What is the difference between LCL and FCL?

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Introduction

Many will summarize FCL as Full Container Load and LCL as Lesser Container Load. This suggests that FCL caters to exporters requiring a full-sized container to load their cargo, whereas LCL caters to exporters that do not need a full container to load its cargo.

This difference is only on the surface. In reality, there are many reasons why a small cargo size needs a full container to transport. There are also cases where exporter chooses to break the cargo down to a few LCL shipments.

Herein lies the conundrum faced by many exporters and importers, we generally know which modes of transportation to use and what sized container to use, whether it is a 20-foot container or a 40-foot container. However, there is also a puzzle of whether to opt for a lesser container load or a full container load shipment in transport.

Here we explore not only the difference between an FCL and LCL shipment but also the implications and applications of shipping using FCL and LCL modes.

Why Choose FCL Shipments

Full Container Load Shipments are as straight forward as it can get. It is akin to renting the space all to yourself, in this case, space is the length, width, and height of the container you chose.

Within that container space, you can transport the cargo however you want to. Of course, we imply that you follow all the laws of customs and physics when deciding how and what to load a container.

Moreover, the space you rent (container leased), is up to what you fancy (your cargo requirement). Special container equipment is also available for your choosing.

  1. Reefer Container
  2. 20’ Footer Container
  3. 40’ Footer Container
  4. 40’ High Cube Container
  5. 45’ Container
General Sea Container Specs

Additional Reading: Learn about cargo dimensions and loading

Say you are looking to transport 40’ NOR worth of Potatoes across the Atlantic Ocean. NOR stands for Non-Operating Reefer, basically a reefer container that is not plugged into a generator, but retains its temperature before loading to vessels.

You specify that the 40’ NOR has to be at a specific temperature of 20 degrees Celsius.

Your most reliable arrangement at this point is definitely an FCL shipment. Since it is rare for LCL consolidators to offer Reefer boxes, obviously because each and every other product require different temperature settings.

reefer containers allows FCL over LCL only
Source: Common Wikipedia

Cargos requiring special packaging

For another example, say that you are an oil tycoon and your business is in the export of sunflower oil.

Your importer specifically requests for the cargos to be loaded on Flexi-bags as they have the equipment to unload the cargo that way.

Flexi-bags are alternatives to ISO tanks, which uses the container frame to lend itself structure, a bag is pre-installed into the container with a valve in place to load/unload liquid cargos.

Flexi-bag loading only allows FCL over LCL
Flexi-bag Loading

Flexi-bags are only available in Full Container Load shipments. Once again, your only option is to arrange shipments in FCL mode.

Why Choose LCL Shipments?

Lesser Container Load shipment is a neat solution for cargo exporters and importers that do not necessarily need a full container to ship their cargo.

On the other hand, they are also not in a hurry to ship the cargo to the destination, added to the fact is that they are not keen on spending too much money on transporting the cargo. So, shipping the cargo via air freight is out of the question.

Hence, the consolidators come up with a clever solution of leasing the containers themselves and then subleasing the container to exporters than only use a fraction of the container.

So long as the overall cost of a Full Container Freight is less than the sum total freight the consolidators charges its customers, they are in business.

Calculation of LCL Freight Charges

LCL shipments are charged based on a unit per metric ton (m3).

For example, you prepared a shipment of bags of cement for transport. On your packing list, it shows that you have 5 cubic meters (m3) with a gross weight of 8 tons.

The effective ocean freight rate for this shipment to Timbuktu is USD 30 per m3/ton. Consolidators will quote you base on whichever is the highest metric, which in your case is 8 tons.

So, your ocean freight rate is USD 30.00 x 8 tons = USD 240.00/shipment.

In comparison, should you choose to load the cargo in a full container, a 20’ footer container freight rate is USD 500.00 per container.

Your choice is straight forward from there, you will definitely opt for shipping the cargo under LCL arrangements, unless…

Is LCL Cheaper than FCL?

Well, it depends on perspective, are you looking at ALL the cost of LCL shipment or only the freight rates to deliberate if LCL is cheaper than FCL?

As a small-time exporter, with costs of shipment a big factor in your choice of logistic solution, you need to be aware of the hidden costs in both FCL and LCL shipments. Here are some of the costs that may differ between an FCL and LCL shipment

  1. Warehouse Storage Cost
  2. Terminal Handling Fees
  3. Documentation Fee
  4. Loading/Unloading Fee
  5. Inland Transportation Cost

Other reasons to consider FCL or LCL

We can fall back to the rule of thumb when choosing either FCL or LCL mode.

If your cargo is less than 20m3 or 20 ton in gross weight, you can go for LCL shipment, anything more than that you have to choose an FCL shipment.

But there is more to consider, while the rule of thumb is easy to follow by there are many other considerations to reflect on. Here are the reasons why exporters may choose multiple LCL shipments over an FCL shipment, and vice versa.

Cargo weight and type of packing

So, what happens if your cargo is in an unfavorable category of neither-here-nor-there? A 10m3 cargo or 10-tonne cargo. Which mode of transportation should you choose?

Here is where you have to consider the facilities your importer has and the type of packaging in which your cargo is loaded.

Say you have 10-ton worth of cargo and the cost of palletizing the cargo will eat into your cost of transportation. Most consolidators will not accept loosely packed bags or sacks of goods. They have to consider other ‘tenants’ of the container.

With that in mind, you have to weigh the costs between palletizing the goods or just arranging an FCL shipment, allowing you to load the goods in loose. Of course, your importer has to accept either palletized or unpalletized goods.

Consider the fact too that the manpower required to unload loose cargos one by one, the importers have to hire laborers and the importers may not necessarily want that added cost.

Multiple Inland Destinations

In a scenario where you have one port of discharge, but multiple inland destination points for one shipment.

There are warehouse facilities in most ports that allow you to de-consolidate your shipment for multiple distributions. Or, the alternative to that is to arrange multiple separate LCL shipments and deliver your cargo individually.

These are the many ways to skin the cat, your freight forwarder should be able to ascertain the comparative costs of both options and provide a holistic solution for you.

The biggest curveball, however, is where one final destination is nearer to one port, while the other is nearer to another port.

high cost of inland transportation affects LCL or FCL choice
Image Courtesy of Google Images

Take South Africa for example, so happens you have two orders from South Africa, one close to Cape Town, another close to Durban

The traveling distance between Cape Town and Durban is about 1056 miles apart!

If you choose to consolidate your shipment to call Cape Town, you not only need a warehouse to de-consolidate your cargo, but you need to add the additional inland transport cost into your calculation!

Countries with large landmass often pose this kind of conundrum, where the cost of de-consolidating at one port, to deliver the cargo hundreds of miles to a destination may not be justifiable, it may rather be cheaper to arrange two separate shipments to two different ports at one country.

Concluding Remark

If you think that it is a clear-cut case whereby you can definitively choose between FCL or LCL shipment. There are in fact many other variables to consider before reaching that conclusion. Our advice is to weigh the multiple options you have when arranging for transportation and pick one that is best suited to serve your logistics need.

The key takeaway steps from this article are, therefore: –

  1. Consider your cargo deadweight tonnage and volumetric tonnage
  2. Compare both FCL and LCL ocean freight rates
  3. Consider the handling charges that are specific to FCL and LCL
  4. Look at your cargo delivery requirements
  5. Make an informed decision that offers the best solution at the lowest cost possible

We love to hear from you directly about your problems in choosing either FCL or LCL shipment arrangements, so we can update this post for other possible scenarios.

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