The need for e-commerce shipping solutions has risen in correlation with the COVID-19 pandemic. As a result, less-than-container load (LCL) has become a popular option – allowing e-commerce businesses to cut shipping costs by up to 75%, and develop a supply chain that bends with the rapidly changing nature of inventory.
LCL shipping is an alternative to full-container-load (FCL) shipping. With FCL, the shipper uses an entire shipping container and pays for the space no matter the size of the shipment– often wasting money on unused space for smaller orders. LCL, on the contrary, allows you to share container space with other shippers.
Of course, there are situations in which one shipping method makes more sense than the other. If you’re shipping large products, FCL may be the best option for you. The freedom provided by LCL is especially useful in e-commerce, where small parcels are most common, allowing you to keep a more adaptable inventory without having to pay for unused space in the container.
Because of the e-commerce boom, there has been an increase in shipping frequency, a decrease in average shipment size, and demand for more supply chain availability. Business Insider predicts that e-commerce growth will continue to accelerate in 2021. Knowing this, let’s look at how e-commerce businesses can save on shipping costs with an LCL option.
Choose the Right Container Size
LCL is especially useful when shipping several, smaller packages to the same location.
Most LCL services require a minimum quantity of 500 kg or 2 cbm, and are cheaper and faster than traditional ocean delivery services since the consignments are being consolidated together. It’s common for LCL services to bill a minimum of 1CBM/1000kgs.
With LCL shipping, businesses can upgrade or downgrade their shipment sizes according to their needs without making a cash commitment to a full shipping container. Instead, you are paying only for what you need.
Of course, LCL won’t work as well as traditional FCL shipping in a number of circumstances. Some logistics providers don’t have a large enough customer base to consolidate all of the products in your lane. If this is the case, your shipment could be delayed while waiting at the port for additional LCL shipments to fill the container.
Price varies as well. LCL isn’t always cheaper than FCL, especially when a provider consolidates many LCL packages into an FCL load. Extra fees levied to cover handling at the destination port can rack up, so finding a global logistics provider like IBC that has a large enough customer base and the agility to create a customized solution for your businesses' needs will save you money and expedite delivery times.
Understand How Freight Rates Are Calculated
Several factors influence freight rates. Understanding how these costs are calculated can help you select the correct shipping options to gain long-term savings. These include:
Weight: Similar to other forms of shipping, the weight of an item can alter its cost. Weight is calculated by multiplying the length, width, and height of a package to get the total cubic feet/cubic meter.
Freight Class: This helps shippers get standardized freight pricing for shipments when working with different carriers, brokers, and warehouses. Lower freight classes are designed for dense shipments, whereas higher freight classes are designed for fragile shipments. Since higher classes generally result in higher rates, a shipper can save money by picking a lower class for small parcels.
Volume / Size: Often volumetrically larger FCL shipments can result in a lower landed cost than smaller ones thanks to fixed costs, premiums, and document fees. LCL providers rely on accurate dimensions to allocate the number of containers per freight. Inaccurate dimensions can result in costly adjustments from providers, so it’s important to carefully record the volume.
One way to reduce costs is to work with a global logistics provider that has multiple container freight stations to optimize pricing and streamline routing. IBC has four container freight stations located in Los Angeles, Miami, New York, and Chicago.
Work with a customs broker
Working with a global logistics provider is highly advisable when dealing with LCL shipments. Supply chain experts add a critical level of tactical know-how to the shipping process. But some logistics providers offer more services than others.
Since the global shipping environment is complex and changes day-to-day based on world events, it’s a good idea to look for a logistics company with an in-house customs broker. These providers handle the end-to-end technicalities of shipping across international borders. They are familiar with the laws, regulations, and inspection processes of clearing parcels across various borders on the supply route — and will alleviate your stress in the shipping process.
By working with a global logistics provider that offers in-house customs, you will have a single point of contact throughout the entire process, as opposed to multiple companies that charge different rates.
Explore LCL Options with an End-to-End Logistics Provider
As the shift to e-commerce accelerates, there’s never been a better time to fine-tune your shipping practices. To explore LCL options with an end-to-end global logistics provider, contact IBC today.