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Guide to LCL shipping: Everything exporters need to know

Less than Container Load (LCL) shipping is a method of transporting goods by sea for small cargo loads. Learn more about its process, benefits and more.

Shipping is an important aspect of an export-import business. As it impacts the final cost, timeline, and relationship between the two parties, it is important to select the right mode of shipping. It helps ensure that goods reach the destination as per expected timelines at reasonable costs. Contrary to common perception, a business does not need to ship huge quantities of a particular product to start an export business. With Less than Container Load (LCL) shipping, it is possible to consolidate products with goods of other sellers. This ensures that the goods are shipped inexpensively without putting any additional pressure on the shipping company.

What is Less than Container Load (LCL) shipping?

LCL shipment is the process of shipping goods that do not take up the entire volume of a single ocean container. This load is consolidated with other similar shipments to ensure that they can collectively meet the total volume of a container. The LCL freight system mainly works in cases where the end destination or route of the shipment is common¹.

Advantages and disadvantages of LCL shipping

Advantages

Cost-effective

LCL freight is a cheaper option, especially in cases when a business is shipping goods that are small in volume and weight. LCL shipping can also work out to be a cheaper option as compared to air freight.

Inventory optimization

Shipping smaller volumes frequently can help a business optimize its inventory space. LCL shipping is mainly preferred by small businesses as they do not need to have large inventory spaces for storage.

Peak season demand

LCL shipping comes in as a handy option in case of peak season demand in the shipping industry. As compared to the full container load route, LCL shipment often ends up being the practical option available in case of peak seasons.

Disadvantages

Not suitable for large cargo

LCL shipping is not suitable for large cargo shipments. There is a breakeven point after which LCL shipping can prove to be a costly affair for sellers. As LCL shipping includes a higher per cubic meter (CBM) cost as compared to FCL shipping, it should be a key consideration when opting for this mode.

Time for delivery

LCL shipments are usually faced with several stops at various ports before reaching the final destination. These stops also include the loading and unloading of shipments. As a result, transit time for LCL freight is longer as compared to FCL shipments.

Safety

As the shipment is handled frequently in the case of LCL shipping, there is a chance of damage or loss of goods in the process.

Documents required for LCL shipping

Some of the documents required for LCL shipping are²:
· Bill of Lading
· Commercial invoice
· Packing list
· Certificate of Origin
· Dangerous Cargo Certificate (If needed)
· Insurance certificate

Cost of LCL shipment

The cost of an LCL shipment is usually calculated by adding the effort required in various phases of handling the shipment. This is mainly because the process involves the use of manpower and infrastructure. LCL shipment charges are usually calculated following the CBM metrics for goods. However, in case the weight of the goods is more than 1000 kgs (1 ton), the cost is levied based on the weight. As LCL shipments are usually small in size, it is a rare chance that the overall weight crosses the 1000 kg limit³.

How does an LCL Shipment work?

An LCL shipment has a clear and transparent procedure for all stakeholders. Here is how an LCL shipment process works:

Step 1: Register with the shipping company

The first step in this process is to get in touch with the shipping company and discuss requirements.

Step 2: Provide information about the package

In the second step, the shipping company finalizes cost and route as per the requirements to be shipped following the LCL route. This information helps them to consolidate the cargo with other shipments in a particular container.

Step 3: LCL dispatch and shipping

Once the package reaches the warehouse of the shipping company, it is matched with other shipments and put in a container. This step is also known as container stuffing.

Step 4: Arrival and delivery

Once the ship reaches its destination, the container is moved from the ship to the warehouse. Under this step, the cargo is de-grouped.

LCL vs FCL

It may seem a logical choice to go for LCL if the shipment is less than the volume of the container. Here are a few key differences between LCL and FCL to help you make a better decision:

Per CBM rate

LCL shipment charges higher per CBM rate than FCL shipments. As it involves grouping and de-grouping of a consignment, the per CBM rate in LCL shipment is higher.

Stability

LCL rates are more stable as compared to FCL rates. FCL rates are usually valid for two weeks while LCL rates are valid for three months.

Time of delivery

FCL shipments usually take less time for delivery as compared to LCL shipments.

Inventory-friendly

LCL shipments are more inventory-friendly as it does not overburden the logistics framework. On the other hand, FCL shipments carry large quantities. They can burden the supply chain.

Things to keep in mind for LCL shipping

Some of the things to consider before booking an LCL shipment are:

Volume weight

In case the total volume weight is close to the total capacity of the container, it may work out cheaper to go for FCL shipment.

Safety

Sending fragile goods in an LCL shipment can prove to be a risky proposition. To avoid any mishandling or loss, a business should double-check before putting fragile goods in LCL shipment.

Timeline

In case a business is working with a tight deadline, LCL shipment can disappoint. It is better to keep the timelines in mind before booking an LCL shipment.

How do you label and pack goods in LCL shipments?

Here are a few steps that a business can take to properly label and pack goods in LCL shipments:

Boxes and packaging

Pack all merchandise in boxes. Also, use bubble packing for extra protection. Each box must be sealed properly before goods are packed.

Labelling

Each box must be labelled with details like the name of the shipper, consignee, destination country, freight forwarder, and booking number.

Numbering

Each box should be numbered with its clear position. For instance, if the consignment has 10 boxes, each box should be numbered as Box #1 of 10, Box #2 of 10, and so on.

Fragile goods

In case the consignment is carrying fragile goods, it should be labelled clearly and ensured that all sides of a box are marked fragile.

LCL shipments have proven to be valuable for businesses that do not have large quantities to work with. However, it is important to consider all required factors before opting for an LCL shipment. With shipping methods like LCL and e-commerce opportunities, exporting from India has become easy.

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Frequently Asked Questions

How long does LCL shipping take?

LCL shipments can take 20-60 days on average. It is also dependent on the final destination and route.

Is LCL cheaper than FCL?

LCL is usually cheaper than FCL when sending small quantities as compared to the full capacity of the container.

Which is better LCL or FCL?

LCL and FCL are designed for specific purposes. In the case of small quantities, LCL can be preferred while FCL can be preferred for large quantities.

What is the minimum weight for LCL shipment?

There is no minimum weight requirement as such. However, for shipments below 1 CBM, air freight may be considered.

What is a loose cargo load?

A loose cargo load is often confused with Less than Container Load. A loose cargo load is a cargo load that is not palletized. In other words, a loose cargo load is used in case of shipments that cannot be sent in containers due to their dimensions.

Published on January 29, 2023.

Sources:
1. https://www.dripcapital.com/en-in/resources/blog/lcl-less-than-container-load-shipment
2. https://www.shipit.com/post/a-complete-guide-to-lcl-less-than-container-shipping
3. https://www.cogoport.com/en-IN/blogs/complete-guide-to-lcl-shipping-everything-exporters-importers-need-to-know
4. https://www.dhl.com/in-en/home/our-divisions/global-forwarding/forwarding-insights/documents-you-need-to-ship-lcl.html
5. https://www.marineinsight.com/maritime-law/lcl-shipping-everything-you-wanted-to-know/

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