Risks in LCL Shipments

Understanding risks associated with LCL (Less than Container Load) shipments.

0
1692

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.

References: