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FCL/LCL Shipments: Single Shipper/ Multiple Consignees

By
Ozgur Eker (CDCS)
-
0

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 FCL/LCL shipments.

FCL/LCL is an international shipping term, that is used when single shipper dispatches goods under FCL terms for multiple consignees.

A freight forwarder ships the cargo as a full container load at the export leg, but the cargo will be deconsolidated at the import leg and delivered to more than one consignees.

FCL/LCL Shipment Example:

An exporter in Italy sells leather bags to UAE. The exporter works with couple of importers in UAE.

The Italian exporter signs following proforma invoices with two UAE importers as follow:

  • Proforma Invoice 1: 10 Euro pallets of leather bags with importer 1.
  • Proforma Invoice 2: 14 Euro pallets of leather bags with importer 2.

The goods are sold on CFR Jebel Ali Port, Duba, UAE and shipment will be completed with a 40ft High Cube container.

40ft High Cube Container holds 24 Euro pallets.

Italian exporter completes the production and books a full 40ft High Cube container with his freight forwarder.Because goods are cleared by two different importers, Italian exporter prepares two sets of documents including bills of lading, certificates of origin, commercial invoices and packing lists.

The importers get in touch with the freight forwarders agent in Dubai and clears the goods with corresponding document sets that they have received from the Italian exporter.

References:

LCL/FCL Shipments: Multiple Shippers/ Single Consignee

By
Ozgur Eker (CDCS)
-
0

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.

References:

Risks in LCL Shipments

By
Ozgur Eker (CDCS)
-
0

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:

Letter of Credit Condition: LCL/LCL Shipment Prohibited

By
Ozgur Eker (CDCS)
-
0

LCL is an abbreviation that is used mostly in international shipping. Its long form is Less than Container Load (LCL).

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 can only be arranged by freight forwarders.

LCL shipment is one of the great solutions that our modern international logistics sector provided to us and it is nothing wrong to use an LCL shipment.

However, LCL shipments are not risk free. Because two or more exporters share the same container, anything does not go well for one cargo unit may effect delivery of other cargoes.

In order to eliminate risks may arise from LCL shipments, in some letters of credit transactions issuing banks prohibit LCL shipments.

In these situations, exporters have to comply with the letter of credit terms and make sure that they have shipped the goods in FCL, but not LCL.

Example:

An exporter in Australia signs a sales contract with an importer in Bangladesh to supply of textile chemicals.

Under field 47-A letter of credit states that LCL shipments are prohibited.

47A/Additional Conditions

  • Shipment must be made through FCL/FCL container basics and LCL/LCL shipment strictly prohibited.

The exporter presented a FCL bill of lading in order to comply with the letter of credit term. The bill of lading clearly states that the shipment has been affected by FCL/FCL terms.

Full Container Load (FCL) and Less than Container Load (LCL): Explanations with Examples

By
Ozgur Eker (CDCS)
-
0

Containers are the main Cargo Transport Units (CTU) in international transportation.

It is possible to load almost every type of manufacturing merchandise via containers  from consumer goods to big production lines by sea shipments.

Because international trade is generally materialized between the manufacturers and wholesalers or wholesaler and wholesalers, individual order quantities are high enough to fill a freight container.

But in some circumstances making the shipment by full containers do not make sense in economic terms. In these situations freight forwarders take the stage and consolidate cargoes into full containers.

Full Container Load (FCL)

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)

Under Full Container Load shipments all containers stated on a bill of lading is booked and used by one party.

Important Note: Full Container Load term does not suggest how much the container is loaded. Which means that it does not matter how full the container is that is to be accepted as a FCL.

 

Less than Container Load (LCL)

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)

Example 1: Full Container Load Shipment from India to UAE

An Indian exporter signs a sales contract with an importer in United Arab Emirates. Delivery term is CFR Abu Dhabi Port, U.A.E and the payment method is letter of credit.

After production is completed, the exporter decides that the shipment is suitable to be carried on a 20′ standard dry container. As a result he gets in touch with his freight forwarder and gets a quotation for a 1 x 20 DC shipment.

The container is not shared by a third party as a result shipment is effected on Full Container Load (FCL). The container number is PONU 089402-9

The bill of lading assures this point by indicating FCL/FCL abbreviation.

Example 2: Less than Container Load Shipment from Italy to Bangladesh

An Italian exporter signs a sales contract with an importer in Bangladesh. Delivery term is CFR Chittagong Sea Port, Bangladesh and the payment method is letter of credit.

After production is completed, the exporter decides that the shipment is too small for booking a 20′ standard dry container. As a result he gets in touch with his freight forwarder and gets a quotation for a Less than Container Load (LCL) shipment.

The freight forwarder consolidates the shipment into a 1 x 40 HQ container.

The container is shared by two or more shippers as a result the shipment is effected on Less than Container Load (LCL) term. The container number is TCNU/455605/6.

The bill of lading assures this point by indicating LCL/LCL abbreviation.

References:

Blank Back Bill of Lading Not Acceptable

By
Ozgur Eker (CDCS)
-
0

A Blank Back Bill of Lading, also known as Short Form Bill of Lading, is a type of transport document that does not include the terms and conditions of the shipment (contract of carriage) on the back side.

Short form bills of lading are not in high demand.

Especially under the letters of credit payments, issuing banks generally demand long form bills of lading, by simply prohibiting presentation of short form bills of lading.

Some examples are:

  • Short form, blank backed bill of lading not acceptable.
  • Short form, blank backed and freight forwarder bill of lading not acceptable
  • Short form, blank backed, claused stale bill of lading / air way bill not acceptable.
  • Short form, blank backed, charter party and through bills of lading is not acceptable.

What to Do If Letter of Credit Prohibits Presentation of Blank Back Bills of Lading

As an exporter you must examine Field 46A: Documents Required and Field 47A: Additional Conditions.

If you determine that the letter of credit prohibits presentation of blank back/short form bills of lading, you must make sure that the bill of lading you will present contains the terms and conditions of the shipment (contract of carriage) on the back side of the bill of lading.

It is advisable to discuss this issue with your freight forwarder before shipment takes place.

Short Form/Blank Back Bill of Lading

By
Ozgur Eker (CDCS)
-
0

A bill of lading is a generic name of a transport document, which is used in sea shipments.

As a transport document a bill of lading is expected to fulfill three basic functions:

  • it evidences that the goods have been received by the carrier;
  • it evidences the terms of the contract of carriage
  • it is expected to allow transfer of ownership of the goods

There are several types of bills of lading in circulation such as multimodal bill of lading, forwarder bill of lading, charter party bill of lading, negotiable bill of lading and non-negotiable bill of lading etc.

Each type of bill of lading has unique characteristics. Different types of bills of lading may not be able cover all functions.

As an example, non-negotiable bill of lading does not allow transfer of ownership of the goods.

Bill of Lading and the Contract of Carriage

If you look at the reverse side of a bill of lading, you will probably see a contract written in small font size. This contract known as the contract of carriage.

It is ordinary that a bill of lading contains the contract of carriage on the reverse side. Especially in container shipments.

Every container liner has a standard bill of lading contains the contract of carriage on the reverse side.

But some bills of lading are issued with empty reverse sides.

These kind of bills of lading are called Blank Back Bills of Lading or Short Form Bills of Lading.

Examples:

Long Form Bill of Lading Example:

Hapag-Lloyd Bill of Lading: Hapag-Lloyd is one of the biggest container carriers in the world. Hapag-Lloyd uses a standard bill of lading contains a contract of carriage printed on the backside of its bill of lading. It is also possible to see an excerpt of carriage terms on the right bottom of the front page.

Short Form Bill of Lading Example:

BIMCO Blank Back Form of Non Negotiable Liner Waybill: BIMCO is the world’s largest international shipping association, with around 1,900 members globally. BIMCO produces ready to use shipping contracts.

BIMCO Blank Back Form of Non Negotiable Liner Waybill is a perfect example for a short form bill of lading.

What are the Risks Associated with Short Form/Blank Back Bills of Lading

The parties on a bill of lading such as consignee, notify party and shipper can not reach to  carrier’s contract of carriage with ease under Short Form/Blank Back Bills of Lading.

Hiding the contract of carriage by carrier can attract some sort of unpleasant questions to the minds of the parties on a bill of lading.

The main risk may associate with a blank back bill of lading would be a third party interference on delivery of goods to the consignee, by claiming that his interests have not been fulfilled by the carrier.

Of course there must be a secret contract had to be signed between the third party and the carrier, on which the parties of the bill of lading have no information about.

What are the Differences Between a Container Number and a Seal Number?

By
Ozgur Eker (CDCS)
-
0

A container number, also known as container identification number, is a reference number assigned to a freight container for legal and commercial purposes.

Container seal number is an identification number of a container seal. Each container seal has an individual identification number.

Both container numbers and seal numbers are important international transportation security and safety measures and monitored closely by customs offices during the import and import stages.

On this post, I will identify the main differences between a container number and a container seal number.

Differences Between Container Number and Seal Number:

Easy to Locate / Hard to Locate:

Container number is printed on three spots of each freight container: one on the doors end, one on the side wall and one on the top of the container.

It is very easy to locate a container number.

On the other hand, a seal number is affixed to each container seal, which is a small item.

It is not easy to locate a seal number comparing to a container number.

Tracking a shipment:

It is possible to track a shipment by a container number. On the other hand you can not track a shipment by a seal number.

International Coding Standard:

Freight containers are numbered by an international organization called BIC (The Bureau International des Containers) according to an internationally recognized ISO 6346 standard.

Container seals are numbered by each seal producer or container liners according to their internal corporate rules.

What is a Container Seal Number? Explanations with Examples

By
Ozgur Eker (CDCS)
-
0

Customs and Border Protection departments of countries have one basic goal.

Allowing the clean cargo pass through the customs, while detecting and preventing the entrance of illegal cargo such as narcotics, guns, some types of chemicals etc.

To achieve this objective, each party in international logistics have to follow certain security rules. Sealing freight containers with proper seals is one of these security measures.

It is compulsory for every shipping container to have at least one seal before a shipping line allows the container to be shipped.(1)

Seal number is an identification number of a container seal. Each container seal has an individual identification number.

Container Seal Documentation Process

Under Full Container Loads(FCL), it is shippers responsibility to inform the seal number along with other relevant information stated in the shipping instructions to the carrier, after securely stuffing and sealing the container.

Under Less Container Loads (LCL), it is the freight forwarder who stuffs and seals the container, not the shipper. As a result under LCL shipments, the freight forwarder must inform the seal number to the carrier.

In either way, the seal number must be properly documented.

Example:

G2382564 is a seal number that belongs to CMA CMG container liner group (APL) that is used to seal a 40HC container with container number APHU7124611.

References:
  1. How to seal a shipping container and how many seals should a container have..

What is a Container Number? Explanations with Examples

By
Ozgur Eker (CDCS)
-
0

A container number, also known as container identification number, is a reference number assigned to a freight container for legal and commercial purposes.

Container number, which is one of the container markings, is printed on three spots of each freight container: one on the doors end, one on the side wall and one on the top of the container.

Containers are the main Cargo Transport Units (CTU) in international transportation.

They are mainly used to carry almost all types of manufacturing goods.

Some container types are also suitable for commodity transportation such as bulk containers and tank containers.

Because hundreds of thousands of containers are in circulation each day between the borders of the nations, it is very important to label each of them by an internationally accepted organization with an internationally recognized identification system.

Container numbers are assigned by The Bureau International des Containers, which was founded in 1933 as a neutral, non-profit, international organization whose mission is to promote the safe, secure and sustainable expansion of containerization and intermodal transportation.

BIC (The Bureau International des Containers) uses the ISO 6346 standard when assigning reference numbers to the shipping containers.

Understanding the Container Identification Number Structure:

Container Identification Number: BIC Code (Owner prefix) + Equipment Identifier + Serial Number + Check Digit

 

The identification system provides uniform international identification of containers, in documentation and in communication associated with the movement of containers from door to door. It consists of:

  • The Owner Prefix (BIC code): Three capital letters of the Latin alphabet to indicate the owner or principal operator of the container,
  • The Equipment Category Identifier: One capital letter as follows:
        • U for all freight containers,
        • J for detachable freight container-related equipment,
        • Z for trailers and chassis,
  • The Serial Number: Six Arabic numerals, left at owner‘s or operator‘s option,
  • The Check Digit: One Arabic numeral providing a means of validating the recording and transmission accuracies of the owner code and serial number. (1)

Examples:

Example 1:) MSKU 907032-3 is a container identification number referencing a Maersk Line container.

MSKU is a BIC code which belongs to Maersk Line. Serial number of the container is 907032 and the check digit is 3.

Example 2:) MRKU 953040-6 is a container identification number referencing a Maersk Line container.

MRKU is a BIC code which belongs to Maersk Line. Serial number of the container is 953040 and the check digit is 6.

Example 3:) MEDU 870768-8 is a container identification number referencing a MSC container – Mediterranean Shipping Company.

MEDU is a BIC code which belongs to MSC. Serial number of the container is 870768 and the check digit is 8.

References:

  1. Container Identification Number, Bureau International des Containers et du Transport Intermodal
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