There are many variables to consider when choosing between shipping your goods LCL (less than container load), air freight, or purchasing a whole container even though you’re not going to fill it.
You’re either purchasing a whole container or you’re not. So technically, LCL is always consolidated… and you’re never going to put loose cartons or skids of freight on a steamship line.
There are also some misconceptions concerning LCL and air freight. What exactly are they, and when is one shipping method preferable over the other?
Air Freight Is Not Always More Expensive
There are times when it’s beneficial to use one form of shipping over the other, but many people operate under the assumption that LCL is more cost-effective than air freight or a full container. This is a widely-held assumption, but it’s not always accurate.
There are a couple of primary factors that will affect the final price, as well as a few case-by-case variables. A few common, reoccurring elements help determine the preferred method of shipping such as: the type of goods shipped, how much they weigh per cubic meter, time in transit, and the potential for additional storage and fees.
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Size and Weight
The standard conversion for actual weight vs. volume weight is 1000 pounds per cubic meter. So, if your load is one-half of a cubic meter and only weighs 200 pounds, there is a good chance it will be cheaper to ship via air freight.
If the load is one-half of a cubic meter and 500 pounds, it may be slightly cheaper to send it via LCL on a ship. Your priorities will be a factor in this decision: time in transit versus cost. When the price difference is within a few hundred dollars, getting your shipment to its destination in just a few days versus 45 days may be well worth the extra cost.
Keep in mind, the airline industry as a whole looks at size and weight. A shipment’s billable weight will be the greater of either the actual weight or the dimensional weight; the dimensional weight is calculated by dividing its volume by a “dim factor.” Using dim weight ensures that a minimum is charged by carriers who would otherwise not be profitable on lightweight shipments that take up as much space as similarly-sized, heavier shipments.
Additional Time in Transit
People tend to forget that LCL freight usually takes longer than shipping container loads or air freight. A company could have an LCL shipment and a full container on the same ocean vessel going to the same destination, but the process is different. LCL shipments are consolidated at an overseas container freight station (CFS) before transiting to the port; whereas, a full container load may come directly from one origin point (e.g., one factory). Once at the destination port a full container gets offloaded, a truck with a chassis backs up, loads the full container, and is ready to make their delivery appointment. On the other hand, an LCL shipment can have 20 to 30 companies’ freight on it. Once that container gets released from the steamship line, a truck will take it to a CFS where it will be put in a queue for de-stuffing.
There is at least a day’s worth of delay with LCL shipments at the CFS alone, and there is a cost to that time. Once the container is de-stuffed, workers go through the various house bills of lading and arranging freight. They then figure out who the ‘notify parties’ are, get delivery orders for each load from the container, and move the cargo into trucks for final transit.
In most cases, LCL can take seven to ten days longer in transit time than full containers. The process involves various hands touching the shipments and takes more time, which could include extra storage fees, thus incurring additional costs.
With air freight, most airlines consolidate onto big metal trays with slides similar to cookie sheets. Next, they wrap the load to make it stays stable and intact. After it arrives at its destination airport, the freight is usually broken down and distributed that day. So, assuming there are no hold-ups in Customs or bad weather to delay trucks, once an air freight shipment hits the ground you can expect to have your goods at their final destination in roughly 48 hours.
Flexibility and Transparency of Charges
In many ways, air freight is more flexible than shipping LCL on a steamship line. There’s less of a chance of running into any significant delays or demurrage because air carriers have planes departing continuously. There are more options available for getting a shipment off the ground. Air carriers can quickly adjust and get the load on the next flight or move it over to a partner airline. If there is a delay, it’s usually a matter of hours instead of days, and with air freight demurrage is a rare occurrence.
Although the upfront cost of shipping through the air often comes with a steeper price tag, there are generally fewer total charges—usually handling fees—than shipping LCL via ocean freight. On top of that, you know precisely what you’re getting into. The costs associated with air freight are transparent and will be on the quote.
Depending on your Incoterms, typical charges you’ll see include:
- Pickup fees
- Air freight fees
- Delivery fees
- Customs clearance fees
- Terminal services fees or container stations fees (occasionally)
With LCL, there is more potential for unexpected overcharges—especially if you’re working with a freight forwarder who doesn’t communicate with you. You’ll have the standard fees on your quote, but with so many moving parts and people touching your shipment you can't always account for all of the potential charges in the initial quote. For example, the container you’re sharing arrives on a Friday, and Monday is a holiday. If you’re on the bottom of the stack of house bills of lading, you may not be contacted about your shipment until Tuesday. Now, you suddenly you have extra days of storage or holding fees due.
In short, you should always do a comprehensive cost comparison using all three shipping methods. This is especially true if you’re going to be shipping the same type of goods along the same shipping lane multiple times. In certain situations, it may behoove you to purchase a whole container versus a partial container. If you’re shipping something on the lighter side, air freight may be the way to go.
Finding a resourceful freight forwarder who understands the product your shipping is essential. They can analyze your goods, shipping lanes, and time constraints to give you the best options, as well as the pros and cons of each mode under specific circumstances.
