Adam Hill, President
Ginny Roady, Corporate Communications
The Scarbrough Group
When you are a small to medium-sized enterprise (SME), the idea of having to use FCL (Full Container Load) for international shipments may present some challenges. Perhaps you do not have enough product to fill a container entirely or have the time to wait until you can reach the capacity you need to utilize a full container. In this case, your best option is to use LCL (Less than Container Load), which consolidates with other international cargo into a container as an FCL.
There are two types of LCL services available, Standard LCL and Direct/Express Services. Most service providers worldwide provide a Standard LCL service, but only a select few in specific trade lanes offer a Direct/Express service. To illustrate the contrast in process and timing, let's consider the analysis of a shipment from Shanghai, China, to Kansas City, MO.
The Two Types of LCL Service: Shanghai, China, to Kansas City, MO
Standard LCL Service
Day 00-07: Cargo consolidated with other cargo destined for the United States in a container as FCL
Day 08-10: FCL sealed, delivered to the Shanghai port, and container laden on a vessel
Day 11-25: FCL on a vessel destined for the United States (i.e., Los Angeles/Long Beach [LA/LGB])
Day 25-27: FCL unladen in LA/LGB
Day 28-35: FCL moved to a public warehouse in LA/LGB and deconsolidated
Day 35-37: Cargo reconsolidated into an intermodal container (53’) with other cargo destined for Kansas City
Day 38-48: Intermodal container moved to rail and moved into Kansas City rail yard
Day 49-55: Intermodal container moved to a public warehouse in Kansas City and deconsolidated
Day 56-58: Cargo delivered to your door
Direct/Express Service
Day 00-07: Cargo consolidated with other cargo destined for the United States in a container as FCL
Day 08-10: FCL sealed, delivered to the Chinese port, and container laden on a vessel
Day 11-25: FCL on a vessel destined for the United States (i.e., Los Angeles/Long Beach [LA/LGB])
Day 25-27: FCL unladen in LA/LGB
Day 28-38: FCL moved via rail to Kansas City rail yard
Day 39-40: FCL moved to a private warehouse in Kansas City and deconsolidated
Day 41-43: Cargo delivered to your door
From the comparison of the two service offerings, it is evident that there is a significant difference in transit times and the number of individuals handling your cargo. The standard service increases the risk of damage as your cargo goes through the consolidation and deconsolidation process twice, while also having double the amount of people handling it. The Direct/Express service cuts out the intermediary, therefore, requiring less labor and less room for error.
When it comes to LCL cargo, pricing is usually based on weight or measurement (W/M). In other words, it's priced per cubic meter (CBM) or 800 lbs. So, say you have a shipment that’s 2 CBM and weighs 1000 lbs, it will be priced at 2 CBM. However, if that same shipment weighs 2400 lbs, it will be priced as 3 CBM (2400/800 = 3). On top of the base cost, there will also be destination and warehouse fees for deconsolidation. If you calculate the fees for an FCL and compare it to the cost of LCL, you'll find that LCL is more expensive than shipping a fully loaded container of your own product.
Though the price may be higher, LCL is seen as a more viable choice for SMEs by cutting back on storage space if you are not looking to commit to a large amount of inventory at one time. The advantages compared to LCL expand even more when using Direct/Express by saving you on time, delivering efficient cargo care, and reducing additional transit and warehouse expenses.
Adam Hill, President
Ginny Roady, Corporate Communications
The Scarbrough Group