As air freight capacity crunches continue—largely due to continued cancellation of passenger flights—the mode continues to experience significant rate fluctuations. If you’re currently using air freight within your supply chain, our recent article offers four tips for making air freight work in today’s environment.
If you’re looking for alternatives to air freight, ocean freight might fit the bill. Traditional ocean freight costs significantly less than air freight, sometimes as much as two-thirds less, which can offer some relief for your shipping budget.
Additionally, expedited LCL can offer you a middle ground: faster delivery than traditional ocean freight at a cost that’s lower than air freight. We’ll walk you through some of the options available in case you’re considering modifications to your supply chain.
Benefits aside, expedited LCL comes with trade-offs, as well as a few sticking points to watch out for. Additionally, switching modes will likely require some adjustments to your supply chain in order to keep the materials or goods you need in stock while controlling your costs.
We’ll walk you through all of these issues. But, first, let’s talk about the recent rise in popularity that expedited LCL is experiencing.
Expedited LCL: A More Popular (and Viable!) Option Today
Although expedited LCL isn’t a new service, the sharp rise in air freight costs, as well as the dip in capacity, have made this mode a more popular option, especially among shippers who used air freight extensively in the past. Although expedited LCL costs more than regular LCL services, it still currently costs less than air freight in most circumstances, and it offers attractive transit times, especially on shipments moving east from Asia.
Whereas regular LCL services for eastbound, trans-Pacific ocean freight shipments can often take around a month, many expedited LCL services offer ~12-day port-to-port transit times. Services are available from many of China’s key ports, including Shanghai, Ningbo, Shenzhen, Guangzhou, Xiamen, Hong Kong, and Qingdao, to the ports of Los Angeles and Long Beach. Additionally, with overland options via truck and rail available from Los Angeles and Long Beach, some shippers are converting from all-water solutions in order to receive shipments faster. i
That being said, expedited LCL costs more than traditional LCL. However, given current air freight rates, some businesses may embrace this opportunity to move freight at a faster rate than traditional LCL at a rate significantly lower than air freight. Additionally, with the capacity crunch, many air freight shipments have seen delays of their own, so once you take into account the current cost and the extended transit time that air freight has been experiencing, it might not feel worth it.
However, if you’re seriously considering a move to expedited LCL, there are a couple of items that you need to be aware of.
Before Making the Switch to Expedited LCL, Take Note
Before you go all-in on expedited LCL, make sure you consider the following four issues around this mode of transportation:
1. It’s Not Just About Transit Time
Although some expedited LCL services are offering ~12-day port-to-port transit times, you also need to consider:
- Cargo cut-off times: Generally, expedited LCL cargo has to be tendered five to seven days before the ship sails.
- Availability after arrival: Once the ship is in port, the container needs to be picked up and devanned, then your freight has to be made available for pickup, which can take up to seven days after arrival.
In other words, when you look at the transit time, realize that you need to account for additional time before and after in order to get an accurate idea of the true arrival time at your warehouse. That being said, many of the carriers who offer expedited LCL are making an effort to make the overall process as efficient as possible, especially pick-up from the port. A good freight forwarder will be able to work with all parties involved to help you estimate a complete and accurate timeline for your shipment.
2. Ocean Freight Comes with Different Fees
If you’re used to the flat-rate handling fee of $20 that comes with air freight shipments, you might be surprised when it comes to all the fees associated with ocean freight. Drayage, fuel surcharges, terminal handling charges and wharfage are some of the items you’ll ultimately pay for when you choose ocean freight.
That being said, a freight forwarder can also come to your assistance in this matter. They’ll often provide simplified invoices to give you an all-in cost for warehouse-to-warehouse delivery, making it much easier to understand exactly how much you’re paying for each one of your shipments.
3. You Risk Unexpected Delays That Aren’t Your Fault
If you do go the LCL route, whether you choose expedited or regular service, make sure you use a consolidator or a forwarder you can trust—one who’s experienced in the field. Because you’re part of a consolidated shipment, your freight will share a container with other shippers’ freight. If one of those other shippers hasn’t completed the proper paperwork—or has improperly documented the contents of their shipment—the entire container could be held up for inspection.
An experienced consolidator or freight forwarder will 1) spot potential customs and paperwork problems before they happen and 2) separate out cargo that might be subject out to greater scrutiny to avoid delaying more straightforward shipments.
4. Be Aware of All the Costs to Your Business
Whenever you switch modes, you’ll need to take a broad view of your supply chain so you can see the ripple effects that any change will create. Moving from air freight to ocean freight might mean that you need to order larger quantities of goods or supplies to ensure that you stay well stocked. In turn, this will raise your inventory carrying costs, including potential expenses around storage, warehousing and inventory management. Larger orders will also put more strain on your cash flow, tying more of it up in inventory.
So as you make your decisions, remember to evaluate the impact all along the length of your supply chain. A freight forwarder with supply management capability can help you with this analysis to help you make the decisions that support the long-term health of your business.
Exploring Alternatives in the Midst of Volatility
Any massive global event, like COVID-19, will create ripple effects felt across the globe, ones that can impact your supply chain. In this case, taking advantage of a new mode of transportation offers you the opportunity to take a critical look at the balance you maintain between the cost of your freight shipments versus the speed in which they arrive. If you’re not already working with a freight forwarder, their services can be invaluable for both 1) exploring alternatives to increase your supply chain’s effectiveness and 2) analyzing the cost of adjusting the mix of modes you currently use.
If you’d like some help adjusting your supply chain to react more effectively to the current situation, reach out to us for a free consultation. One of our experts would be happy to explore your current situation and help you come up with a plan that meets your business goals—and your budget.