Shipping costs are one of the biggest concerns for importers. The costs depend on the volume of the goods and can alter the landed unit cost dramatically depending on whether your goods fill a Full Container Load (FCL) or are Less than a Container Load (LCL).
Even identical shipments one month to the next may not have the same freight costs. Each consignment is different depending on the freight market. That’s before you take into account currency fluctuations.
FCL and LCL Shipment Definition
There are a few shipping terms you should be familiar with before you import cargo and receive shipments from China. Knowing the difference between a Full Container Load (FCL) and Less Than Container Load (LCL) is important in deciding which shipment method works for you.
Full Container Load (FCL)
Full Container Load (or FCL) means your shipment is the only one in the container. Your container is delivered faster because it can come off the ship and be delivered straight to you for unpacking.
Less Than Container Load (LCL)
Less Than Container Load (or LCL) shipments are smaller than a full container and need to be mixed with other importers’ orders. LCL is more expensive per unit price than FCL. When multiple shipments are included in a container, various documents need to be processed and the goods unpacked and sorted at a warehouse before they can be delivered to or collected by buyers.
FCL vs LCL Shipments - Which is Cheaper?
The costs associated with FCL and LCL shipping will vary depending on certain factors, such as the method of freight and the route being taken, as well as the volume of the shipment.
FCL Shipments Aren’t Always Cheaper
While the unit price is lower with FCL shipments, your shipment needs to be more than 15 cubic metres (in a 20-foot container) in order for the load to be more economical. If the volume is smaller than 15 cubic metres, it will be cheaper to use LCL shipping when transporting cargo. This is because you will share the cost of transporting the container with other importers.
LCL Shipment with Like Goods
It’s a long trip from China to Australia, so you will want some peace of mind that the cargo in your shipment is safe during its travels. Shipping containers can be tossed around in heavy seas, so it's important to consider that damage is a threat to every shipment. Use a reputable agent that will ensure your goods are packed correctly and aren’t placed in the same container as hazardous materials or liquids that can spill. Heavy products can squash and destroy your lighter goods during LCL shipping.
If damage to your cargo occurs during a Less Than Container Load shipment, you may be able to take out insurance for your order. This means that if your cargo is destroyed, the cost of replacement and shipping may be covered. However, you may not be able to fulfill orders to customers on time, which can negatively impact your business. Additionally, if and when customs need to inspect any cargo in a container, that whole container is put on hold until the cargo has been cleared.
Shipping Costs Change Depending on Demand
The costs/fees associated with FCL and LCL shipping don't stay the same - they can change depending on supply and demand. There are a few times during the year that there is a high demand for goods to be shipped from China. Many customers aim to have their order filled before factories close down for Chinese New Year in late January or February, so peak demand for shipping occurs before this time every year. There is also a high number of goods being exported from China before Christmas to fill stockings around the world, so this also places pressure on the available ships and containers.
Use an Import or Shipping Agent
DIY (Do it Yourself) can save money in some areas, but when it comes to shipping, you are often better off leaving it to an agent. If you have an LCL order, the agent will organise for your shipment to join with other orders. The agent is then responsible for sorting the goods, distribution to clients and ensuring the container is returned to the dock before demurrage charges begin. Even with an FCL, a shipping agent will have better contacts and can most likely access cheaper rates than a low volume buyer. There is also the risk of making a mistake on the paperwork, which results in the buyer paying more than they should.
If you want to ensure you achieve the best possible unit cost for your goods, speak to Vara Allied. We’ll organise the product sourcing or manufacturer sourcing, as well as the shipment of high quality goods from China. Ask for a quote by calling (08) 6115 0118 or contact us.