What Is Less than Container Load (LCL)?

Less than container load (LCL) is a shipping method where freight from different vendors is consolidated into one container for cost-effective transport. The shipments belong to multiple parties, each with separate bills of lading (BoL).

How LCL shipping works

Consolidation

The LCL shipping process starts with the consolidation of cargo from multiple shippers at a freight forwarding facility. The cargo is stored in a single container and each shipment is carefully organized and documented. Since the shipments come from different vendors, the freight forwarder is responsible for package labeling.

Shipping process

Once the container is full, it is sealed and loaded onto the vessel. The consolidated container is then shipped to its destination, following the standards set by the chosen Incoterm outlined in each BoL. During transit, the shipments remain separated so they can be easily identified upon arrival.

Deconsolidation

After reaching the destination port, the container is unloaded and each shipment is separated according to its documentation. The goods are then prepared for separate deliveries to the final point.

Comparison with full container load (FCL)

• In FCL (full container load) shipping, goods from one supplier take up the entire container space. In LCL shipping, smaller shipments from multiple vendors share space in one container.  

• FCL shipping is faster compared to LCL as it benefits from reduced handling times due to the elimination of consolidation and deconsolidation processes.

• In FCL, the seller pays a flat fee for the entire container space, while in LCL, the cost is based on the volume occupied, calculated in the CBM unit of measure.

• The cost per CBM in LCL shipping may be higher but it ends up being more economical than FCL if your cargo requires a small space.

• LCL cargo requires handling at multiple points throughout shipping; consolidation, loading, unloading, and deconsolidation. FCL cargo, however, is only handled by the buyer and seller and sealed throughout shipping, making it more suitable for transporting fragile goods.

Advantages of LCL shipping

• Cost savings: Allows shippers to pay only for the space needed within a container, making it more budget-friendly for smaller consignments.

• Minimized waste: Promotes more efficient use of container space, contributing to reduced carbon emissions per unit of cargo transported.

• Flexible space utilization: Accommodates shipments of various sizes and weights, making it suitable for businesses with changing transport needs or those that do not regularly ship large volumes.

• Global market reach: Opens up international markets for smaller businesses that may fail to justify FCL shipping due to a low volume of goods.

• Improved cash flow management: Smaller, frequent shipments help businesses improve control over their cash flow as they can align shipping costs with their sales cycles.

Disadvantages

• Longer lead times: Takes longer for goods to reach their destination due to additional steps at origin and destination ports for consolidating and separating shipments. Moreover, any customs issue with a single consignment can delay the entire cargo.

• Higher risk of damage or loss: With multiple shipments in one container and various handling points, there is a higher risk of damage or loss to the cargo during transit.

• Complexity: Involves coordination among multiple shippers, each with their own BoL and shipping requirements. Any communication gaps can overcomplicate the logistics process and shipment tracking.

• Extensive documentation: Requires robust logistics planning and considerable paperwork, including packing list, BoL, and commercial invoice, to clear customs and ensure compliance with regulations.

• Impaired logistics oversight: Weakens control over delivery times and may lead to unexpected delays if any of the shipments are not ready, causing supply chain disruptions.

When to choose LCL shipping

LCL shipping is a common choice for businesses looking to ship internationally while not having enough cargo or time to wait to fill a whole container. This method allows freight forwarders to combine smaller shipments from other vendors, increase the frequency of deliveries, and saving on transport costs.

It’s best to choose LCL when you want to transport low-value goods more frequently under FOB or CIF Incoterms. Small businesses often choose this option as they may not be ready to commit a significant amount to shipping costs associated with FCL or air freight. It is also a viable solution for companies facing space constraints during peak shipping seasons.