Analysis

The Business Case For LCL Shipping: Benefits and Strategic Importance

June 26, 2024
Ram Radhakrishnan
Founder & CEO

SUMMARY

Exploring the benefits and strategic importance of LCL shipping and the factors to consider if you want to ensure successful LCL shipping operations.

The Business Case For LCL Shipping: Benefits and Strategic Importance

LCL shipping is a vital bridge to the world for businesses of all sizes, from small enterprises to larger companies seeking flexibility.

The LCL shipping solution is not just a cost-effective and flexible option but also strategically important depending on the nature of the shipment and freight move. LCL allows shippers to leverage container shipping without paying for the entire container. These businesses and supply chains can ship what they want when they want, and all they have to do is pay for the allocated container space their products will occupy.

In this article, we will review the benefits and strategic importance of the LCL shipping solution.

Benefits of LCL Shipping

One of the primary advantages of less-than-container load (LCL) shipping is its flexibility compared to full-container load (FCL) shipping. LCL shipping accommodates a wider variety of shippers and products, making it an attractive option for diverse shipping needs. Beyond its flexibility, other critical factors make LCL shipping appealing to shippers and supply chains across the globe.

Cheaper Cost of Shipping

Imagine trying to ship a small shipment and paying as if it were an FCL shipment. The cost to businesses and their supply chains would be astronomical. LCL cargo service bridges that gap, allowing shippers to pay for the container space their shipment occupies.

This has helped businesses across the globe continue to ship internationally without a huge cost to their bottom line.

Flexibility and Scalability

With the LCL freight option, shippers could enjoy more flexible shipping arrangements.

Picture a business or an e-commerce platform having to ship products across the world and then using FCL shipment solutions for each of these shipping. The cost alone will be detrimental to the business and its supply chain. More importantly, the business will always be forced to wait to get enough products to each location, so the FCL charges will be worth it -- losing out on potential customers in that time interval. However, that is no longer the case with LCL shipments.

A business or supply chain can enjoy flexibility and scale operations across the world at its own pace without putting much stress on inventory management.

Exploring New Markets

Smaller businesses and e-commerce platforms can now explore new markets at their own pace.

They can send smaller shipments across a period to gauge the product's acceptance in the new market. If there is resistance, the business has ample flexibility to find out why and how to adapt without the pressure of holding too much inventory. In situations where the business cannot penetrate the market, it can withdraw, having incurred minimal cost.

Strategic Importance of LCL Shipping

LCL shipping is strategic for shippers, freight forwarders, and carriers because it provides a way to optimize the transportation process.

By consolidating smaller shipments from various shippers into a single container, carriers can maximize space utilization and reduce the number of trips needed, leading to greater efficiency and cost savings. The following are some of the other strategic importance of the LCL logistics solution.

Participation in International Trade

LCL shipping allows businesses and supply chains of any size to participate in international shipping and trade effectively. This is particularly helpful to e-commerce platforms and businesses with customers across the globe. The business can ship any quantity of goods to different parts of the world without worrying about ensuring it fills up the container.

Sustainability

There is no question that logistics operations contribute majorly to greenhouse gas emissions

It doesn’t matter whether it is through land, ocean, air, or rail. LCL freight service provides a strategic advantage for carriers and shippers because they can leverage it to reduce the environmental impact of their logistics operation on the globe. LCL freight offers a sustainability strategy to ship freight, which is crucial in a world where customers are increasingly interested in learning about the green initiatives of the businesses they patronize.

Shipment of Diverse Goods

The global economy is made of two types of products.

There are the products we are all familiar with — the big necessities in every corner of the world. However, some are quite diverse and will only serve a limited number of people within each of these markets. The perfect balance between these products ensures the global economy is quite healthy.

So, a local business in India making traditional ornamental cups or spice mixes for Indian cuisine can seamlessly sell the same to Indians and other patrons on the US East Coast by leveraging LCL shipping.

The Business Case For LCL Shipping: Benefits and Strategic Importance

Factors to Consider For An Effective LCL Shipping Process

Although the LCL cargo service is a game changer for many shippers and supply chains, certain factors will drive its success. The freight forwarders and the shippers involved need to consider the factors to avoid a world of trouble. A reliable freight forwarder will help guide you through the process.

Shipment Details

The product's dimensions will determine the allocated space on the container and, more importantly, the fee you must pay. It is essential to measure and weigh the product accurately, package it thoroughly to avoid damage, and understand any restrictions for the cargo type. Doing all of these will ensure the entire process is seamless.

Destination and Regulations

Know the regulations, policies, and requirements of the cargo destination. There may not be too many challenges at the origin container freight station, but the destination ports may not be so understanding. There may be more detailed inspections because it is an LCL cargo service instead of a full container load (FCL) shipping. Having the right documentation is also very critical.

Logistics and Costs

Choosing the right shipping method (air vs ocean freight, LCL vs FCL) is a crucial decision that can significantly impact your costs. It's also important to consider insurance and explore the potential cost benefits of trade agreements. Partnering with a reliable freight forwarder can provide the necessary guidance and assurance that your shipment will arrive safely.

How Pinky Wears Became A Global Brand Through Silq’s LCL Shipping Service

Pinky Wears is an India-based online women’s fashion store. The e-commerce platform had been getting requests from all parts of the world, which it shipped to via parcel shipment. However, with orders continuing to grow, Pinky Wears management realized they could make better profit margins if they could leverage bulk shipment. Nonetheless, it was a scary prospect, as they had never ventured to ship large volumes. Pinky Wears had encountered the FCL vs LCL predicament but wasn’t sure how to leverage each.

This was until Silq came on the scene. With Silq, the company could see the benefits of LCL ocean shipping more clearly, and Silq helped with consolidation and direct LCL shipments from India to the US. This ensured the company enjoyed FCL perks while leveraging the LCL solution.

It was a win-win solution that saw the company grow its global sales figures within six months.

Silq: The LCL Shipment Connoisseur

The Silq platform is the control center for LCL logistics operations. Silq has ample experience, expertise, and state-of-the-art technology that allows the company to serve shippers, businesses, and supply chains across the globe. With Silq, you can enjoy seamless LCL cargo service, one with all the FCL shipping benefits, including faster delivery times and zero access to the container until it reaches the destination port.

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