Updated on November 08, 2022
Calculating the cost of full container load (FC) shipping is typically straightforward since most carriers set their rates based on the container's size. But how much does less than container (LCL) shipping cost? More to the point, how can shippers get quotes for their LCL and FCL freight so they'll know exactly how much it will cost?
Thanks to freight marketplaces such as FreightMango, getting quotes for FCL and LCL shipping rates is now easier. Still, there's a lot of confusion regarding how these rates are calculated and the factors that can impact both FCL and LCL shipment charges. To help clear up this confusion, let's look at everything you need to know about FCL and LCL shipping rates.
Before we jump into how FCL and LCL shipping costs are calculated, let's start by defining these two terms and comparing FCL vs. LCL shipping. Full container load shipping refers to shipments that take up an entire container. FCL shipping is best for high-volume loads and shippers that want complete control over the type of goods shipped in the container.
Less than container load shipping refers to shipments that are not large enough to fill an entire container. In LCL shipping, container space is shared by multiple shippers, and the goods are separated when the container reaches its final destination. LCL shipping is ideal for shippers that ship smaller volumes of goods. However, LCL shipping has a few drawbacks, such as a higher per-unit price and an inability to control the type of goods that your shipments share container space with.
There are three main ways that shippers can go about getting quotes for their FCL or LCL freight:
The traditional way of getting freight quotes is to call a bunch of carriers and request quotes manually. As you can imagine, though, this can be a time-consuming process. It's also prone to delays since carriers can take days or weeks to respond to an RFQ.
When you partner with a freight forwarder, it becomes the forwarder's responsibility to procure capacity for your freight, including collecting quotes to find the best rate. Using a forwarder can certainly reduce your burden as a shipper, but it will cost more than working with carriers directly.
In many ways, utilizing a freight marketplace such as FreightMango offers shippers the best of both worlds. With FreightMango, shippers can instantly receive quotes for their LCL and FCL freight and compare quotes to find the best price. Since finding carriers on a freight marketplace still ends with the shipper working directly with the carrier, it also enables shippers to avoid the expense of working with a freight forwarder.
Several factors impact both full-container load and less-than-container load shipping rates. This is why it's typically easier for shippers to request an exact quote for their shipment rather than trying to estimate it themselves. Nevertheless, it's still helpful to understand how shipping rates are calculated. Let's look at how carriers arrive at their FCL and LCL shipping rates.
The shipping rate starts in FCL and LCL shipments by determining the carrier's ocean freight base rate. In the case of FCL shipments, this base rate is multiplied by the size of the container. In the case of LCL shipments, the base rate is multiplied by either the shipment's weight or volume, whichever is higher.
Two primary factors impact FCL shipping rates: the container's size and the container's type. Container sizes can range from 10ft containers up to 53ft containers. 40ft containers are the most commonly used in the logistics industry, and most carriers will have a set rate for each size. In addition to carrier size, the type of container being shipped can also impact FCL shipping rates. For example, refrigerated and specialized containers will typically cost more to ship than standard containers.
LCL shipping rates are calculated based on the freight's weight or volume, with weight being measured in tons and volume measured in cubic meters (CBM). Whichever of these two numbers is higher will be the number that is multiplied by the carrier's LCL base rate to determine the charge.
Let's look at this formula in action and assume a hypothetical LCL shipment that weighs 1000lbs and has a volume of 100 cubic meters. If the carrier's LCL base rate is $50 per CBM or ton, then you would take the larger of the two numbers (in this case, the shipment's volume of 100 cubic meters) and multiply it by the base rate to reach a shipping charge of $5,000.
So far, we've covered the basic calculations for FCL and LCL shipping rates. However, there are additional charges that shippers can incur depending on various circumstances and factors. This includes charges such as:
Bunker Adjustment Factor (BAF): BAF is a variable surcharge applied to compensate for global oil price fluctuations.
Currency Adjustment Factor (CAF): A CAF surcharge is applied to protect shipping companies from global currency fluctuations. For instance, this surcharge may be applied if a carrier charges a shipper in USD but incurs local costs in another currency. CAF is usually quoted as a percentage based on the total amount of freight.
Terminal Handling Charge (THC): THC is a surcharge applied to the port handling of ocean freight, both in the port of origin and destination.
Congestion Surcharge: A CS surcharge is applied in the case of increased congestion at either the origin or destination port.
War Risk Surcharge (WRS): A WRS surcharge is applied when a container ship must pass through an area of ongoing military conflict. It may also be applied if the ship is required to pass through an area at an increased risk of conflict breaking out.
Peak Season Surcharge (PSS): A PSS surcharge is applied during peak season when the demand for ocean transport is higher. The amount of this surcharge depends on both the shipping company and the sailing area.
General Rate Increase (GRI): Also known as a General Rate Restoration (GRR) or Emergency Rate Restoration (ERR), GRI is a surcharge that can be applied to all or specific trade lanes during a certain period of time. Shipping companies introduce this surcharge to keep their rates in line with the market.
Overweight Surcharge (OWS): An OWS surcharge is applied to transport heavy goods that may require using non-standard containers.
Special Equipment Surcharge (SEP): An SEP surcharge is applied to the sea freight of special containers and is most commonly applied on the transportation of Open Top or Flat Rack containers.
IMO Surcharge: An IMO surcharge is applied to transporting UN-classified dangerous goods. This surcharge is typically based on the type of goods, the number of containers, and the cargo's total weight.
Automated Manifest Systems Filing (AMS): An AMS surcharge is applied to shipments sent to Mexico or the United States. Both countries require AMS filing as a security measure, and shipping companies charge an extra fee for filing the AMS document.
Shippers want to move their freight at the most affordable rate possible, which leads many to compare the costs of LCL, FCL, and air freight rates. Let's start by comparing the cost of LCL and FCL shipments. On a per-unit basis, FCL shipping is more affordable than LCL shipping. If you have enough goods to fill a standard container, then shipping FCL is the way to go. For shipments that are less than 20 cubic meters in volume, though, shipping LCL will typically be more affordable than paying to ship an entire container. The other factor determining whether LCL shipping is more affordable than FCL shipping is whether you are shipping goods on a common trade lane with direct LCL services.
Meanwhile, air freight will almost always be more expensive than FCL and LCL shipping. The biggest benefit of air freight is that it substantially reduces transit times. However, it does so at the cost of substantially higher rates. With that said, it is worth mentioning that air freight typically incurs fewer surcharges. This means that the difference in the final cost of shipping LCL vs. shipping air freight may be much narrower than the difference in upfront cost.
Along with choosing the right shipment type for your freight, using the right procurement process is one of the most important keys to securing the best possible rate. Compared to traditional procurement, FreightMango's industry-leading freight marketplace offers several advantages.
For freight quotes, FreightMango eliminates the tedious process of manual RFQs, which, along with being time-consuming, often entails waiting days or weeks for a verified quote. Instead, shippers using FreightMango can see quotes in seconds simply by entering their shipment requirements and browsing carriers with confirmed capacity.
Traditional procurement relies on historical data and current market predictions for freight pricing to predict freight costs. However, these predictions are simply estimates and in no way guarantee that you will be able to find capacity at the predicted rate. With FreightMango, shippers can find verified available capacity at a confirmed rate for accurate, reliable pricing.
For freight rating, FreightMango helps shippers directly save on ocean freight costs by offering below-market rates for unexpected capacity. This makes using FreightMango an ideal way to find discounted rates for backlogged freight, spot freight, and LCL shipments.
By eliminating the hassles, delays, and unreliability of traditional procurement while at the same time offering shippers access to discounted rates, FreightMango provides a far better alternative for quoting, pricing, and rating LCL and FCL freight.
FreightMango provides shippers with all the tools they need to find the best rate for their shipment, book its transportation, and track it to its destination. To get started enjoying the many advantages of our industry-leading managed freight marketplace, be sure to sign up for FreightMango today!