If you ship products internationally, sometimes your orders will not fill a complete ocean freight container. Airfreight may be too expensive. You are surely interested in reducing international freight costs, so how do you handle these situations?
Sometimes you may have international ocean freight shipments that are not large enough to fill a 20-foot or 40-foot ocean freight container. What should you do? Should you ship the order(s) as a Less-Than-Container (LCL) shipment? That depends.
These days we all want to save some money, so regarding shipment volume and cost, one important thing you should consider and calculate is the so-called Full-Container-Load (FCL) “container pivot point”. This is the amount of volume expressed in cubic meters (CBM) of product, where shipping in a partially loaded container is actually less expensive than tendering the order as a Less-Than-Container load (LCL).
Particularly with the currently low Full-Container-Load rates, and depending on the trade lane costs for Less-Than-Container load shipments, this pivot point can be as low as 12 - 15 cubic meters, and can actually cost you much less than an LCL shipment. Be sure you factor and compare all the origin and destination charges, warehouse in/out handling, drayage, etc., costs for both shipment methods to get your true savings.
Let’s take a simple example –
1. You have a contracted ocean freight rate of us$70 all-in per CBM for Less-Than-Container load shipments.
2. The current all-in Full-Container-Load rate for a 20-foot container from Hong Kong to Los Angeles is about us$1200 (a 20-foot container costs 75% of a 40-foot container - currently us$1600 all-in for a 40 foot container).
In this example, with only 17.2 CBM it would be cheaper for you to ship your order(s) as a full 20-foot container instead of LCL, plus you save a few days transit time.
If your product is really bulky you could still ship 22.8 CBM cheaper as a 40-foot container than shipping as LCL.
I have regularly shipped low-volume orders as a full container to reduce costs while shortening the transit times. The lower transit time for FCL versus LCL can easily be 3 or 4 days, which also impacts your inventory carrying cost, and therefore your actual fully loaded landed costs.
If you aren’t sure of all the charges you need to consider, or you just want to check on your providers’ invoices, feel free to review or download the document I put together a while back in this regard.
The best other alternative (if you have multiple suppliers in the same general area of your origin ports) is if you can improve or establish a “shippers consolidation” program. Then you can pool a number of orders into the larger containers i.e. 40 foot high-cube or 45 foot containers.
Oh yes, if you ship partially loaded containers make sure your supplier properly stows and secures the product to avoid any damages in-transit.
Plan for success! Poor planning can result in much headache and unnecessary expense. Great success will follow your good planning.
If you need more detail or clarification, we will be happy to work with you to setup a bid or RFP (Request For Proposal), or to audit or review your current rates and processes for possible improvement.
At Ray McGuire Consulting Group we consistently and successfully help you define and implement international logistics, import / export, Customs, C-TPAT, NAFTA, Importer Security Filing, TSA, social and vendor compliance, cross-dock, pick & pack fulfillment, and distribution solutions. We have expert knowledge and experience in C-TPAT certification (Customs-Trade Partnership Against Terrorism), Importer Security Filing (ISF or 10+2), AES, FAST, TSA, and other supply chain security programs.
Consistently increasing speed-to-market while reducing costs!
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