Road Freight Blog

Posted on October 26, 2015 in Road Freight Articles

How LCL cartage and shipment benefits growing businesses

Small to medium enterprises in Queensland are increasing in number, and if your business is one of them, you’ll know how difficult it can be to maintain control over the logistics costs of distributing your goods.

Containing the expenditures you need to make in order to meet your market demand can be daunting if your business is in a growth phase, particularly if you’re on the borderline of having the volumes of stock and the time to ship full containers. You might delaying your orders and risking your customer’s satisfaction in order to reap the discounts in filling whole containers. Or you could be sweating over the risk of catastrophic financial impact that comes with trusting shipping companies with large volumes of your inventory.


So how can LCL cartage and shipment offer alternative benefits to you, and keep you functioning against your larger competitors?


 

Lower rates

More and more business throughout South East Queensland are choosing to pay comparatively small container surcharges in order to make smaller shipments— particularly in light of the high costs of air freight, and improvements in ocean transport between Queensland’s coasts and our closest trading partners.

In many cases, LCL cartage and shipping is more cost effective for companies with lower volumes of goods, because they’re only paying for the space their load fills in the container—and despite not being able to access the lower rates for the minimum tonnage or volume, and despite paying the small surcharge, the cost is offset by the smaller short-term expense, and the ability to service their client base on time. The cost is also delineated: because LCL costs are clear, it’s easier to gauge how much each shipment is going to cost you, and to prioritise your inventories.

There may also be cost savings due to the increase in transport routes along the Queensland coast. Because there are increasingly frequent runs between the Sunshine Coast, Brisbane and the Gold Coast to meet Queensland’s growing population and FMCG markets, many LCL providers can offer discounted cartage, or negotiate lower rates with their partners to get your deliveries to the destinations on time. And because of the proximity of the metropolitan areas, the transit times are becoming shorter, minimising the risk of transportation delays with increased efficiency.

While full containerloads are traditionally the best way to cap shipping and cartage costs, the rise of smaller businesses and the demand to service their distribution needs has resulted in logistics providers seeking to deliver innovative and flexible solutions. LCL shipment and cartage is evolving, and more and more providers throughout Queensland are offering new and more cost effective transportation options. The competition in this market is fierce, which means your business could benefit greatly from negotiating for better rates—particularly if you can guarantee a certain cargo volume over time, or demonstrate that your business’s expansion makes you an ideal candidate for a long-term relationship with the provider.

 

Greater flexibility

LCL cartage and shipping can be the mostcost effective choice if your business supplies certain types and combinations of goods. In cases where your cargo needs extra requirements—like refrigeration, fragile handling, or accommodations for size and shape—and there are substantial costs associated with them, it’s sometimes cheaper to move smaller loads. And because you don’t have a full container restricted by those requirements, there’s greater flexibility in changing your product mix without wasting inventory.

LCL also takes care of the risks of your business overcommitting to its suppliers or manufacturers. Because you’re not ordering full containers, you’re not burdened with the weighty decisions of choosing one supplier who you’ll then rely on indefinitely. LCL lets you spread the risk over multiple suppliers or manufacturers, so you’ll lose substantially less if it all goes south, and there aren’t any restrictions preventing you from sourcing replacements.

LCL is also a valuable tool in streamlining the logistics of FMCG businesses—if you’re manufacturing or supplying perishable goods, you’ll know that small, regular supplies are essential to serving your market. The retail industry, the food industry, industries trading chemicals and gas, and e-commerce industries are all frequent LCL users, because FCL simply can’t accommodate the demand volumes or the nature of the products.

Because the competition in Australia’s FMCG markets is intensifying, your company’s only chance of survival is innovation and flexibility: consumers are fickle and spoilt for choice, and being able to deliver your products first—and in varying volumes—might be the difference between your survival and your decimation.

 

Stable fulfilment

Small and medium businesses are relying on LCL cartage and shipping more and more:


They simply aren’t moving the volumes of stock to use FCL, but they don’t want to hurt their customers by delaying orders or missing delivery deadlines.


LCL caters to businesses who need to fulfil smaller orders, whether the reasons for it is distributing FMCGs in small, frequent loads, or not having the time to manufacture the products to fully fill a container. While for some businesses LCL costs might exceed FCL costs, avoiding the impact of failing to meet customer demand is well worth the expense. LCL’s ability to streamline distribution throughout the entire supply chain is often responsible for customer satisfaction—and ultimately, the livelihood and growth of the business. After all, what costs more: the shipping, or your business’s products not being available when they’re demanded in a critical market?

Meeting demand in extraneous circumstances is also one of the strengths of LCL cartage and shipping. It guards against demand fluctuations, reducing the financial exposure your business could suffer in unsold products that you’ve moved before hitting a market downturn, and helping you deliver in times of unexpected demand.

The benefits to future production and partnerships that businesses get through promotional events and product launches can also mitigate the expense of delivering smaller volumes of goods: in these cases, LCL can be considered a marketing expense, a wise investment in future sales.

 

Risk management

As with any method of transportation and distribution, LCL does have its problems. But even among these hurdles, it has its benefits.

One of the drawbacks of LCL is that the forwarder often won’t bring the container that holds your goods directly to your pick up and drop off points. But this condition can actually mitigate your risk: there might be an expense involved in arranging suppliers and customers to drop off or collect products from the forwarder’s warehouses, but it means you’re not relying on a middleman to ensure your inventory is delivered safely. Many LCL transport providers will also offer other options to you, which could include negotiating lower rates from their partners to get your stock gets where it needs to go.

While the transit times of LCL and FCL cargo are the same both domestically and internationally, there can be delays involved (often a day or two) due to processing and loading and unloading the stock. But it’s often overlooked that LCL shipments frequently get preferential treatment: in cases where LCL containers are charged higher freight rates than FCL containers, carriers will often give them priority loading, reducing the risk of longer transportation times that comes with mixed container loads.

 

risk-management

 

Another commonly faced issue is customs clearance. Because LCL containers are shared with multiple consignees, one business’s failure to complete the appropriate documentation or to meet regulations can cause the entire shipment to be delayed by customs agencies for up to 21 days. The best way to circumvent this risk might be to overestimate delivery timeframes. But a good LCL provider will automatically address the risk by carefully avoiding mixing non-compatible or hazardous shipments, and by anticipating which goods are likely to cause problems—so even where there is a delay risk, you’ll have a reasonably clear idea of the extent of it before it occurs, and you can plan accordingly.

Your goods might also require extra packaging to overcome risk of damage from other business’s shipments. You might wear the cost of protecting your stock properly, but it will likely be offset in meeting your delivery deadlines. Again, a good LCL provider will pack containers properly, and with like goods, to prevent damage occurring.

There are many benefits to using LCL cartage and shipping, and reliable providers will help you to keep your business’s distribution smooth and flowing by accommodating your needs as a growing enterprise. G&D Partners are specialist providers of innovative and flexible freight solutions, so contact us at any time to find out how we can streamline your logistics processes and help your business thrive.

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