Ocean shipping rates are reportedly dropping, which is accelerating the movement away from air cargo delivery.
One of the shipping methods that benefits from this trend is LCL shipping (less-than-container load) which has become more prominent with the changing dynamics of manufacturing and trade worldwide, especially in Asia.
As more businesses engage in international e-commerce, the need for more cost-efficient and sustainable shipping solutions arises. To maximize shipping container capacity and reduce costs, multiple shipment owners share a single container in an LCL shipping arrangement.
This is generally a more sustainable option compared to FCL shipping (full load container load) given that shipment owners are often unable to fill an entire container with just their products.
However, the efficiency benefits of LCL shipping do not come automatically.
Simply choosing this shipping method does not always result in advantages. There are necessary steps to achieve the best outcomes, and this article will elaborate on those.
Maximize LCL Shipping Efficiency
LCL shipping requires careful planning and preparation. Shipments should be scheduled strategically with the help of optimized inventory management. Also, it is important to sort items systematically and ascertain accurate and complete documentation.
One of the most important steps is inventory management optimization. Businesses need to adopt systems that ensure the accurate tracking of inventory to come up with appropriate schedules for restocking.
It helps to automate the inventory tracking process with the help of IoT devices. This enables access to real-time data and sensible inventory forecasting to ensure that orders are placed at the right time and at the right volumes/quantities.
Additionally, the products being shipped should be grouped properly to maximize available space and ensure that they are handled properly.
Before sending them into the container, it is important to plan their positions. Fragile items should not be placed alongside non-fragile ones. Small items may have to be packaged together into standard box sizes to maximize container space.
Also, the items should be labeled accordingly. Each box or package should come with clear labels that include vital details such as SKU numbers, the quantities inside packages, and handling instructions.
Moreover, since LCL shipping means the container will most likely be shared with other shippers, it is important to have the proper documentation ready including the customs clearance papers.
Mix-ups with the items of other shippers can be avoided if the packages are properly labeled and complete documentation is on hand to be used as a reference when obtaining and consolidating the shipped packages.
Ensure Cost Savings
Many e-commerce businesses use LCL shipping because of its cost-efficiency. To attain this benefit, though, it is important to evaluate the shipping costs of different LCL providers.
Providers of this shipping solution rarely offer the same rates, especially for specific product categories and order sizes. It is important to evaluate the different solutions available to find the most cost-efficient one.
Notably, there are cases when full container load (FCL) shipping is cheaper than the LCL option of some companies for certain order volumes and product categories, so it is important to thoroughly scrutinize the options.
Also, it is advisable to find a shipping service provider or logistics company that offers supplier consolidation to make it easy to bring together products from multiple suppliers that are located close to each other.
The provider can handle the bundling of items from different sources to maximize container capacity to reduce shipping costs.
On the other hand, it is possible to negotiate with the service provider to lower costs by having a long-term contract with them. They may also offer volume-based discounts or rate reductions for frequent shipments. Shipping companies are not always open to these price compromises, but it would not hurt to inquire about them.
Maintain Quality Control
In addition to sorting and labeling products properly, it is crucial to have a quality control system that covers the entire journey of the products being shipped.
E-commerce businesses typically deal with retail consumer products that are prone to damage. Around 30 percent of products purchased online are returned, and one of the main reasons for this high return rate is damage incurred during shipment.
Also, some products are sensitive to certain conditions like high temperatures and humidity. E-commerce businesses should take all of these into account and maintain quality control in shipping.
All items should be checked for proper and secure packaging and labeling.
For example, breakable or flimsy items should be securely packaged with ample cushioning and structural reinforcements, if applicable, and bear an imposing “fragile” label.
Upon arrival, the products should also be examined carefully to make sure that they have been delivered in good condition. If there are issues found, they should be discussed with the LCL shipping service provider as soon as possible.
Even if there are no actual damages in the products, it is important to communicate the issues identified to the shipping company for proper resolution.
Remember that they are dealing with products from multiple clients, so they may need to be reminded about specific handling instructions. They also have to be called out over the recurrent mix-up of products (from other companies).
If they fail to address the concerns in the next shipments, it would be better to switch to a different service provider.
Ascertain Customs Compliance
All the effort in sorting, labeling, and properly handling the products is useless if the shipment is stuck at the port because of customs compliance problems.
Faulty declarations, documentation errors, the inclusion of restricted or prohibited items, custom broker errors, and undervaluation can lead to problems during customs processing. Even the presence of consistent information in the documentation can become problematic.
As such, it is critical to be up to date with customs requirements, rules, and processes. Getting flagged during customs processing can lead to fines or even the confiscation of the shipment. These do not only lead to more costs.
They can also affect a business’s reputation. It is advisable to be mindful of the reputation of the shipping company. It is important to avoid those who have been flagged many times for repeatedly allowing (or not checking for) banned items into their containers.
The Takeaway
In conclusion, LCL shipping has several benefits including its contribution towards achieving sustainable maritime trade. However, there are also risks involved, especially because a container is shared with other businesses–customers of the shipping company.
It is important to scrutinize the LCL shipping service to use to ensure timely shipments and the proper handling of items. Also, it is crucial to carefully plan, organize, label, handle, and monitor the products being shipped.
As much as possible, e-commerce companies that employ LCL shipping should embrace automation and take advantage of their shipping-related data to come up with forecasts to support efficient inventory management.
Lastly, customs compliance is critical, so everything related to customs clearance should be addressed accordingly.
