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LCL import prices depend largely on the party who pays for the freight and chooses the shipping company. As with all international trade processes, Incoterms determine the legal and cost responsibilities throughout the ocean freight or air transport industries for both import and export shipments. In the case of LCL shipping, prices differ depending on whether you’ve chosen the FOB Incoterm or CFR Incoterm.
If merchandise is shipped under the CFR Incoterm (i.e. the importer only pays for arrival which include THC, documentation charges, the container deconsolidation, storage and delivery to your warehouse), it is very likely that the importer will end up paying a much higher price than if the shipment were to be carried out under the FOB Incoterm (i.e. paying the freight from the port of origin).
When LCL goods are shipped under CFR (Cost and Freight) conditions, given the nature of the Incoterm, the buyer has limited control over the international shipment. The freight forwarder at origin is often the consignee and thus accepts and loads the goods upon arrival. Following this, the freight forwarder will then contact the buyer and arrange for final transportation.
Under such conditions, there may be additional intermediates in the logistics chain, which will inevitably increase costs. As such, the overall price of the transaction is likely to be a lot higher than working under the FOB Incoterm. Furthermore, in these cases, it is usually impossible to agree on a price prior to the arrival of the goods.
On the other hand, LCL shipping under the FOB Incoterm means the importer is responsible for the international freight and is thus the party who arranges the entire LCL shipping service. Even though this means he has to cover the costs of shipping and arrival expenses, he will have control over these aspects and can avoid unnecessary additional costs from intermediaries.
LCL shipments are measured per ton or cubic meter (the larger of the two). That is, if the weight cost is greater than the volume cost, the weight cost will apply or vice-versa. Given that, it is extremely important to know how to properly prepare your LCL shipment to minimize volume and costs.
If you’re still confused about your LCL freight price, do give our article on how to understand ocean freight quotes a read. Alternatively, you may give us a call. Our import and export consultants will be happy to help you out.