Shipping items overseas can be a complicated process. You have to weigh a variety of options to balance price, lead time, delays, environmental hazards, company relationships, and more.

If you’ve decided to ship via ocean freight as opposed to air freight, you’re met with another array of decisions. Most importantly, do you want to ship FCL or LCL?

What is ocean freight shipping?

Ocean freight is when you ship your goods on the high seas. Your products are loaded onto a cargo ship and brought from China to America via the ocean.

Why choose ocean over air:

  • Greater capacity
  • Fewer restrictions regarding products shipped
  • Smaller environmental impact
  • Reduced price for large shipments
  • Improvement in ocean line speed

Companies tend to choose ocean freight for high volume or large size shipments. Air freight is charged based on “chargeable weight,” which is the volume and size of the shipment. Sea carriers tend to charge based on the amount of room used in the cargo container. This makes it more economical to ship via ocean when sending large or heavy goods.

Ocean carriers charge based on container rather than on the size or weight of the goods. FCL and LCL determine how much of the container an importer will use for their goods—and thus how much they’ll pay for that container.

Should You Use FCL or LCL For Ocean Freight Shipping? ocean freight shipping

What is FCL?

FCL is a Full Container Load. If you choose to ship your ocean freight with FCL, your products are shipped in a container that is not shared with other cargo shipments.

Think of it like booking and renting a container that’s all yours to use. No other shippers can put their products in that container. You then bear the entire cost and responsibility for that container.

You own that cargo box. You have control over what goes into it. If you don’t have a full load but you still want to ship via FCL, you can leave empty space in your container if you want.

A typical FCL container is 8 feet wide, 20 feet long, and 8 feet tall. This provides a lot of room to comfortably ship large volumes.

Think of FCL like an UberX. You get into the car yourself, absorb the cost, and go directly to your stop.

What is LCL?

LCL refers to Less Than Container Load. This is when various shipments from multiple customers are placed in the same container.

Basically, your goods are shipped in a cargo box with other customers’ goods. This is a more popular option for small to medium-sized companies with smaller volumes of cargo.

If FCL is an UberX, LCL is an Uber Pool. You get in the car, but there may be other riders hopping in along the way as well. You have to pick up and drop off other riders at different stops. You may also not be dropped off at your exact location because the Uber Pool has a schedule to keep. You’re sharing the cost with other Uber Poolers, but the cost itself can be comparable to an UberX in many cases.

What are the advantages of FCL?

1. Cost

FCL shipping generally costs less than LCL. Most carriers will charge a flat rate for a cargo container, while they charge per unit with LCL. Moreover, importing fees are the same for both methods, so you usually just have to look at the carrier’s price differentiation.

Generally, it’s more cost-effective to ship FCL with a cargo shipment that is more than 15 cubic meters (for a 20ft container). However, in some cases, shippers will choose FCL for smaller shipments because the flat rate per cargo box would actually be less than the cost per unit with LCL.

 

2. Speed

FCL generally has a faster lead time and shorter delivery timeline than LCL. The freight carrier knows that that cargo box has only your products in it. This means that they don’t have to open up the box at each port to unload other shippers’ products. Even if the ship goes to various ports, your goods don’t have to be unloaded and reloaded at each port. This can help avoid delays and make the process smoother.

 

3. Product safety

As discussed, FCL has reduced handling. Products aren’t being moved around, loaded, unloaded, and reloaded at each port. The container isn’t being opened or shifted at different locations. This means there’s a reduced risk of damages caused by handling.

Moreover, you don’t have to worry about other shippers’ packages. With LCL, your products are in the same cargo box as others’ goods. If their items aren’t properly packaged, it could impact your boxes. For example, their liquids could leak, their sharp objects could pierce through your boxes, or their heavy cargo could crush yours.

 

4. Express

FCL can ship more direct than LCL. You’re not worrying where other people’s shipments are going, so you don’t have to stop to unload at every point. The freight forwarder can bring the container to a specific address faster without a large number stops along the way. Overall, this creates a faster, safer, shorter delivery timeline.

Should You Use FCL or LCL For Ocean Freight Shipping? loading shipping crates on boat

What are the disadvantages of FCL?

FCL may not always be the most cost-effective option. If you often ship in smaller quantities, FCL can be expensive and ineffective. You usually want to send a greater quantity of goods with FCL, and this can leave you with a hefty inventory of product on your hands. You would then have to house that inventory with warehousing fees, which can cause additional expense.

 

What are the advantages of LCL?

1. Inventory costs

Less-than-container-load is usually a strong option if you’re shipping a small number of goods that don’t fill up a full container. Because you’re shipping in small quantities, you can keep your inventory lean. You’re not sending large quantities of goods that you then have to house in a warehouse—and then pay warehousing fees.

This is especially useful if you sell trending items or highly specialized products. These types of goods may not sell through your entire inventory, or it may take awhile to move the product. In these cases, you’ll want to house a lean inventory to avoid expensive warehousing and inventory fees. Thus, you’ll want to ship smaller quantities to avoid an overflow of goods in your stockroom.

 

2. Management

Generally, LCL tends to be easier for the importer to manage. Most freight forwarders have consolidators who handle the organization of the LCL shipments in the box. You don’t have to worry about managing the box yourself. This gives a slightly more hands-off approach to your ocean shipment.

What are the disadvantages of LCL?

1. Cost

Generally, LCL has higher costs as payment is charged based on volume in cubic meters. LCL also has higher insurance costs because you’re insuring for the potential of damage from other shippers’ cargo.

Moreover, freight companies prefer not to deal with the organization and management of an LCL. They have to organize multiple shippers in one box, rather than simply selling an entire cargo box. Thus, charges are higher because the freight forwarder maintains responsibility and costs for your cargo.

 

2. Lengthy timeline

LCL shipping takes longer because the cargo box has to be unloaded and reloaded at each customer’s port. Your shipment has to wait for everyone else’s goods to be dropped off at their various destinations.

LCLs usually sit in ports for a longer period of time. The upside here, though, is that this means you can usually schedule delivery appointments, which can allow you to have your goods picked up before housing fees start accruing.

Learn more about preventing late shipments here

 

3. Potential delays

LCL has a greater risk of delays than FCL. For example, if another shipper’s goods have customs concerns, your goods will get stopped too because they are in the same box. You could have perfect documentation but still end up with a customs delay.

 

4. Less control

You don’t have control over what items are going in your cargo box. This increases the risk of damage if the other shipper’s goods aren’t correctly packaged. In turn, this increases insurance cost and potential product replacement cost.

Note that for some small shipments, you may want to consider air freight. (LCL tends to still be less costly than air freight, but ocean freight has a longer delivery time.)

How do you decide between FCL and LCL?

Ultimately, you’ll want to choose FCL or LCL based on the size of your shipment. Generally, LCL is for smaller shipments and FCL is for bigger ones.

However, there’s a breakeven point at which a small shipment’s LCL cost would equate to the flat rate of an entire FCL container. Even if you leave half of the container empty, it might still be more effective to use FCL. This breakeven point usually depends on the shipping locations and the state of the ocean freight market.

You’ll also want to consider the impact on your delivery lead time. FCL tends to be a shorter delivery timeline, which is useful if you’re in a time crunch.

If you ship in small quantities at a higher frequency, it might be worth looking into sending larger quantities via FCL. You’ll want to balance the cost of shipping with the delivery time, inventory fees, and potential delays or damage.

 

The Bottom Line

Work with Ask Idea Sourcing to come up with your overseas shipment plan. We’ll take a formulaic approach to ensuring your goods arrive on time at the lowest possible expenditure.

Contact us now to start optimizing your sourcing costs.