If you’ve ever had to ship cargo or products either domestically, or internationally, you’re probably familiar with the terms “LCL” and “FCL” shipping. For ecommerce business leaders and growing vendors, knowing the difference between FCL and LCL shipping, and the unique benefits they can offer is crucial to building the right logistics strategy.
The method you choose for transporting your goods doesn’t just influence how much you pay for logistics; it also has an impact on how reliably your business can serve customers. After all, 82% of customers say they’d recommend a brand to their friends if they offered a good shipping experience.
Knowing when to choose FCL and LCL shipping for your logistics strategy determines how effectively you can keep warehouses stocked, and minimize disruptions in your supply chain. Here’s everything you need to know to make the right decision.
What is LCL Shipping? Less-Than-Container Load Shipping
In the logistics landscape, “LCL” stands for “Less-than-Container Load”. When companies use this shipping service, they don’t need to fill an entire container to ship overseas. Instead, they just hire a portion of the container, alongside other smaller companies.
LCL shipping has grown more common in recent years, and it’s expected to continue expanding at a CAGR of 3.5% in the next five years. Many smaller companies can access faster, more convenient shipping options with LCL, when they don’t have enough cargo to fill an entire container.
With LCL shipping, your goods are placed in the same container as the products being shipped by various other companies. In some cases, the container may even accumulate additional cargo as it moves through each stage of its journey. Though LCL shipping can be a cost-effective option for smaller brands, it can take more time for goods to reach their destination.
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What is FCL Shipping? Full Container Load Shipping
The Incoterm “FCL” stands for “Full Container Load”. The name is a little misleading, as a container doesn’t actually have to be full with FCL. However, with this shipping method, your company is the only one hiring and using the container. There are no stops along the way to your target destination, and no other businesses sharing your space.
FCL shipping options can offer faster delivery times because there aren’t as many on-route stops. Cargo is loaded into a dedicated container, which is then sealed and sent directly to its destination. This practice can also help protect sensitive goods, as there are fewer people handling your products.
Additionally, if you fill out all of the right shipping documents correctly, you can often avoid additional customs checks, which can slow down transit. However, since you’re not sharing your container, the price of paying for FCL can be higher.
The Difference Between FCL and LCL Shipping
The main difference between the incoterms FCL and LCL shipping is the amount of container space you access as a business. Ultimately, FCL and LCL shipping options both allow you to transport goods around the world. However, with FCL shipping, you purchase exclusive use of a container, whereas with LCL, you share that container with other businesses.
There are also a few other differences between the strategies worth mentioning, revolving around:
- Transit time: With LCL shipping, products often take more time to reach their destination. Products need to be consolidated and deconsolidated at the beginning and end of each shipping route. Additionally, some containers will accumulate additional products before they reach the “port of destination”
- Complexity: LCL shipping can be more complex than FCL shipping. For instance, if there’s an issue with a certain shipment during the customs clearance process, it may impact every importer with cargo in that container, leading to additional requests for documentation. More employees are also necessary to classify, group, and package shipments
- Costs: Although LCL shipping can be more cost-effective for companies with less cargo to ship, the costs can be higher per “unit of freight”. LCL prices are calculated by volume, in cubic meters, so the more space you need, the more you pay. LCL shipping can also have additional costs associated with the shipment preparation and completion process
- Risk: Because LCL shipments involve packaging various types of goods into one container, it often comes with a higher risk of damage, theft, and loss. With LCL shipping, you can’t always choose how goods are packaged into a container either, which can cause damage to goods packaged with liquids and heavy items
Choosing Between FCL and LCL Shipping
FCL and LCL shipping are both valuable options for companies shipping products overseas. There’s no one method that’s automatically better for a vendor than another. The right choice will depend on various factors, including how much of a product you need to transport (the volume), and how much control you want to maintain over the logistics journey.
If you’re trying to choose the right method based on cost, it’s worth remembering that LCL shipping isn’t always the most cost-effective route. While it is cheaper to hire a portion of container, rather than a full container if you only need to ship a small amount of cargo, the prices can quickly add up. The more space you take up in a container, the more you’ll pay.
Additionally, you may incur additional costs when:
- Paying for products to be collected from a warehouse or factory
- Asking logistics companies to consolidate and package shipments for you
- Managing customs clearance and other tasks at the point of delivery
It’s also worth remembering that FCL shipping can give you more control over the logistics journey, and expose you to fewer risks. With this shipping method, you’re less likely to encounter delays as a result of another company’s products failing to pass customs inspections.
You don’t have to worry about stops on your container’s route to its destination, and since fewer people are handling your products, there are fewer risks associated with theft, or damage. The biggest downside of FCL shipping is it can be hard to find a company that offers full container allocation to smaller companies, which is why it’s important to work with the right freight forwarder.
Finding the Right Shipping Solution
Both FCL and LCL shipping solutions give businesses an opportunity to ship their products around the world, to both warehouses and customers. Both of these methods have their pros and cons to consider, so it’s worth looking at your situation carefully.
If you want to maintain control over your cargo, and unlock faster shipping times, FCL could be an ideal solution – if you can find a company that offers it to businesses of your size. If you’re looking for a cost-effective way to ship smaller volumes of products, and you’re not too concerned about products getting damaged, or arriving at their destination late, LCL might be the right choice.