and exposed again at the destination.
If you choose LCL cargo shipping, make sure your goods prepared and packed properly to be able to withstand sharp or heavy objects as well as chemical fumes or liquids.
3. LCL shipments will take longer to process.
This is because the carrier can load FCL containers without any fuss, whereas cargo for LCL needs to be consolidated first. Same situation at the destination.
4. FCL unit freight cost will be cheaper.
Lower price per cubic meter compared to an equivalent volume or weight of cargo shipped by air freight or LCL sea freight. Because it’s more convenient to optimize your quantity and packaging to maximize the space usage inside a 20 feet or 40 feet container.
There are numerous rates, surcharges and tariffs which are adjusted to the size of your LCL shipment.
Advantages when you buy LCL
Rather than importing a large quantity of goods from China, you may want to start with a small shipment to learn the problems and issues that will inevitably arise. Your knowledge of restrictions, taxes, Chinese society, finances and professional resources will be greatly tested.
Cargo with a volume as small as less than one cbm (taken as one cubic meter) can be shipped by sea.
2. Lower sourcing risk
A trial order with small quantity can prove if the product is qualified and the supplier is experienced.
3. Shorten delivery time
Sometimes, it will arrive sooner than FCL, since you do not need to wait until your supply have enough stock to fill a complete container alone.
4. Minimum inventory management
Whether you are new to a niche market, or just on a budget, choose LCL shipment at first can lower your financial risk, and keep you out of large inventory trouble. Therefore your supply chain suffers fewer bottlenecks, allowing your operations to run smoothly.
The cost of inventory is not solely determined by the direct expenses associated with storing, managing, and maintaining the goods, but also by the opportunity costs that arise when money is tied up. Goods represent a store of value; keeping resources tied up in products or components that are not being utilized or sold immediately restricts a company’s overall cash flow and may reduce the amount of liquid capital available.
How to choose FCL and LCL cost-effectively?
At first, you should request your supplier quote you a price based on a predetermined quantity (which is often the case when importing from China). However, the supplier should still calculate how many product units fit inside the container.
There are also situations when you need to go even bigger than a 20′ container. A 40′ container is more than twice as long as a 20′ one, but the freight charge for a 40′ container is less twice than a 20′ one.
But if small cargo like the volume under a full container loading,
- If 1cbm~8cbm, choose LCL.
- If 8cbm~15cbm, do some research to see what’s the most effective solution.
- If over 15cbm, choose FCL without any hesitation.
Some points to keep in mind:
1. Plan ahead
If you are interested in consolidating orders, make sure to schedule accordingly and allow enough time to plan the shipments in line with the consolidation requirements. Sometimes, this will help save a lot.
2. Use pallet
It is generally a good rule of thumb to pack your goods on pallets. This helps with loading and can avoid problems from occurring in transit.
3. Size matters
When considering the size of your products, you must also remember that the dimensions of the packaging (and any further packaging carried out on your behalf) are the values that are used to calculate the cost, and in some cases this packaging can add up to 30% to each dimension.
If your products are too delicate, or cannot be tightly packed and therefore takes up more space, it will obviously affect the cost.
Some importers try to optimize their freight costs. The rate of one unit product is definitely lower when choose FCL.
Some importers, however, simply buy what they need. Not only considering landed cost, but also avoiding extra inventory that might not get sold.
If you’re intending to ship a large amount of imported goods regularly, then it would be worth looking at FCL, as it enjoys greater economies of scale; If your shipment is relatively small, stick to LCL.
Try to buy FCL not LCL, and ONLY buy LCL when your cargo volume is under 15 cubic meters, this should be a basic rule.
Special note: It’s not an excuse for your supplier persuade you to buy more than you really need.
If you need our assist on this, or want to get a competitive quote for your FCL or LCL shipment, please feel free to let us know.
CFC News - Nov. 25, 2020
🍂Demand remain strong, will last into the end of the year, or stay at these levels as long as until Chinese New Year in February.🍂
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