Export/Import Updates!
July 27, 2021

A Guide to LCL Shipping: Everything Exporters/Importers Need to Know

If you are an importer or exporter, you might have come across the acronym LCL while looking to ship goods in small quantities. LCL stands for “less than container load”. It is different from another widely used term in international logistics – FCL, which is short for “full container load” and is meant for large shipments.

As you might already know, LCL is recommended as a safe way to ship cargo in moderate volumes while keeping costs low. While this is mostly true, it is important to understand the LCL shipping process in its entirety. This blog serves as a complete guide to LCL shipping. It will touch on the following elements:

  • What is LCL shipping?
  • Its benefits and drawbacks
  • How much it costs
  • Step-By-Step Guide: How An LCL Shipment Works
  • When to ship LCL – with comparisons to air freight and FCL
  • How to pack an LCL shipment
  • Other transportation needs for LCL cargo  
  • How to track an LCL shipment
  • Things to keep in mind

What is LCL shipping?

If your cargo does not fill an entire 20-foot or 40-foot container, you can ship it in a shared container with other shipments. This is what “less than container load” means. It is also called groupage because it is grouped with other cargo. LCL shipping is, therefore, meant for cargo of low or moderate volume.

Benefits of LCL

  • It is cost-effective. In FCL, you pay a flat rate for the container called commodity box rate. But in LCL, you only pay for the volume you need. It also works out cheaper than air freight
  • Shipping smaller volumes frequently can help you save on inventory space. LCL is, thus, the preferred shipping mode for small businesses 
  • During peak season, LCL is more readily available than FCL

Drawbacks of LCL

  • LCL might not be cheap for large volumes of cargo because it charges a higher cost per cubic meter (CBM) than FCL, usually two to three time more. Why? Because there is a lot of work involved in LCL shipping – the freight forwarder makes multiple LCL bookings, then books an FCL container and fills it with the LCL shipments (a process called consolidation).
  • Sometimes, LCL shipments stop at multiple ports, go through several rounds of loading and unloading. In such cases, transit time could be longer and even result in delays. Frequent handling of merchandise increases their chances of being damaged or lost.

How much does it cost?

For LCL shipments, freight is usually charged on the basis of volume (CBM). Weight becomes a factor only when the cargo weighs more than one ton. Then, freight is charged on the basis of CBM or weight, whichever is higher.

Note: To find out how to calculate freight volume, read our blog here.

Exporters and importers must note that the shipping process covers not just the sea voyage but a longer journey. So, when a freight forwarder makes an LCL quote, it usually covers the cost of:

  • Picking up the cargo from the shipper’s warehouse
  • Loading it into the container with other shipments. This is called container stuffing
  • The ship journey 
  • Destuffing and deconsolidation in the destination country  
  • Transporting the cargo by truck to the destination warehouse

Step-By-Step Guide: How An LCL Shipment Works 

  1. Shipper chooses a service provider 
  2. Shares complete shipment details (origin, destination, cargo dimensions/weight, etc) with the service provider
  3. Cargo leaves shipper’s factory, reaches service provider’s warehouse or CFS/ICD
  4. Service provider processes shipment details, figures out what other LCL packages shipment can be consolidated with 
  5. Cargo is grouped with other LCL packages and stuffed into a container, which is then loaded on the ship 
  6. Ship arrives at destination; container is unloaded and moved to warehouse for deconsolidation
  7. Once shipment is ungrouped, service provider has it delivered at customer’s doorstep

When should you ship LCL?

The general rule is to use LCL to ship low or moderate-volume cargo to keep costs low. But before taking a decision, consider these factors while also examining how LCL compares to air freight and FCL:  

1. LCL versus air freight

Both are suitable for small shipments but which one is better for you? The decision hinges on the size, weight, contents and urgency of your cargo:

  • Air freight is more expensive, its prices more volatile. When cargo size and weight increase, air freight rates go up comparatively faster than LCL rates. If you are on a tight budget, you might be better off shipping LCL, especially for heavy cargo.  
  • Air freight is faster and safer. A shipment that takes a month by sea can be delivered within days by air. Air freight is better for time-sensitive or valuable cargo.
  • However, ships are getting faster. Some offer Expedited LCL, with a guaranteed delivery period that almost matches air delivery time while remaining cheaper than air freight. Expedited LCL is popular with those working in e-commerce, fashion, energy and manufacturing.      
  • Compared to ships, airlines have more restrictions on goods, especially hazardous material. For such merchandise, LCL might be a better bet.

2. LCL versus FCL

While LCL seems to be the natural choice for shipments that don’t fill up a container, it sometimes makes more sense to book FCL when your cargo reaches a certain volume. Consider these factors:

  • With LCL charging a higher rate per CBM, industry insiders recommend LCL for shipments up to 13 cubic meters and FCL for anything above. So, if your cargo volume is 15 cubic meters, an LCL booking might cost the same or more than an FCL booking. Also, an LCL shipment might invite additional destination charges. In such a scenario, it is better to pay for a full container and enjoy its benefits. 
  • That said, LCL rates are more stable. They stay valid for a month to three months while FCL rates are generally valid for two weeks at a time.  
  • Cargo content must be factored in. FCL cuts risk of contamination from other cargo, so it is better for temperature-sensitive and hazardous merchandise. But LCL shipments are said to be more securely packed, reducing risk of damage from movement
  • Time is also a factor. FCL is suited for urgent deliveries and LCL for shipments with flexible delivery dates
Get real time updates on your shipping container, on Cogoport

How to pack an LCL shipment?

Improper packaging is said to be the single biggest cause of damage to LCL shipments. Here’s what you can do to secure your cargo:

  1. Pack your cargo in boxes designed for exporting goods, not in any old bag or box. When the boxes are stacked in a container, it is called loose LCL. For greater security and easier handling, place the cargo on pallets, secure with straps and wraps, and load the pallets in the container. This is called palletised LCL. A pallet is a flat structure, usually made of wood and sometimes of steel and plastic. They come in standard sizes, the most common being 48 inches x 40 inches.
  2. Label each piece of cargo with details including booking number, destination country, shipper (exporter) and consignee (importer) names. Number each piece of cargo. Include a fragile tag if needed. All labels must be correct and visible. 
  3. Make sure your cargo pieces are uniformly and evenly packed 
  4. If your cargo is fragile (flat-screen TVs) and should not be stacked, mention this up-front to your freight forwarder

Truck transportation for your LCL shipment

Apart from ships, there are other modes of transportation – rail, road and barge – involved in the shipping process. Trucks are particularly important to this logistics chain. And it is important to choose the right truck transportation for your LCL cargo. There are two options:

  • FTL (full truckload): This means a truck carries one shipment that meets its space or weight limits
  • LTL (less than truckload): Here, a truck carries more than one shipment that is of a smaller volume than an FTL shipment

FTL pros and cons: Shorter delivery time, less cargo handling, lower risk of cargo loss or damage. But it is the more expensive option. Freight is charged on the basis of distance. Suitable for: Time-sensitive or valuable cargo. 

LTL pros and cons: Cheaper, because you pay only for the section of the truck your cargo occupies. Freight is charged on the basis of weight. But because of multiple shipments, there is more than one pick-up and drop-off, hence longer transit time and more cargo handling. More size and weight restrictions compared to FTL. Suitable for: Small businesses sending moderate volumes of goods, cargo with flexible timelines. By most estimates, good for individual shipments weighing up to 6,800 kg (15,000 pounds).       

                                   

How to track an LCL shipment

It’s important to know the whereabouts of your cargo while it is in transit. Yet, tracking an LCL shipment can be challenging. For FCL shipments, most carriers provide a tracking facility on their platform, which their customers can use to check their shipment status in real time. However, very few service providers offer the same facility for LCL shipments. And even if they do, the information and updates provided on such a platform might not always be complete. So, before booking your LCL shipment, you might want to check if your chosen service provider provides real time information during the entire delivery process.


The final LCL checklist

  • Before making your LCL booking, get quotes from multiple freight forwarders. This will give you an idea of the market price and help you figure out if a quoted price is too low, which might mean there are additional charges involved

Try Cogoport’s Discover Rates tool for multiple instant freight quotes to gain an insight into market prices

  • Look out for extra costs, including destination charges for port service, terminal handling and security, import processing, documentation and so on
  • While calculating freight volume, remember to take pallets (if used) into consideration. Pallets take up space, for which you will be charged. Excluding pallet dimensions will lead to under-reporting freight volume and might mess up your budget
  • To avoid unexpected expenses, experts recommend booking door-to-door or port-to-door services.

Cogoport currently offers door-to-door services for imports into India, door-to-port services for exports out of India and Europe, and port-to-door services for imports in Europe  


Try Cogoport’s new LCL services

At Cogoport, we strive to put all your shipping needs on one platform. Whether you are a newly minted exporter/importer exploring LCL shipping or a veteran of the trade, you can register with us here to avail of a range of services, including:  

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