For exporters, LCL shipment vs FCL shipment is one of the choices they have to consider when deciding prices for their export products.
This option can undoubtedly affect the shipping price since LCL or LTL means less volume or more enormous volumes are involved.
The primary differences between FCL and LCL shipments
Shipment is a term used for bulk cargo or general merchandise. Each package is unloaded from the entire container and re-loaded on a smaller one to facilitate the delivery of individual consignments. In other words, shipment means consigning goods from a supplier to a reseller according to their purchase order or contract terms.
There are two types of shipment: Full Container Load (FCL) and Less Than Container Load (LCL).
The main difference between FCL and LCL shipments is how things get packed into containers. When you book an FCL shipment, the whole container is booked for your business with specific volume allocation assigned by container manufacturers such as Matson Lines. With both types of loads, it’s important to note who pays for unloading at either end when items arrive in port. For FCL contracts, at the same time.
What are the differences in cost?
Many traders are bewildered by the vast difference between the cost of an FCL shipment and that of an LCL shipment. While an FCL is almost three times the price of an LCL, what really matters in your decision to ship FCL or LCL is economics. Factors like quantity, value per unit (gross weight), origin and destination also affect your decision when opting for either one.
Many traders ship small amounts of goods in an LCL shipment, while others who specialize in valuable trading items for a profit may want to go for an FCL. Today, there is a growing trend towards consolidating cargo from various suppliers and customers into larger units.
Though this has its advantages, it also complicates the process.
Your decision should be based on factors like:
- The value per unit of your cargo
- Origin and destination points
- Load factors
- Frequency of shipments
- Payment terms and conditions
- Regret factor – what happens if you do not have goods shipped by FCL? Will that affect your business adversely? If so, then you should probably ship FCL and not LCL.
- Current market trends: this is always a matter of research and gathering information from reliable sources like freight forwarders, other traders etc.
While deciding on which shipping service to opt for, consider the advantages and disadvantages of both before choosing one that would work best for you.
What about paperwork required?
There is no difference in paperwork between LCL and FCL shipments. All the required documentation, including commercial invoices, packing lists, insurance certificates and bills of lading, should be provided for both types of shipment.
However, a greater degree of formality is required for FCL shipments than the LCL customs clearance process. This is because goods packed in separate containers can be sent to different destinations at different times, thus requiring more documents.
For example, you will find it necessary to provide a master air waybill or master shipping instructions if your cargo is shipped on the same aircraft but requires distribution to several ports within the same country. In such cases, each container must have its bill of lading which details the exact number of cartons transported.
In some cases, all the details of FCL shipments are written on a master air waybill rather than each individual air waybill being prepared. A master air waybill accompanies your cargo from origin to destination and allows you to monitor its progress throughout that leg of the journey.
A further example is if a customer requests a consolidated shipment where different consignments from several customers or shippers are shipped in one combined container. In this case, each parcel will have been labelled with an identifying number, but there will be just one bill of lading for the combined consignment. This consolidating shipment must also remain under seal until customs clearance at the destination, or it may be subject to opening and inspection by customs officials.
Other types of consolidation can be done, such as consolidation by value, weight or volume of the shipment. This type of consolidation is often requested when a customer requires several shipments from different shippers to be treated as one consignment before invoicing and payment.
