Analysis

What is an LCL Shipment? How Does it Work?

July 9, 2024
Ram Radhakrishnan
Founder & CEO

SUMMARY

An in-depth guide on LCL shipment and how small businesses and e-commerce platforms can leverage it for flexibility and accessibility in international trade

What is an LCL Shipment? How Does it Work?

Less-than-Container Load (LCL) shipment is a key enabler of global commerce, allowing businesses to ship smaller shipments efficiently. In combination with Full Container Load (FCL) shipments, LCL forms the building blocks of international trade, providing flexibility and cost-effectiveness for companies of all sizes to participate in the global market.

In this article, we will demystify the concept of LCL shipment and show you how it's a straightforward and efficient solution for your shipping needs.

Understanding LCL Shipment

LCL denotes freight from different shippers that are consolidated and moved in one container. The idea is to have a shipper share the cost of the container load with fellow shippers, with each paying for the space they occupy in the container.

The LCL mode has something for everyone. Small to medium businesses that do not have the volumes to ship via full container loads (FCL) ship goods in smaller volumes on LCL. Larger companies that want to precisely control inventories and order in batches look at LCL shipments favorably as well.

E-commerce is an important industry utilizing LCL, with internationally recognized e-commerce platforms shipping products in small sizes to customers in different locations or countries. Businesses exploring newer markets tend to leverage LCL, as they can cautiously build inventories with smaller orders, rather than committing to large, upfront investments in stock.

Benefits of LCL Shipment

What is an LCL Shipment? How Does it Work?

The LCL shipment has been significantly consequential to various businesses and supply chains because it allows them to compete on an international scene. It has been able to accomplish these through the following:

1. Cost Efficiency

LCL logistics provides a cost-effective option for shippers because it allows them to only pay for the space the shipment occupies in the container. This makes economic sense for shippers who do not have the order volumes to justify a full container load (FCL) shipment fee for every shipping operation. For instance, imagine an e-commerce platform paying the FCL shipping fee for every cargo it wants to ship out. The cost would be astronomical and prevent these shippers from venturing beyond their domestic market.

2. Flexibility

LCL cargo allows flexibility in logistics operations. This is because, through LCL shipment, businesses can optimize supply chain operations to suit their customer needs. LCL allows for a more streamlined approach to demands and supply chains are enhanced to treat each demand uniquely. This results in more impactful order fulfillment, including improved lead times.

3. Frequent Departures

LCL logistics management means a business does not have to ship only when it has enough orders or demands to fill an entire container. With volatile demand, easily phased-out trends, and the sheer variety of SKUs that need stocking, LCL has become an ideal option for many businesses. With multiple or frequent departures, the shipper can run their shipping operations with the 'right' volume of orders.

How Does LCL Shipping Work

As such, the LCL freight is a standard shipping option, which works like any other maritime shipment option. Some steps or processes must be followed before it can be viewed as a success. These steps include:

Step 1: Booking and Documentation

The freight forwarder is one stakeholder you must partner with if you prefer LCL shipping and move your shipment without hiccups. The freight forwarding business handles the consolidation, booking, and freight documentation process.

However, you still have a part to play. When the LCL shipment is ready or if a need arises, informing the freight forwarder about these and the freight's intended destination is critical. The freight forwarder will help secure or find LCL container space going through the same shipping route or line. The next part is the documentation. Have all the LCL documentation, including commercial invoice, certificate of origin, export/import declaration, bill of lading, packing list, and other essential documents in place.

P.S. The freight forwarder will advise on the documentation and how to get it. With Silq you have a robust technology platform that streamlines this process for efficiency.

Step 2: Pick Up and Consolidation

When the shipment is ready, it can be sent to the freight forwarder's warehouse using a third-party logistics company or an in-house truck or logistics service. It can also be picked up by the freight forwarder. The pickup service will depend on the agreement between the freight forwarding business and the supply chain or business.

After pick up, the LCL shipments will be taken to a transloading facility or warehouse, where the goods will be consolidated together into the container that will house the shipment throughout the transportation and logistics operation. The consolidation will usually be with similar goods going on the same route. This way, there is less handling and more security for the shipment.

Step 3: Loading and Transportation

When the container is full, the freight forwarder will oversee loading into the transport vessel. Working with freight forwarders gives the shippers a sense of security because they are the ones who will see to the safety of the shipment throughout the entire process.

When loading is complete, the next phase is the transportation or shipping process.

Step 4: Deconsolidation and Delivery

When the good arrives at its destination, the container will be cleared by the freight forwarding business you are in partnership. Ensuring the freight forwarder is present in the destination country is important. After clearance and payment of customs duties and taxes, the freight forwarder will take the full container load to a warehouse, where it will deconsolidate the container and send out each LCL shipment to its final destination.

Again, just like the pickup process, these can be done by leveraging a 3PL company, using a private logistics service, or depending on the freight forwarder to ensure the delivery process.

When To Choose Less than Container Load (LCL) Over Full Container Load (FCL) Shipments

There are a few factors to consider when trying to decide between the less than container load and full container load shipping. They serve as a guide in helping the business make effective decisions.

  1. Shipment Size: The cargo volume must be below a certain threshold before it is considered for LCL shipment. This is usually between 10-18 CBM, depending on the size of the container.
  2. Low Urgency: LCL shipments can be delayed because of the need to consolidate with other shipments. That means a delay from one shipper could impact all the goods in the shipping container, leading to delays or disruption. If it is urgent, it is best to explore other options.
  3. Nature of the Product: Not all products are suitable for LCL shipping. A great example is the reefer or refrigerated freight and other sensitive products.

Best Practices for LCL Shipment

The nature of the LCL shipping means that such shipments are prone to damage, theft, and more interest from customs authorities. To prevent any of these, the following will be critical:

  1. Packaging: Ensure the LCL cargo is well protected by packaging to prevent exposure and damage.
  2. Accurate Documentation: Lack of proper LCL documentation could lead to all sorts of problems, especially delays and possible demurrage. It is important to work with the freight forwarder to avoid such.
  3. Working with Reliable Partners: Work with market-tested and proven freight forwarding partners like Silq to ensure seamless LCL shipping.

How Forrest LLC Leveraged Silq to Tap into The Global Market

Forrest LLC, a furniture company, was planning to expand the business by entering new markets. The only problem? They were not sure how the new market would react. This meant they had to send in shipments and goods to the market in small amounts to avoid overcapacity in the new market.

The CEO, having worked with Silq in the past, wasted no time calling Silq up and getting to the root of the matter. The Silq team knew just what to do and what the company needed. First, it will facilitate the transportation of single pieces of top-selling furniture to the new company, allowing Forrest LLC to use them as a sample for reeling in new customers.

Doing this meant that Silq would have to leverage its LCL shipment option, which is very popular among small business shippers looking to take their cargo around the world. Upon onboarding the company on the Silq platform, Silq sent out experts to Forrest LLC‘s factories to assess the extent of the cargo, when it would be ready, and what type of shipment would be required.

After an eventful factory inspection, Silq had all it would need to facilitate seamless LCL shipment for Forrest LLC. On the day of shipping, the company picked up the cargo, consolidated it with others in a private facility, processed documentation, and it was ready for shipping. The cargo was taken to the container freight station, and the process went on without a hitch. That marked the first of many LCL shipments that Silq had helped Forrest LLC out with.

Seamless LCL Shipments with Silq

Silq is the premier freight forwarding platform and shipping solution for small businesses and e-commerce platforms seeking to process flexible and affordable LCL shipments. Whether it is air freight or ocean freight, it all begins with effective planning and then leveraging a robust technology platform to ensure your small shipments arrive where they need to be on time and under the right conditions. Get started with us today.

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