5.3 – Shipping Containers & Costs

When learning how to import or how to export, you must understand the different shipping Container types, dimensions, methods for Import Export and International Trade.

FCL Full Container Load shipping, LCL Less than Container Load shipping and breakbulk Cargo are popular shipping methods used in the International logistics supply chain.

When choosing the ideal shipment method it is essential to take into account the overall packing size, total cubic measurement or total weight of goods to be shipped.

Container sizes

International ISO standards has standardized the shipping process considerably. Since it’s inception the streamlined system has resulted in a huge influx of speedier more transparent shipments.

1. FCL Shipping: Full Container Loads

Full Container Load (FCL), as the name implies, is the standard form of shipping freight for those who have a large amount of goods to send.

FCL does not mean that the complete container needs to be filled. You will have exclusive use of the container however every sq metre does not need to be used for it to still work out to be the cheapest method for your shipment.

It will be down to you to do the math to calculate if LCL Shipping (Less than Container Load) works out as the more cost-efficient option. Generally if you have 12 pallets or more you may find that FCL freight works out to be the better option.

There are other advantages such as less risk of damage due to onloading/offloading of other shipped cargo, this could also be a determining factor if you are shipping fragile goods.

The FCL process

As with most shipping, you have options. These can be summarized as –

Door to Door
Door to Port
Port to Door
Port to Port

The choice will depend on cost, your level of preparedness for loading the shipment, and the arrangements you have with your consignee at the other end.

Modern FCL transport has come on leaps and bounds over recent years and technology is now able to consistently track and provide transparency as to the progress of your cargo. Your freight forwarder will be able to continually track update you with the progress.

The forwarder will take care of paperwork for you as required by the type of service chosen: including the Bill of Lading (BoL), advice to the receiving port, and customs clearance

Container Stuffing Options

You can request to have an empty container delivered to your chosen location. Loading time may have strict restrictions therefore be prepared to load speedily to avoid extra charges. Packaging quality will be your responsibility.

If shipping overseas you may require special ‘export packing’. This may need to be carried out be a specialist firm. In this circumstance the forwarder will arrange collection from them after which the container will be transported to the shipper at the port.

Do not forget that with FCL container delivery the risk, and the account, are held by one shipper and there is one consignee. The container is sealed until it reaches its destination. There is no-one else to blame if you do not carry out the container packing to the required standards.

Loading Time and Renting Options for FCL

There are generally two options offered by Freight Forwarders:

The first being a Live Load. This is where the container is delivered to you and you have approximately 3 hours to load and secure the consignment. If the loading takes in excess of the specified time, an hourly surcharge for all additional time will begin.

Drop and Pack is a slightly more expensive option but far less stressful. Typically the timescale is anything up to 7 days.

2. LCL Shipping: Less than Container Load

It enables importers to ship smaller amounts of cargo that’s not of a large enough volume to make FCL a viable option.

LCL shipping is a shipping method used for smaller cargo amounts when the overall size of the goods for export will not fill a 20’ container. 

The shipping container will be shared with other party’s cargo to fill the container (a consolidated container).  The freight cost is calculated using either size or weight, whichever is greater. (per cubic meter of cargo (m3) or per Metric Tonne (1,000kg) in mass).

LCL cargo has higher charging rates than FCL as pallets may need to be loaded and unloaded more than once to make space in the container. For this reason, LCL cargo is not a cost effective method of shipment, but can be useful if shipping small goods.

3. Breakbulk Cargo

Breakbulk Cargo is not a very popular shipping method as it’s generally used for oversized cargo that can’t fit inside shipping containers.  Any load that exceeds the length, height or weight restrictions of a 40′ container will be shipped by breakbulk cargo.

Cargo is loaded on top of the deck of the vessel and has to be carefully packed into place on the top of the deck by crane.  Large machinery, boats and steel are examples of goods that are exported around the world by Breakbulk Cargo.

Comparison of FCL & LCL

When to choose FCL or LCL?

Always request quotations from your supplier based on predetermined quantities.

The supplier should be able to confirm how many product units will fit into a container.

When making your decision here are some suggestions:

  • If 1cbm~8cbm, choose LCL.
  • If 8cbm~15cbm, do some research to see what’s the most effective solution.
  • If over 15cbm, choose FCL
  • 12 Pallets or more choose FCL

Tips

Make sure you plan ahead. If you are interested in consolidating orders, make sure to schedule accordingly and allow enough time to plan the shipments in line with the consolidation requirements. Sometimes, this will help save a lot of time and money.

Ask your supplier to use pallet. This helps with loading and can avoid problems from occurring in transit.

And don’t forget “size really matters”. When considering the size of your products, you must remember that the dimensions of the packaging (and any further packaging carried out on your behalf) are the values that are used to calculate the cost, and in some cases this packaging can add up to 30% to each dimension.

To import products, there are three main elements of landed cost we all need to keep in mind.

  • Product cost
  • Shipping cost
  • Import duty & tax

Landed Cost = Product cost + Shipping cost + Import duty & tax

Shipping Costs

These can include a wide variety such as:

  • Transportation cost
  • Freight insurance
  • Terminal handling charges (THC)
  • Handling fees
  • Clearing fees
  • Document fees
  • Surcharges (BAF & CAF etc.)
  • Security surcharges (ISPS & ISS)

Understand your actual freight and additional costs of imported goods.

Contact your freight forwarder to get an accurate quotation for products to be shipped directly to your location. A freight forwarder’s quotation will usually be itemized to show all of the fees involved.

Fees may include:

  • International Sea freight from Port of Loading to Port of Discharge (usually in USD) Note sea freight rate vary throughout the year and you will have to confirm the validity date of your prices.
  • Local charges in the country of import (get these costs in your local currency) – These include local port handling costs, documentation, customs clearance, quarantine, marine transit insurance, domestic trucking etc.
  • Local Import Duty Rates  If you supply the HS Code for the goods to import, the freight forwarder or customs broker can confirm what rate of duties will be applied to the imported goods. Also, confirm how the import duty is charged on your product. This process varies from country to country so get confirmation for your situation.
  • Import Taxes Understand the local tax rate and how it is applied to imported goods.

Example of Supplier Quotation for goods imported from China:

  • 100pcs of furniture items – $100 USD per piece
  • Incoterm – FOB
  • Port of Loading – Shanghai Port
  • Total FOB Cost – $10,000 USD
  • Shipment Type – 20′ GP Container
  • HS Code – 1234.56

Note – The import duty and import tax rates vary from country to country and are applied in different ways.  You should consult your freight forwarder or customs broker to understand the process involved in your location and work out your landed cost accordingly. 

The below is just an example to help you understand the process.

Step 1 – Convert costs to your local currency and add together

You will most likely have to convert the supplier’s USD costs and the International Sea freight charges into your local coin.  When you have converted all foreign currencies into your local currency, add all of the costs together.

  • Product FOB $10,000USD = $13,000 in your local currency
    Sea freight $2000USD = $2600 in your local currency
    TOTAL Product + Sea freight = $15,600 local currency

Step 2 – Add local import costs and charges from your freight forwarder

Local freight costs (your local currency) – $1500:

Step 3 – Calculate the import duties

Assume your freight forwarder has confirmed that a 5% import duty rate will apply to FOB Value of imported goods (local currency).  5% import duty will be charged on $13,000:

  • ADD $650 in import duty charges

Step 4 – Add import taxes

– say 10% import taxes is charges on the final value of imported goods (final value $17,750):

  • ADD $1775 import taxes
So, your Final Landed Price of goods imported into your country:
  • FOB $13,000
  • + Sea freight $2600
  • + All local import costs $1500
  • + 5% import duty $650

TOTAL LANDED COST = $17,750 PLUS 10% TAX OF $1775

This is a total landed price of the overall goods.  If you want to have multiple items inside a shipment, you will want to calculate the landed cost per product.  To do this, you will need to accurately understand the packaging sizes and weight of each product and apply the above costs per product.  The easiest way to do this is to calculate the cubic measurement per product (m3 per piece) or weight per item (in kilograms).  The total of the International Freight costs + local import costs (in this case $15,600) can then be split up by total cubic measurement or weight (whatever is greater).

If you need more support to find a verified and cost effective logistics supplier, you can submit your request to us through the supplier section of this website.