Full Container Load

FCL/LCL Shipments: Single Shipper/ Multiple Consignees

Ozgur Eker (CDCS) Containers, Logistics , , , ,
FCL/LCL Shipments: Single Shipper/ Multiple Consignees

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

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.

References:

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

Ozgur Eker (CDCS) Containers, Logistics , , ,
Full Container Load (FCL) and Less than Container Load (LCL): Explanations with Examples

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.

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