Less than container load (LCL) shipping

Global trade continues to expand and growth could more than double in 2024. The world is flat as Thomas L. Friedman stated and with a single mouse click products can be purchased from the other side of the world. As a consequence less than container load shipping (LCL shipping) has become more popular and is estimated to grow 3.5% from 2024 to 2029. In this article, we’ll delve into what LCL shipping is, how it works, its benefits and drawbacks, and how it compares to FCL (Full-Container-Load) shipping.

LCL meaning. What is Less than container load shipping?

LCL is the abbreviation of less than container load. It is a method of freight transport where multiple shippers share a single container. Instead of having enough cargo to fill an entire container (FCL), individual shippers consolidate smaller shipments into one container. This method is particularly suitable for companies that don’t have large enough volumes to justify booking a full container but still need to move goods internationally.

In this process, each shipper pays for only the space their cargo occupies within the shared container, making LCL a cost-effective solution for small and medium-sized shipments. It’s commonly used in ocean freight and allows businesses to benefit from the economies of scale without having to bear the entire cost of a full container.

The term also refers to the service for providing LCL shipments.

How does LCL shipping work?

The process of LCL shipping involves several steps, beginning with consolidation and ending with deconsolidation:

1. Booking and pickup. Shippers arrange for their cargo to be picked up by a logistics company or freight forwarder. At this stage, goods are packed and prepared for transportation.
2. Consolidation. After pickup, the cargo is transported to a consolidation warehouse, where it is grouped with other LCL shipments. These combined shipments are then loaded into a single container.
3. Transport. The container, filled with multiple LCL shipments, is loaded onto a vessel, e.g. a container ship, and transported to the destination port.
4. Deconsolidation. Once the container arrives at the destination port, it is taken to a deconsolidation facility. Here, the cargo is separated, and each individual shipment is prepared for delivery to its final destination.
5. Delivery. The freight forwarder or carrier arranges for last-mile delivery of the goods to the recipient’s address.

Benefits of LCL shipping

LCL shipping offers several advantages that make it an good option for businesses:

1. Cost efficiency. One of the biggest benefits of LCL shipping is its cost-effectiveness. Shippers only pay for the space their cargo occupies within the container, as opposed to paying for the full container in FCL. When the shipper’s cargo is not enough to fill a container completely, LCL is usually cheaper than FCL.
2. Flexibility. LCL provides flexibility for shippers who don’t consistently have large quantities of goods to move. It allows them to ship smaller quantities more frequently, helping businesses maintain better inventory control and potential shorter delivery times.
3. Accessibility for small and medium enterprises. For small businesses that don’t have the resources to fill entire containers, LCL shipping offers a way to serve international markets. It allows them to participate in global trade without requiring large investments in logistics.

Disadvantages of LCL shipping

While LCL shipping offers several benefits, it also has its drawbacks:

1. Higher risk of damage and infringement. In full container load (FCL) shipping, your goods and the container are sealed directly at the manufacturing facility, ensuring that no one can legally access the container until it reaches its final destination. In contrast, with LCL shipping, goods from multiple shippers are consolidated, allowing access to your products. The container is sealed at the port by a third party after it has been fully loaded, and upon arrival at the destination port, the goods are unpacked by another third party, further increasing the risk of handling issues.

This significantly increases the risk of damage, especially if the goods are fragile or sensitive. It also increases the risk of infringement.

2. Higher costs for large volumes. If a cargo is enough to fill a full container, LCL is usually more expensive than FCL.
3. Longer transit times. Since LCL involves the consolidation of multiple shipments, the transit time may be longer compared to FCL. Cargo must be collected, consolidated, and deconsolidated at various stages, adding extra steps to the process. More handling also increases the risk of delays.

How are the costs of LCL shipping calculated?

The cost of LCL shipping is calculated differently from FCL shipping. Instead of paying for the entire container, shippers pay based on the volume of space their cargo occupies. The main factors that influence the cost include:

1. Volume. LCL freight rates are typically calculated based on the volume of the shipment, measured in cubic meters (CBM). The higher the volume, the more space it occupies in the container, and the more the shipper will pay.
2. Weight. Some LCL shipments may also be charged based on weight, especially if the cargo is dense. However, in most cases, volume is the primary determinant.
3. Route. The distance between the origin and destination ports, as well as any additional handling fees at these locations, influences the overall cost.
4. Additional services. Costs for services such as pickup, delivery, customs clearance, and insurance can also add to the total cost of LCL shipping.

Differences between LCL and FCL shipping

The key distinction between LCL (Less-than-Container-Load) and FCL (Full-Container-Load) shipping lies in the amount of cargo being shipped and the way the container space is utilized.

1. Cargo volume. LCL is suitable for small shipments that don’t require an entire container. multiple shippers share the same container. FCL is ideal for large shipments that can fill an entire container. The shipper has exclusive use of the container.
2. Cost structure. LCL costs are based on the space occupied by the goods (measured in cubic meters). FCL costs are based on a flat rate for the entire container, regardless of how much space is used.
3. Control and flexibility. With LCL shippers have less control over the timing and handling of their goods due to shared space. With FCL the shipper has full control over the container, allowing for more flexibility in scheduling and loading.
4. Transit times. LCL has longer transit times due to the consolidation and deconsolidation processes. FCL is generally faster, as there are fewer steps involved in handling the shipment.
5. Risk of damage. LCL has a higher risk of damage due to multiple shipments being packed together. FCL has a lower risk of damage, as the shipper’s goods are isolated within the container.

LCL shipping offers an efficient and cost-effective solution for businesses that need to ship smaller volumes internationally. By sharing container space, companies can reduce their logistics costs while still able to ship goods around the world. However, the longer transit times and increased handling involved in LCL shipping can be drawbacks for some shippers.

About Hoefon Security Seals

Do you ship your transports by LCL shipping and do you want to secure your goods? Security Seals is a certified supplier of security seals, damage indicators and transport monitoring equipment. In our portfolio you will find, among others, container seals, trailer seals, tilt indicators, temperature loggers and humidity loggers. We offer worldwide door-to-door delivery and same day shipping.

Niels Pas

CEO Hoefon Security Seals

Niels Pas has been Hoefon Security Seals’ CEO since 2017. He has extensive international experience and speaks 4 languages professionally.

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