How to save your LCL shipment charge?

author: Jane.Liu

2023-08-16

Many buyers initially find the prices acceptable when inquiring, but when they provide the actual order quantity to the factory, they may be charged additional fees. This situation often arises due to a lack of clear communication between both parties at the beginning. When buyers inquire about prices, they might not specify the exact order quantity, or they may receive quotes for various styles from the factory's sales representatives. In such cases, the quotes are typically based on Full Container Load (FCL) prices, even though the final order might end up being less than a full container, leading to additional charges for LCL shipment.

The situation can be frustrating for buyers, as they may feel that the factory is being unreasonable by increasing the costs after initially quoting FOB (Free On Board) prices. It might seem like a bait-and-switch tactic. However, the root cause is often the lack of clarity during the initial communication.

When goods are shipped as LCL, they are stored in different types of warehouses, and the charges associated with these warehouses vary. Different warehouses, such as ordinary warehouses, bonded warehouses, and custodian warehouse, have different fee structures. Even among ordinary warehouses, the fees can differ. This discrepancy in fees is often not covered by the original FOB quote, leading to the perception of additional charges.

The following is the cost breakdown of several recent bulk shipments from our company.

CBM	Total charge	local Charge/CBM	Detail Charge
16.58	3772.5	227.53
13.23	2630.25	198.81
11.873	1544.92	130.12
6.89	647.34	93.95
39.552	2320	58.66
FCL 1*40HQ charge	3180	46.76

As you can see from the above table, the local charge per CBM in some warehouses is close to the FCL shipment, but the local charge per CBM in some warehouses, especially the custodian warehouse and bonded warehouses, is very expensive, and the FOB cost of the normal manufacturer's accounting is not able to cover this extra cost.

From the above table, you also could find that the CFS charge for most of the warehouse charge by CBM, rate is from 39 RMB per CBM to 125 RMB per CBM, it's a big gap between different warehouses. And some warehouses charge documents, handling, VGM, AMS, and other charges by shipment (if one container load 3 different customers' good, they will charge 3 times), but some charge by the container (so you just need to pay less, divided by CBM). This is a big difference too. So finding a good forwarder could help you save lots of costs.

Then How to get a reasonable quote from factories?

Clarify Freight Forwarder Fees: Determine which freight forwarder you intend to use and inquire about their fee structure. Share this information with the factory's sales representative.
Provide Approximate Order Quantity: Provide the factory with a rough estimate of your order quantity. This allows the factory to provide a more accurate and reasonable quote. Without this information, factories might provide higher quotes to account for potential LCL costs.

If your forwarder’s local charge is high, what you can do?

* Consider Consolidation: If you work with multiple suppliers in the same area, you could consider consolidating shipments from different factories into the same container and load in one of the factories.

This can reduce LCL charges, about 100 USD per shipment can cover the extra combined shipment charge.

*Negotiate with the Freight Forwarder: Try to negotiate with your chosen freight forwarder to lower their local charges or explore cost-saving measures

*Evaluate Alternative Freight Forwarders: If the fees are consistently high, consider looking for alternative freight forwarders with more competitive pricing.

Remember that effective communication and transparency between buyers and factories are crucial to avoiding misunderstandings and unexpected charges.

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