July 24, 2023
The constant development of the global economy has pushed many companies in finding ways to operate their respective businesses as cost effectively as possible while still having a consistent presence whether that be in the local or international market. Due to answering overseas demands, many companies have opted in using shipping or certain freight services in cutting overall shipping costs while still being able to deliver goods to their respective customers. One of them being LCL Consolidation which serves as a medium for their global shipping in reaching customers through country borders as swiftly and efficiently as possible while still being cost effective in the process.
Although this service may or may not be well-known especially for the general public, this begs the question on what is the definition of LCL and what specifically does this service provide to be able to benefit companies to develop their business?
In its base definition, LCL refers to “Less than Container Load” where a shipment of certain goods does not fill an entire container. This directly correlates with the LCL Consolidation Service which is a sea freight transport shipment method which involves multiple shippers sharing a single container. This of course needs categorization mainly by the destination but details like their chosen cargo, weight, dimensions, quantity, etc are also discussed between LCL consolidators and the companies.
Consolidators serve as a coordinator of sorts which help in coordinating the entire process in delivering the company's goods smoothly. Their role usually includes obtaining port clearance to loading the container on-board a vessel until the goods reach their respective destination ports.This service also usually offer consistent weekly shipping to numerous ports which enables local businesses to easily reach international markets.
Choosing the most fitting or most suitable mode of shipping transport may prove rather complex and difficult, but below we provide a summary of the Pros and Cons from using LCL to help give more detailed information to consider if LCL fits for you and your business.
1. Lower Costs
By using LCL, companies, especially smaller SMEs who have lower volumes/quantity for their shipment can greatly reduce costs from renting a whole shipping container. This is due to how LCL distributes the costs of transport between different shipments which allows business to only pay for the space they occupy in the container as opposed to Full Container Load (FCL) shipping. This in turn also reduces other costs such as inventory costs, warehouse expenses, customs duties and taxes, and can eliminate minimum order quantities in shipment.
2. Greater Efficiency and Better Management
With LCL consolidators and their services, businesses can more efficiently take care of the transportation process and with the smaller quantity of goods needed to be shipped it can help improve management through a more adaptable inventory which would be more beneficial rather than maintaining large warehouses. By using LCL consolidation services, businesses can also focus more on the development of their business without worrying too much about customs clearance and delivery.
3. Access to More Destinations
LCL services are widely available and accessible to various destinations around the world. This expansive coverage allows businesses to reach markets that may not have enough demand to justify FCL shipments. LCL provides the opportunity to explore new markets and expand the reach of products without committing to large shipping volumes.
4. More Simple and Practical Tracking
LCL shipments often come with tracking and visibility options provided by the logistics providers. Businesses can use these tracking systems to monitor the movement of their shipments, view real-time status updates, and receive notifications about any delays or issues. Many shipping companies also provide online platforms or software that allow businesses to track their LCL shipments easily. These tracking tools provide visibility into each stage of the shipment process, including pickup, consolidation, loading, transit, and delivery.
5. Opportunities to trial in new markets
LCL which gives the ability for businesses to ship smaller quantities of goods can also help businesses to venture and broaden their scope to new markets. In using LCL services businesses can conduct trials at new markets with a more adaptable shipment method which corresponds to demands. With this, businesses can test out their viability, calculate demands, and potential sales while safeguarding against risks or excessive costs.
1. Shipping Delays
One of the biggest cons of using LCL are the potential shipping delays specifically in consolidation time since LCL shipment combines goods from multiple different suppliers. The process of consolidating these shipments can take time, especially if there are numerous suppliers or if the consolidation point is located far from the origin of the goods. Delays in consolidation can extend the overall lead time of the shipment.
2. Potential Extended Inspection and Customs
LCL shipments can involve goods from multiple suppliers, each with its own set of documentation and compliance requirements. Which means that the customs clearance process may take longer for LCL shipments due to the need to verify and process documentation for each individual shipment within the container.
3. Potential Damages for your Goods
With different shipments being compiled into one container, it may be harder to know if your goods are properly protected through the shipment process. Your goods are also handled more frequently in the consolidation process which makes it difficult to make sure if your goods are secured safely until their final destination.
With the increased interest and demand for citizens to buy from foreign markets online, it is no wonder that LCL may prove important especially in shipping low quantity goods.This is also very apparent in shipment of goods from China to Indonesia due to the relatively cheaper prices that they offer in online marketplaces. If you're looking for the right logistic partner that can help with LCL Consolidation from China to Indonesia, Uniair Cargo is the perfect partner for your business.
Here’s an example of a buyer consolidation service at work:
Indonesian Manufacturers uses Uniair Cargo in partnership with Dimerco to consolidate shipments from different suppliers in China and ship them door-to-door to different consignees in Jakarta, Surabaya, Medan, and Semarang. Goods ship as LCL in a single container to Jakarta where they are divided for final delivery locally and to Surabaya, Medan, and Semarang. The customer gets a better rate due to the consolidation. Ultimately, Uniair Cargo’s customer can move cargo faster than waiting for each consignee to order enough to fill one container. Everyone in the chain pays less and the consignees get their goods faster.
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