LCL shipping: A competitive business during COVID-19

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Soaring airfreight rates have left some commodities on the ground, but expedited ocean services are emerging as viable and cost-effective alternatives with a faster reach for moving cargo to destinations across the globe. In recent months, shippers have turned to less-than-container-load (LCL) services as a way to counter ocean carrier service disruptions involving full-container-load (FCL) transport. Allowing smaller shipments to hitch a ride on these partially filled containers makes excellent sense, both financially and environmentally.

Upamanyu Borah

The high cost of air cargo has always been a driving force behind the rise of less-than-container-load (LCL), which offers increasingly diverse options. Within the past few years a new service tier—expedited LCL service—has emerged to meet demand for time-definite ocean transport, particularly for goods that previously moved by air. New vessel lanes are making Asia-to-US East Coast LCL a more viable option. And, as sourcing locations diversify, new LCL services are entering the market.

Avoiding air freight may have been a strong initial driver for shifting to LCL, but today another supply chain factor draws customers: smaller orders.

As e-commerce sales continue to grow, shippers are focussed on importing more frequent shipments. At the same time, many of those e-commerce shippers don’t have enough cargo to fill an ocean container and face high airfreight costs that often are prohibitive.

Thus, there is an increased demand for LCL ocean services. Instead of paying for a full-container-load (FCL), LCL keeps the global supply chain moving as a timely, economical alternative for smaller ocean shipments.

LCL benefits

  • Good for shipping small loads – Early on, a business might want to ship lower volumes of goods initially before ramping up volumes, LCL is a good option to start off when trading
  • Lower sourcing risk – If you’re sourcing goods from numerous suppliers to test stock, using LCL can prevent ordering a bulk volume of goods as your first test run
  • Shorter delivery time – Because you won’t need to wait until you need sufficient volume to send a whole container of goods, the goods ordered would arrive to your destination faster
  • Less inventory management – as the volume of goods are lower than that for a full container, inventory management in the warehouse will be minimal

Small- and mid-size businesses use LCL frequently because they simply don’t have the volume to fill a full load, and waiting until they do would mean missing delivery deadlines. LCL shipments are also typical for companies opening new markets or serving smaller ones. And sometimes manufacturing a product—say, a sparingly used but vital and perishable ingredient for hand cream—depends on a small but regular supply. Retailers, especially apparel, are frequent LCL users, as are the automotive, oil and gas, chemicals, and e-commerce industries.

Pandemic hails LCL

The global spread of the coronavirus is reinforcing the high demand for LCL services. With disruption in the global economy and declining import volumes, more and more companies are opting for consolidated shipments.

According to Freightos, as container shipping capacity tightens due to an unprecedented number of blank sailings, shippers are making greater use of LCL services and cementing relationships with reliable third-party logistics (3PL) providers in an effort to control costs.

“LCL volumes certainly took a hit in both directions during the peak COVID-19 shutdown period from mid-March through April,” says Greg Scott, Director of LCL Ocean Services for American forwarder CH Robinson.

“For imports, we saw increased shipment counts moving but at lower-than-average volumes per house bill of lading,” Scott said. “With a higher dependency for airfreight to move via passenger aircraft on the Trans-Atlantic, a shift to LCL made economic sense for those who could handle the transit differences. This was especially true when airfreight rates spiked to over $10 per kilogram.”

“COVID-19 has changed the entire world of logistics,” says Andreas Saleske, Department Head- Global Sales Development ASL at DACHSER. “Air traffic has shrunk to an unprecedented minimum, which is forcing customers to switch to alternatives. We also have to recalculate delivery times. Provided the product type and delivery time allow, LCL is a cost-effective and eco-friendly way of transporting goods.”

“We’re confident that LCL will play an important role in the future,” Saleske adds.

What makes a good LCL service provider?

A good LCL operator can be recognised by the following characteristics:

  • Global services through a right mix of direct and transshipment services
  • Full visibility of movement of cargo on the web through a strong IT system
  • Full knowledge of documentation required for carrying the LCL consignment till final delivery, especially in the world of AMS (Advance Manifest System), ACI (Advance Commercial Information) and ENS (Entry Summary Declaration)
  • Strong infrastructure in terms of warehouses to handle smaller LCL shipments of all kinds. LCL shippers also face challenges

DACHSER, as market leader in the German and European groupage markets, is constantly working hard to expand its LCL network. This network has excellent LCL connections around the world, serving the US, India, Hong Kong, and more.

In March 2020, the company extended its LCL service by adding a new route from Europe to Chile. Shippers seeking a consolidated access option along the route from Europe to Chile are now offered DACHSER’s latest weekly schedule of LCL services. This added service streamlines the process by collecting container shipments followed by consolidation at its Hamburg warehouse. Once consolidated, the items are shipped directly to San Antonio, Chile without interruption.

According to DACHSER, its weekly LCL service from Hamburg, Germany to San Antonio, Chile has seen a 35% increase in demand since launching in April of this year.

The weekly LCL service offers a reliable 30 to 32-day port-to-door transit time, which has attracted companies who are seeking solutions to help plan, optimise and manage their supply chains. Addressing the challenges presented by the current ocean and air freight disruption, the Hamburg-San Antonio LCL service is the latest addition to DACHSER Americas robust LCL service portfolio. Through DACHSER’s robust network, this service connects Germany, Finland, Austria, Switzerland, Belgium, Denmark, Netherlands, Czech Republic, Poland and Slovakia to the Chilean market.

“With the steadily increasing LCL cargo volumes from Europe to Chile, we were confident we could support our own consol box. DACHSER’s ability to offer a predictable schedule in the midst of a highly unpredictable marketplace has sparked demand that has surpassed our expectations,” says Frank Habermann, Managing Director, DACHSER Chile.

“By offering weekly LCL consolidation box service from Hamburg to Chile, DACHSER is enabling customers to take greater control of their supply chain with flexible shipping choices that address their challenges. Our internal systems and strong global network enable the enhanced control of cargo flow, information flow, speed, accuracy, cost efficiency and reliability,” adds Habermann.

CH Robinson, in the early weeks of March alone, handled dozens of expedited LCL shipments out of Asia, working across 22 origin ports from 10 origin countries to get its customers everything they needed.

CH Robinson, that handles its own LCL containers, offer dependable, fixed sailings and flexible cutoffs. This provides reliable ocean and port handling transits. With a high level of reliability, customers can better plan production at origin to load into LCL schedules and take advantage of just-in-time deliveries at their destination to keep materials moving through production, assembly lines, and onto store shelves.

“CH Robinson’s LCL service includes weekly consolidations from Milan, Italy, to North America, with extensive coverage of destinations across the country. In addition, CH Robinson also has expedited options with weekly consolidations to North America from the United Kingdom, Antwerp, Hamburg, Prague, and Le Havre, with extensive coverage of destinations across the US,” says Scott.

“Our global scale and dedicated LCL experts help us maintain clear control over consolidations and LCL service. As one of the largest customs brokers in the US and with all-risk cargo insurance options that cover financial exposure, physical loss, or damage while goods are in transit—we work with customers to discover their needs and tailor a solution that lower costs, provides reliable transit, and moves them closer to their goals,” adds Scott.

With a high level of reliability from your LCL provider, you can better plan production at origin to load into LCL schedules and take advantage of just-in-time deliveries at your destination to keep materials moving through production, assembly lines, and onto store shelves.

In August, Vienna-based forwarder, cargo-partner expanded its LCL services via the Slovenian port of Koper with new connections from Nhava Sheva in India, Lat Krabang in Thailand and Ho Chi Minh City in Vietnam. Port-to-port transit times average around 18 days from Nhava Sheva, around 25 days from Lat Krabang and around 25-28 days from Ho Chi Minh City to Koper.

In addition to weekly or more frequent LCL services from Delhi, Ahmedabad, Bangalore and Mumbai, cargo-partner has now introduced two weekly LCL services from Ludhiana. The most recent addition is the service from Ludhiana via Nhava Sheva and Koper to Europe. Goods coming from this region in India are consolidated in Nhava Sheva and shipped directly to Koper. From there, cargo-partner handles transport to the container freight station in Ljubljana as well as further distribution to numerous countries in Central and Southeastern Europe.

With cargo-partner’s seafreight consolidation service via the Slovenian port of Koper, the logistics provider offers a faster alternative to shipping via Northern ports such as Hamburg or Bremerhaven.

“The new routing via Koper fits very well into our long-established service portfolio of seven direct own consolidation lines from China, Taiwan, Hong Kong and Singapore, our faster consolidation services via the Iron Silk Road, our airfreight and FCL setup and the e-commerce distribution centre next to Ljubljana Airport. The Koper services allow us to offer significant time savings compared to routings via Northern ports, and our iLogistics Centre in Ljubljana provides the ideal hub for fast distribution. Thanks to our own consolidation service, we have direct control over handling at origin and destination,” says Stefan Krauter, CEO of cargo-partner. “Despite the turbulences of COVID-19, we have been able to offer regular weekly departures. This premium service is not only faster, but also safer and more reliable than other options, as the containers are shipped directly without reloading, which means minimal risk of damage and delays.”

“Thanks to the short transit times we can offer with this service, it is gaining popularity not only in Southern Europe, but also in other European countries like Poland and the Czech Republic. At the moment, we are handling a lot of heavy cargo from the automotive, engineering and metal industries on this route. However, this service is also a convenient and reliable option for sensitive cargoes and goods from other industries,” further explains Krauter.

Another solution making use of the Koper hub is cargo-partner’s weekly LCL service from Haifa, Israel with port-to-port transit times of around five days. In addition, cargo-partner’s LCL service offering includes a variety of other connections covering the origin regions Asia and Sub-Sahara as well as destinations throughout Europe.

Demand for accelerated LCL services, in particular, is rising during the COVID-19 pandemic as more and more companies reduce their inventories to a minimum. As a result, transport shipments are becoming smaller and fast transport of time-critical shipments is necessary.

Although expedited LCL services are three to four times more expensive per cubic meter of freight than traditional LCL, they offer air freight shippers that are currently pinched for capacity and seeing higher-than-normal air transport rates due to the coronavirus pandemic, a rate that is two-thirds or three-fourths cheaper, if extra days can be allowed in the transit.

“Due to the effects of COVID-19, we have seen reduced sea freight volumes in the past several months, which tend to lead to a shift from FCL to LCL shipments. With our flexible buyer’s and shipper’s consolidation services, we can bundle low-volume shipments from different suppliers and effectively transport them as FCL shipments, ensuring speed and security. In fact, our LCL consols enjoy priority and special protection over normal FCL containers, so this is a convenient option for customers with urgent transports, especially during these times of blank sailings and limited capacities,” Krauter says.

Offering a faster maritime link across the Pacific, leading LCL consolidator, ECU Worldwide- part of India’s Allcargo Logistics, launched an LCL express service from Shanghai and to nine container freight stations (CFS) throughout the US via the Port of Los Angeles, towards the end of April.

The company’s XLERATE offering uses Matson Navigation for a 10-day transit between the two ports and ECU claims this is the fastest port-to-port time on the route.

The traffic is unloaded in Los Angeles at the company’s bonded container station, 24 hours after its arrival, and moved on ECU’s bonded express truck service to eight inland container stations.

“XLERATE reiterates our commitment to provide an expedited LCL product to our freight forwarding clients from Shanghai to final container freight stations in the US,” says Tim Tudor, CEO, ECU Worldwide. “It combines the benefits of an express service with a day-definite arrival, and an all-inclusive simplified fee structure, which includes price per kilo on freight-on-board Shanghai basis and the final CFS destination fees.”

“With a proven expertise in handling diverse cargo categories and a team of expert professionals providing assistance and advisory on packaging, documentation, customs and key formalities, ECU Worldwide is committed to providing convenient and hassle-free experience to its customers,” comments Tudor.

“Since our XLERATE product is a CFS-to-CFS service, this allows our freight forwarding customers to avoid the requirement of clearing cargo in Los Angeles and arranging an expensive less-than-truckload (LTL) delivery from Los Angeles to the door of their customers located in the central and eastern part of the US,” says Spencer Strader, Director of US imports at ECU Worldwide.

“Given COVID-19’s impact on many importers’ warehouse receiving operations, having the final-mile in local hands builds flexibility in cases where the normal delivery process has changed due to reduced hours at receiving locations,” adds Strader.

CMA CGM has also spotted an opening for a priority offering. In August, it launched SEAPRIORITY get and SEAPRIORITY reach- two new high value-added solutions within the CMA CGM+ catalogue. These two new services complete the SEAPRIORITY range after the success of SEAPRIORITY go, launched in March. With SEAPRIORITY, time-sensitive shipments are expedited and flagged as priority cargo and includes a money-back guarantee. The service is available on all sectors in the liner’s network.

Similar offerings have been around to cater to high-value commodities requiring expedited handling and movement, but they are not adequate to meet the rising need.

Digital flexibility provides intelligence

The greater availability of supply chain data that improve tracking and optimise cargo flows is also making new LCL services possible, and forwarders are using the improved visibility to develop solutions.

Technology helps to optimise the cargo flow and enable better tracking of timestamps. Furthermore, the better the data, the better the utilisation management and the solution design for customers in terms of mixing customer specific consolidation and LCL.

It is no surprise that e-commerce and digitisation are changing the dynamics and economics of freight markets, demanding ease of use, transparency, and on-demand solutions for international shipping. Cargo information within the supply chain has made it possible to increase consolidation across suppliers, resulting in transportation becoming efficient.

A state-of-the-art online platform, ECU360 makes it possible to get door-to-door rates and manage cargo transportation across a number of origin and destination points within the USA as well as other countries, along with online freight visibility. Also, strong relationships with major global core carriers enable ECU Worldwide with flexibility to offer transport routes and schedules aligned to the specific business requirements of customers.

CEVA Logistics is also accelerating its digital transformation with the launch of myCEVA, a new transactional platform enabling shippers to manage their complete shipping journey online. The online tool provides a seamless customer experience by giving them greater control over every function and a larger range of options whatever the circumstances.

myCEVA has been designed to give customers greater control over the booking process while simultaneously improving efficiency through greater process automation. Customers can instantly receive quotes, make bookings and track shipments in real time, which will enhance the customer experience.

After a successful pilot phase in the US in May 2020, myCEVA is working towards covering all transport modes in every region of the world and has been launched in a phased manner with FCL and LCL ocean freight customers using specific Trade Lanes from/to the US, China and India.

myCEVA is now available for importers and exporters located in Japan, Korea, Taiwan, Singapore, Vietnam and the UK, and will soon be rolled out in Europe, South-East Asia, the Middle East and Latin America.

Meanwhile, Hellmann Worldwide Logistics and the digital startup Qwyk have announced a global cooperation to digitise global LCL sailing schedule. Starting July 2020, Qwyk, which is operating the largest database for sailing schedules for FCL, LCL and Air, is infusing data into Hellmann´s global LCL sailing schedules.

The real-time data is made accessible to customers via Hellmann´s digital frontend ‘Hellmann Portal’. The availability of more than 2,500 weekly direct consolidation services currently offered by Hellmann significantly increases transparency throughout the entire ocean transport. Up-to-date information on available transport capacities and clearly defined departure and arrival dates allow for the optimisation of the entire supply chain management as well as pre and post-carriage processes.

Norman Setzkorn, Global Head of LCL, Hellmann Worldwide Logistics says, “The sailing schedule initiative is part of our global digital agenda in which we design solutions and applications for our customers to support their supply chains. For us, Qwyk is a perfect partner to digitise processes in our LCL business. They have the data on hand that we need, but moreover, they collaborate with us to integrate this information in the solutions we want to provide to our customers and network. Thanks to the new database, our customers will have full access to all of our sailing schedules globally and can choose the connection that fits their individual needs.”

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