Less than Container Load (LCL) is a fundamental method in international ocean freight transport, designed for businesses that do not have enough cargo to fill a standard shipping container. This approach allows multiple smaller shipments from various companies to be combined into a single container, facilitating global trade for businesses of all sizes. By sharing the container space, LCL provides an accessible and cost-effective entry point into international shipping for small-volume freight. It offers a flexible solution for transporting goods across oceans without the financial commitment of securing an entire container unit.
Defining Less Than Container Load (LCL)
LCL refers to a shipment that takes up only a portion of the capacity inside a standard 20-foot or 40-foot ocean container. The concept relies on consolidation, where a freight forwarder groups multiple individual shipments from various shippers into one container. This consolidation process is necessary when a business’s volume of goods is insufficient to justify booking a container exclusively for its cargo. The freight forwarder acts as the consolidator, managing the logistics of combining these smaller loads into a single, full container load (FCL) shipment. Each shipper pays only for the space their goods occupy, which is measured in cubic meters (CBM).
The Mechanics of LCL Shipping
The physical journey of an LCL shipment is a multi-step process managed by the consolidator. The cargo is either picked up from the shipper or dropped off at a Container Freight Station (CFS) at the port of origin. The CFS acts as a specialized warehouse where consolidation takes place, combining goods from different shippers headed to the same destination. The cargo is then loaded into a single container for ocean transit. Upon arrival, the container moves to the destination CFS, where deconsolidation occurs, separating the individual shipments for customs clearance and final delivery.
Comparing LCL and FCL (Full Container Load)
The choice between LCL and Full Container Load (FCL) shipping depends primarily on the volume and nature of the goods being transported. FCL involves one shipper securing the exclusive use of an entire container, regardless of whether it is completely filled. The volume threshold where FCL generally becomes more economical than LCL is typically around 13 to 15 cubic meters (CBM) of cargo. FCL shipments offer a direct, sealed route from origin to destination, resulting in fewer physical touchpoints and a lower risk of damage or misplacement compared to LCL. LCL, in contrast, involves shared space and multiple handling events, resulting in slower overall transit and a higher security risk profile.
How LCL Shipping Costs Are Determined
The financial structure of LCL shipping differs from FCL’s flat-rate pricing, as LCL freight is priced based on the volume or weight of the cargo. Shippers pay only for the space their goods occupy, determined by a “weight or measure” rule. The chargeable weight is calculated by comparing the actual gross weight of the cargo to its volumetric weight, applying the shipping rate to the greater figure. Volumetric weight is determined by calculating the cargo’s volume in Cubic Meters (CBM), which is the product of its length, width, and height in meters. For ocean freight, the industry standard considers one CBM equivalent to 1,000 kilograms. LCL shipments also incur various terminal handling charges (THC) and destination fees, which are often proportionally higher than FCL fees due to the labor-intensive handling required.
Deciding When to Use LCL
The decision to use LCL is driven by a business’s inventory strategy and volume requirements. LCL is financially sensible for shipments under the volume threshold of approximately 15 CBM, where the cost per unit of volume is lower than securing an entire container. This method supports efficient inventory management by allowing for smaller, more frequent orders, which helps businesses reduce warehousing costs and improve cash flow. LCL also provides a low-barrier entry for testing new products in different markets, as it requires a reduced initial investment in stock and shipping. However, shippers must consider the drawbacks, including longer transit times that result from consolidation and deconsolidation steps, and the increased handling introduces a higher risk of damage compared to the sealed environment of an FCL shipment.