Month: September 2020

LCL/FCL Shipments: Multiple Shippers/ Single Consignee

Ozgur Eker (CDCS) Containers, Logistics , , , ,
LCL/FCL Shipments: Multiple Shippers/ Single Consignee

Full Container Load (FCL) refers to a single container or multiple containers are booked by a shipper to transport their cargo exclusively under a bill of lading.(1)

Less than Container Load (LCL) refers to cargoes owned by different shippers, grouped in a single container by the forwarding agent, allowing transportation of smaller volumes of cargo without paying for a full container; this is more cost effective for smaller shipments which cannot utilize a full container.(2)

In real world not all containerized goods are transported either by LCL/LCL or FCL/FCL basis, but in mixed options as well such as LCL/FCL or FCL/LCL.

On this page, I am going to explain LCL/FCL shipments.

LCL/FCL is an international shipping term, that is used when multiple shippers dispatch goods under LCL terms for a single consignee.

A freight forwarder consolidates at least two different shippers’ cargo into a full container load at the export leg, but the cargo will not be deconsolidated at the import leg.

One importer clears all goods from the customs.

LCL/FCL Shipment Example:

An importer in Germany buys different foodstuff from Egypt. The importer works with couple of exporters in Egypt.

The German importer orders following goods from three Egyptian exporters as follow:

  • Order 1: 6 Euro pallets of olives from exporter 1.
  • Order 2: 8 Euro pallets of cheese from exporter 2.
  • Order 3: 10 Euro pallets of canned peppers from exporter 3.

The goods are sold on FOB Alexandria Port, Egypt and shipment will be completed with a 40ft High Cube container.

40ft High Cube Container holds 24 Euro pallets.

Importer’s freight forwarder gets in touch with all exporters 2 weeks before shipment date and books the container.

As exporters locate relatively in close areas, it is decided that the goods will be loaded to the container at the exporters’ factories.

1 week before shipment date, the importer’s forwarder arranges inland transportation and brings the empty container from the port and sends to the exporters consecutively.

Inland transportation costs in Egypt up to Alexandria Port and Alexandria Port charges are paid by exporters proportionately according the FOB delivery term.

Although importer receives three sets of documents including three sets of bills of lading, the goods will not be deconsolidated and all goods inside the container will be collected by the same importer in Germany.

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Risks in LCL Shipments

Ozgur Eker (CDCS) Containers, Logistics , , ,
Risks in LCL Shipments

Less than Container Load (LCL) refers to cargoes owned by different shippers, grouped in a single container by the forwarding agent, allowing transportation of smaller volumes of cargo without paying for a full container; this is more cost effective for smaller shipments which cannot utilize a full container.(1)

In an LCL shipment, a freight forwarder finds at least two exporters, who would like to ship smaller volumes of cargo from the same port of loading to the same port of discharge.

Then the freight forwarder consolidates these smaller load units into one full container. Exporters share the freight cost proportionately, based on each volumes of cargo.

LCL shipments offer significant cost advantages, but they are not risk free.

On this post, I am trying to explain main risks factors associated with LCL (Less than Container Load) shipments.

Risk 1: One of the Cargoes May not be Cleared from Export Customs in Time

As I have mentioned earlier, freight forwarders consolidate cargoes from at least two different exporters under LCL shipments.

Consequently, at least two different export customs operations must be completed without any problem in order the container to be released from its export customs obligations.

If one of the exporters could not complete its export operations in time, the container may be put on hold by customs authorities.

Risk 2: Damages Due to Insufficient Packing

Improper packing is one of the major risk factor in international shipments. Damages to the goods or even leakages from the containers could arise due to insufficient packing of goods.

Under LCL shipments probability of experiencing financial loses due to improper packing is significantly higher than FCL shipments, because of the fact that shippers must bear another exporter’s packing risks.

Risks 3: One of the Cargoes May not be Cleared from Import Customs

Although, the risk of being penalized by another shipper’s fault during the import customs operations under LCL shipments is significantly lower comparing to export customs operations, it must be taken into account as a risk factor.

The customs authorities may flag the container you share with an another shipper under LCL shipments due to other shipper’s fault that you have no control over.

Other Risk Factors:

Possible Delays at the Transshipment Port: As I have mentioned earlier, LCL shipments are handled by freight forwarders.

It is possible for a freight forwarder to arrange shipment via two different actual carriers: The first carrier may transport the goods from port of loading to the transshipment port; whereas the second carrier transport the goods from transshipment port to port of discharge.

In rare situations it is also possible the cargo may be offloaded at a transshipment port, where it will either get transported to another container or wait for more cargo to fill the container before continuing to its final destination.(2)

All these extra works at the transshipment port may add extra days to the transit times under LCL shipments.

Risks Associated with Freight Forwarders: Freight forwarders have to handle more complex procedures under LCL shipments than FCL shipments.

Consolidating cargoes into full container, container stowage, handling transshipment and deconsolidating cargoes into individual cargo units and delivering them to corresponding consignees at the port of discharge are the extra work that must be done by freight forwarders under LCL shipments.

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