International trade relies on the movement of millions of cargo containers -- giant metal boxes that can be loaded onto trucks or trains or stacked aboard giant cargo ships. These boxes are big enough that a particular shipment might not fill an entire container. In that case, the shipment is referred to as "LCL," or less than a container load. An "FCL," meanwhile, is a full container load.
Different Pricing Models
According to the China Performance Group, which acts as a liaison between Chinese factories and their overseas customers, freight companies typically offer separate pricing for FCL and LCL shipments. When it's an FCL shipment, the shipper is charged a flat rate -- a set price per box, regardless of what's in it. LCL shipments, however, are charged by volume -- a certain amount for each cubic meter of cargo. Freight companies combine LCL shipments from different shippers, so that a 40-foot-long container with about 65 cubic meters of capacity might be filled with three separate shipments of, say, 13, 17 and 35 cubic meters.
Deciding Between Options
LCL makes sense for companies that don't need an entire box. However, if an LCL load gets large enough, the volume-based charge can end up costing more than the FCL flat rate, China Performance Group says. So shippers should run the numbers to see whether it would be cheaper to reserve a container at the FCL rate even if they can't fill the container. Also, with FCL shipments, shippers can usually load the container at their place of business and then send it off for transport; LCL shipments usually have to be taken to a depot to be combined with other shipments and loaded into a container.