Wednesday, September 27

Demystifying shipping terms – what small businesses need to know about FCL

Have you ever come across the term ‘FCL’ while researching shipping options for your small business?

If so, you’re not alone – this abbreviation often causes head scratches for new importers and exporters. However, understanding what FCL means can be key to maximising your logistics budget.

In this article, we’ll demystify the concept of FCL shipping and discuss how it can benefit small businesses looking to tap into overseas markets. We will also provide some tips on determining if FCL is right for your business, or whether you would be better off exploring other options so you can get the best bang for your buck. So, whether you’re an eCommerce seller looking to source abroad or a manufacturer eyeing new export opportunities, read on to unlock the secrets of FCL shipping.

What is FCL? 

FCL stands for ‘full container load‘ and refers to shipments that fully occupy a standard 20 or 40-foot shipping container. Unlike LCL (less than container load), FCL shipments do not share space with other companies’ goods.

The FCL shipping process revolutionised global trade when it was pioneered in the 1950s. Entrepreneur Malcolm McLean modified oil tankers to carry stacked containers that could be easily transferred between ships, trains and trucks. This standardised ‘intermodal’ system drove down shipping costs and enabled the post-war globalisation boom.

Today, FCL is the predominant method for shipping high volumes of goods globally. Over 80 per cent of non-bulk cargo worldwide moves via containers. The largest container ships today can carry over 24,000 TEU (twenty-foot equivalent units).

Image: MSC Irina

Benefits of FCL for small businesses 

For many shippers, FCL provides an affordable and efficient way to move large volumes overseas. Understanding how to leverage FCL shipping can help small businesses access new markets and optimise their supply chains. Here are some of the main benefits business owners can enjoy:

  • Cost savings – Once your shipment size exceeds around 15 cubic metres, FCL becomes way more affordable than LCL. You’re not paying for any unused space within the container, so the cost per unit shipped drops compared to LCL.
  • Efficiency boost – With FCL, your goods undergo less handling and delays. Containers move seamlessly from origin to destination with faster transit times. Customs clearance is simpler, too. Overall, shipping is faster and smoother vs. LCL.
  • Peace of mind – FCL shipments are secured with an intact seal from start to finish. There’s less risk of damage, theft, or contamination when your goods aren’t repeatedly handled and consolidated.
  • Improved control – You get to determine loading schedules, processes, and timelines with FCL. No relying on third-party consolidators like with LCL shipments.
  • Supply chain reliability – FCL removes uncertainties such as delays from consolidation/deconsolidation that can disrupt LCL shipping timelines.
  • Predictable budgets – FCL pricing is straightforward based on the container. With LCL, costs fluctuate by shipment volume, making forecasts difficult.
  • Global access – FCL finally enables small businesses to competitively export goods overseas without needing massive economies of scale.

When FCL makes sense for small businesses

Alright, we’ve got the lowdown on what FCL (and LCL) means. Now, let’s talk about when going with a full container load makes the most sense for small businesses. After all, FCL isn’t necessarily the best fit for every shipping scenario – you’ve got to look at your specific situation and product needs. Here are some instances when paying up for having your own dedicated FCL container is probably worth it:

High shipment volumes

FCL tends to work best when you’ve got high order volumes that can consistently fill up most of a 20 or 40-foot shipping container. If your shipment sizes fluctuate substantially, you may want to use FCL for your bigger loads but go with LCL or consolidated shipping for smaller batches, to avoid wasting precious container space.

Oversized or heavy cargo

If you’re shipping large, bulky, oversized or heavy equipment like industrial machinery that simply will not physically fit into a shared LCL container, FCL is probably your only option. LCL containers have very limited space.

Valuable or fragile goods

FCL makes a lot of sense for valuable products or super fragile cargo that you want to carefully protect during its long-distance shipping journey. FCL dramatically limits how many times your goods get loaded and unloaded compared to LCL shipping, lowering the chances of any damage.

Time-sensitive shipments

Another case in which FCL wins out is for genuinely urgent or time-sensitive shipments. Your own dedicated FCL container means less time wasted on the loading/unloading carousel, so door-to-door transit time is much faster.

Growing businesses

Finally, FCL tends to make increasing economic sense as your business grows steadily and your order volumes expand over time. At a certain point, you’ll hit a critical mass where you can consistently fill most of an entire shipping container. That’s when FCL becomes substantially more affordable on a per-unit basis.

Final word

Shipping terminology can seem intimidating at first, but taking the time to understand key terms pays dividends. FCL and LCL are two of the most common methods small businesses encounter when importing and exporting. As we’ve discussed, FCL offers advantages such as lower costs for high volumes, security, speed and reliability. However, it also involves challenges around meeting container minimums, managing logistics and maintaining flexibility.

The decision between FCL and LCL requires carefully evaluating your specific cargo, routes, and customer requirements. There is no one-size-fits-all answer. Assess where FCL benefits outweigh the disadvantages for your business. Be ready to explain your reasoning to stakeholders.

With thoughtful analysis and the help of an experienced logistics partner, small businesses can leverage FCL and LCL strategically. The more familiar you become with shipping jargon, the more it transforms from alphabet soup into a roadmap for supply chain success.

Read more

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How to align your customer care to shipping delivery expectations – Keeping your customers educated on your shipping process allows you to better manage customer expectations, discusses Caroline Mason of John Mason International

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