Ocean Freight: FCL vs LCL Shipping - How to Choose the Best for Your Business

Introduction

Ocean freight is one of the oldest modes of transporting goods around the world. Also called Sea freight, it is a well-established, dependable, and affordable means of international trade. Whether you’re a big corporation looking to ship a large volume of commercial goods or an individual wishing to ship personal items, ocean freight can be a viable and cost-effective option.

Simply put, Ocean freight is the international transport of goods by sea. Ocean freight is by far the most popular international shipping method. According to the United Nations Conference on Trade and Development, approximately 90% of all goods are transported by sea around the world. It is an option with huge potential for your business whether you are just starting out or have been in the game for quite a while.

The sheer size of the maritime industry adds to the complexity of ocean freight, and you may be wondering where to start. We’ve got you covered at Allwin Freight. This article will highlight everything you need to know about ocean freight, such as what it is, how it works, how much it may cost, and when it is the best choice for your business.

Contents

• WHAT IS OCEAN FREIGHT?
• HOW OCEAN FREIGHT WORK
• STEPS AND STAGES IN OCEAN FREIGHT SHIPPING
• TYPES OF OCEAN FREIGHT
  • WHAT IS FCL?
  • WHAT IS LCL?
• DIFFERENCES BETWEEN FLC AND LCL
• MAKING THE BEST CHOICE FOR YOUR BUSINESS
• FINAL WORDS

What is Ocean Freight?

Ocean freight is the transportation of goods and cargo by sea. The goods are typically transported on ships or carriers across the open ocean. There are several shipping options for various types of goods, but container shipping is the most popular. Ships or vessels designed for containerization transport goods in containers 20 to 40 feet long, allowing massive quantities of goods to be shipped simultaneously on a single vessel.

As an important part of cross-border trade, ships carrying products and goods loaded in large metal containers; sail and dock in different ports around the world, transporting their cargo from one country to another.

How Ocean Freight Works

In the operations of the ocean freight industry, freight forwarders are very important service providers. A freight forwarder or freight-forwarding company is a third-party person or business that picks up your products, properly arranges for them to be loaded and boarded for shipping, and then successfully delivers them to the final destination.

The services of a good freight forwarder are more important because you need to have dependable eyes and hands that can assist with gathering your items from the vendor/supplier, arranging to ship them, and loading them onto the ship. Allwin Freight will simplify your ocean freight operations with dependable, efficient services.

Incoterms
Another major component of ocean freight is the shipping contract. Ocean freight contracts are governed by international shipping conventions and communicated in standard shipping terms known as “Incoterms” (international commercial terms). Incoterms specify when the buyer assumes responsibility for the shipment and at what point the seller will no longer be liable for the products.

Undoubtedly, there is much to learn about how these incoterms operate and which makes the most sense for you. Some commonly used incoterms are

• FOB (Free on Board): Under the terms of a FOB contract, buyers and sellers split responsibility for the delivery procedure. In order to ensure that the items are properly loaded, packaged, and labeled before delivery, the seller accepts responsibility. The buyer is now responsible for fulfilling the contract once the goods have been put onto the ship.
• EXW (Ex Works): In an EXW contract, the buyer bears the majority of the risk. The buyer is in charge of picking up the items at the factory and transporting them to their final location.
• DDP (Delivered Duty Paid): Here, the buyer assumes the smallest duties while the seller assumes the largest ones. The agreements provide that the cost of shipping, insurance, and inland transportation shall be paid by the seller.

Steps and Stages in Ocean Freight Shipping

The entire process of international transport of goods by sea goes through a series of procedures. This is not far-fetched considering the nature and complexity that comes with cross-border trade. The stages your goods will go through before getting to you are explained below. Every step of the procedure may be assigned to the freight forwarder. Or, in an effort to cut costs, you can opt to make different arrangements for some stages.

• Export haulage: This is where the shipping voyage begins. At this point, your items will be moved from the seller’s warehouse to the warehouse of your freight forwarder.
• Export customs clearance: The majority of nations demand that products intended for export first go through clearance. A thorough statement of the goods and any accompanying paperwork are required for clearance.
• Origin handling: This phase includes all the tasks required to get your products ready for shipping. A staging area will be used to place the cargo for examination and verification. Once verified, the freight forwarder will issue a cargo receipt attesting to their receipt of the items in accordance with the description.
• Depending on whether your goods are for FCL or LCL shipping, they may be loaded into a container or stored to be consolidated with other goods in a container going to the same port of destination. The container will then be transported by truck to the ship’s departure port for loading.
• Ocean Freight: This is the movement of commodities over the ocean itself. Depending on a number of variables, the phases up to this point could take days or even weeks. Depending on where the items are going, ocean freight alone could take anywhere from 20 to 60 days.
• Import clearance: After the goods reach their final port of destination, they must wait for import clearance. Additionally, it entails completing the required paperwork, declaring the cargo, and paying the associated expenses.
• Destination handling: This stage includes all the tasks required to verify the goods, examine the documentation, including the bill of lading, and move the container to the warehouse of the freight forwarder. The items will be verified, opened, and sorted here for import transportation.
• Import haulage: This completes the procedure. At this point, the merchandise will be delivered by truck or train inland to the chosen location.

Types of Ocean Freight

As previously stated, the container shipping model is the most commonly used model of ocean freight. This is because containers can be moved quickly and easily without disrupting the shipment of goods. They are also relatively safe and easy to use. Containerization is best suited for dry and pre-packaged goods, which make up the bulk of commercial shipments. Based on this model, there are 2 major types of ocean freight:

• Full Container Load (FCL) Shipping
• Less than Container Load Shipping

What is FCL?

FCL is a term used by the ISO (International Organization for Standardization) to describe a 20 or 40-foot container loaded and entirely occupied with goods belonging to a single shipper. By choosing FCL, you pay for the whole container and only your goods occupy the entire space (around 10 cubic meters). Shippers who have a lot of cargo, enough to fill a 20- or 40-foot container, typically choose this option.

FCL shipping is done exclusively for the goods of only one party through one or more containers. Only your goods will be contained in the container, ensuring that your shipment will remain undisturbed until you open it. FCL is a great option if you have goods that can fill up or nearly fill a container.

What is LCL?

On the other hand, LCL shipments typically only include a portion of the items needed to fill a container, about 1/4th of the container. A shipment is referred to as LCL if it doesn’t fill a 20 or 40-foot standard container.

In LCL shipping, numerous shippers combine their cargo into a single container. If your goods cannot fill a container, LCL allows you to save money by sharing the container with other shippers. However, this option has the drawback that your goods might be more susceptible to mishandling or damage during the journey. Also, LCL is less expensive than FCL for small shipments, but it costs more per unit of freight overall.

Differences between FLC And LCL

LCL and FCL are fundamentally different from one another because of the spacing implications they have for your shipment. The main distinction between the two is that with LCL, as opposed to FCL, you frequently share space with other people’s shipments. This distinction, however, gives rise to other differences, which are explained below.

	FCL	LCL
Cost	You pay the price for the full container, irrespective of the volume or size of your goods. Additionally, import fees are constant, meaning they don’t change based on volume, thus payments are the same no matter the size	LCL allows you to ship lower amounts, which can help with your cash flow since it is more affordable than FCL. You are charged by how much space your goods occupy (per cubic meter). Smaller cargo that can be stacked will save you money, while you will pay more if your goods occupy more space. Although LCL shipping is more expensive per unit than transporting products in a full container, generally it is less expensive.
Duration of shipping	FCL takes less time in transit compared to LCL. This is because the cargo consolidation is one-time and goods are directly moved from your supplier to you.	A lot of smaller consolidations are involved in LCL. Additional goods from other shippers need to be consolidated with your goods before the container is full. Also, for the several shipments combined, the paperwork must match each item in the container, and then the LCL shipment must be sorted once it arrives at the port. As a result, LCL shipments typically take longer than FLC shipments, and every shipment must be verified and may be subject to a customs inspection.
Flexibility	Not much room for flexibility. If you wish to incorporate delivery to FBA prep centers, the additional costs of storing, unloading, sorting, and transporting to the delivery address must be taken into account.	In contrast to FCL, LCL is highly versatile. For example, LCL is perfect if you need to split your deliveries among destinations or if you are delivering to various Amazon FBA sites or 3PLs, for example.
Security	Basically, FCL is more secure. Since the container just includes your items, FCL has a lower risk of damaged goods. It is also handled much less frequently than products sent by LCL, therefore reducing the chance of damage, theft, or loss. FCL is a preferable choice if you are sending fragile items or items that need to travel undisturbed.	LCL is less safe than FCL, as there is a high tendency for your goods to be disturbed during the processes of loading and unloading during the voyage. There is a higher chance of your items being damaged because LCL offers no guarantees regarding the other goods (such as corrosive, pungent, or liquid commodities) that are shipped in the same container.
Availability of Operations	It can be more difficult to obtain FCL shipments during busy times, such as the days before the Chinese holidays.	Since you don’t need to wait for a complete container to become available, LCL is a great choice at any season, even during rush periods.
Suitability	For fast-track shipping, FCL is preferable. You do not need to factor in consolidation and de-consolidation times because your package travels on its own. Additionally, transporting your item alongside other shipments could put it at risk of encountering issues with customs.	For start-ups and small businesses, LCL might be a better alternative overall. You can adjust your delivery requirements to match your budget due to the variable pricing structure it offers. In the case of low-volume shipments, this is especially advantageous.

Making the Best Choice for Your Business

It may be a tricky decision to pick the best ocean freight type for your business. The four criteria for choosing between LCL and FCL are volume, cost, security, and urgency. FCL is a better alternative if your shipment is more than 10 CBM. However, LCL will probably be your best choice for small-volume shipments.

Your next consideration should be the pricing when the volume is close enough to make things look unclear. FCL is a great choice for shipments bigger than 10 CBM. The reason for this is that you pay a certain price for a full container. Therefore, FCL can end up being less expensive than LCL because LCL charges can increase quickly the more space that your products occupy. However, FCL will probably be more expensive if your shipment is significantly smaller than 10 CBM.

In addition, FCL is a superior choice if security and protection from misuse are important factors for you. This is also true if you need the goods delivered as quickly as possible but do not have flexible delivery dates.

At Allwin Freight, we have flexible services that are tailored to give your business the best results. We have optimum technology and efficient operations to provide you with the best services in transporting your goods across the seas.

Final Words

Ocean freight presents many opportunities for your business, especially if you are planning to scale your business. You would be starting on the right foot by partnering with an experienced and reliable company that makes the whole process as easy as you would want it to be.