Why is FCL cheaper than LCL?

1. High volume utilization rate
One of the biggest advantages of full container transportation is the ability to fully utilize the space of transportation vehicles and improve volume utilization. In contrast, LCL (Less than Container Load) usually requires accommodating goods from multiple different customers in the same container, resulting in large gaps inside the container. This volume waste will result in a relative increase in transportation costs.
Full container transportation allows shippers to use the entire container exclusively, ensuring more efficient stacking of goods and reducing unnecessary space waste. This efficient volume utilization directly affects the reduction of transportation costs, making full container transportation more economically advantageous.
2. Reduce operational steps
The whole box transportation process is relatively simple, reducing the operational steps of the goods during transportation. Once the goods are packed, the entire container will be sealed, reducing the need for loading and unloading of goods midway. In contrast, LCL usually requires multiple loading and unloading of goods midway, which not only increases operational costs but may also increase the risk of cargo damage.
The simplified transportation process not only reduces labor costs, but also reduces the possibility of damage to goods during transportation, providing economic advantages for full container transportation.
3. Improve transportation efficiency
Full container transportation is usually better suited to modern transportation systems, such as container ships, freight trains, etc. These transportation tools are designed for full container transportation, and their transportation efficiency is much higher than that of LCL transportation. Full container transportation is easier to achieve automation in loading and unloading, boxing, and unpacking, further improving transportation efficiency.
An efficient transportation system means that goods can arrive at their destination more quickly, reducing the delay time of goods during transportation. This has a positive impact on reducing inventory costs and improving capital turnover, making it more economically beneficial.
4. Economies of scale effects
Full container transportation often involves large quantities of goods, making it easier to achieve economies of scale. The economies of scale effect refers to the decreasing unit cost as the scale expands in large-scale production or transportation. Due to the large volume of goods, full container transportation can better utilize this effect, thereby reducing the transportation cost per unit of goods.
On the contrary, LCL transportation often faces more dispersed sources of goods, making it difficult to achieve similar economies of scale. This makes full container transportation more competitive in terms of unit freight transportation cost.
5. Stable freight rates
Full container transportation usually provides a more stable freight rate. Due to the large volume of goods involved in full container transportation, a more stable contract agreement can usually be reached between the shipper and the transportation company. This type of contract agreement may include long-term cooperation, fixed prices, etc., which can help shippers better control transportation costs and improve economic efficiency.
In contrast, LCL transportation may have more dispersed and flexible contracts due to the involvement of goods from multiple customers, resulting in greater fluctuations in freight rates. This makes full container transportation more advantageous in terms of controllable transportation costs.