Despite the growth of overseas retail businesses in the last few years, retailers continue to struggle with various supply chain challenges. These include omnichannel complexities, customer expectations, high costs, regulatory compliance, and operational inefficiencies.
Choosing the right fulfillment model can address most of these challenges. Maritime trade offers a practical solution. Large volumes can be shipped at low costs, and containers can transport the consignments further via road or rail. According to a United Nations 2023 review, the sector grew 2.4% in 2023, and the trend will likely continue between 2024 and 2028.
Depending on their needs, business owners can choose full container load shipping (FCL shipping) or several less-than-container loads (LCL shipping) to transport their goods. With FCL shipping, shippers rent out an entire container for exclusive use by one company. As a part of the service, the merchandise is directly packed and loaded into the container at the company’s facility.
FCL shipping for SMEs is a wise choice, as its simplicity and efficiency makes it ideal for shipping products internationally. In this article, we will discuss the impact of FCL shipping on retail supply chains in 2024 and beyond.
The Current State of Container Shipping
According to Statista, 80% of all goods transported worldwide are carried by sea. The cargo volume shipped globally increased from 0.1 billion metric tons in 1980 to 1.95 billion metric tons in 2021. The global container fleet has also grown during the period, from a deadweight tonnage of 11 million metric tons to 293 million metric tons.
Container freight rates have gone through dramatic changes between January 2023 and March 2024. They dropped to their lowest level in October 2023, with a 40-foot shipping container priced at only $ 1,342. It has gradually increased, reaching $ 4,200 in May 2024, the highest recorded value. However, despite these statistics, the present state of container shipping is precarious.
The Red Sea shipping crisis, caused by Houthi rebel attacks on cargo ships, is perhaps the biggest challenge plaguing the segment. Vessels are avoiding the Suez Canal, one of the most important waterways. They are taking a lengthy detour around southern Africa. Each journey is 4,000 miles longer, adding to freight costs and transport times. These disruptions could increase global core goods inflation by 0.7% and overall core inflation by 0.3%.
The Panama Canal drought is another event affecting the global container shipping industry in 2024. The prolonged dry season has led to an acute water shortage in this waterway, limiting its capacity to handle daily passages. With the Panama Canal hosting almost 6% of the global maritime trade, the current problem spells a tough time for the global container shipping industry.
How FCL Shipping Can Help Overcome Supply Chain Challenges
While the current state of container shipping is a reason to worry, retailers can address the concerns by opting for FCL shipping. This service is tailor-made to help them navigate supply chain inefficiencies and disruptions. Here are a few ways it can help:
Speed
Shipping delays often cause problems for retail supply chains. Data from Statista shows that a late container ship was delayed by 4 days on average in 2019. The number increased to more than six days in 2022. FCL shipping service is a relevant solution as these shipments travel directly from the origin to the destination without requiring consolidation or deconsolidation.
Additionally, shipping lines and ports prioritize FCL shipments over LCL because they are easier to handle. With the entire container assigned to a single consignee, there is less handling. Together, these factors accelerate the entire shipping process and reduce transit time.
Cost-Efficiency
Besides saving time, FCL shipping solutions enable retail businesses to lower the cost per unit of cargo. Shipping larger volumes translates into economies of scale for business owners. Also, FCL is available at a flat rate for the whole container. With this, budgeting becomes more predictable for SMEs struggling with cost control.
Another reason FCL shipping is ideal is the reduced possibility of loss and damage compared to LCL. This leads to fewer claims and associated costs.
Simpler Documentation
The documentation for FCL shipments is less complicated as it involves a single Bill of Lading (BOL) for the whole container. Customs clearance is also faster as there is a single consignee and one set of documents for the consignment.
Simpler documentation also translates into ease of tracking. Unlike LCL shipments, there are no delays due to goods from multiple shippers being tracked separately.
What to Consider Before Choosing FCL Shipping
After understanding the benefits of FCL shipping, you may want to know whether or not it is the right fit for your needs. Here are a few things to consider when considering FCL shipping for your retail supply chain.
Volume and Nature of Shipments
Retailers looking to transport large shipments that can occupy an entire shipping container can benefit from FCL shipping. Likewise, this solution works for fragile, sensitive, and high-value items as it reduces handling and lowers the risk of damage.
Market Demand
Determining market demand patterns is another way to decide whether or not you should opt for FCL shipping. This approach ensures timely delivery, whether you experience a consistently high demand or seasonal spikes for your products.
FCL also ensures effective inventory management. You can meet demand without overstocking or encountering stockouts. Additionally, it is ideal if you want to expand into new markets or regions.
Frequency
If you need to send regular, high-frequency shipments, you can secure better rates and more predictable logistics with FCL. It stabilizes the supply chain by reducing the dependency on multiple shipments. FCL also aligns with regular and bulk order requirements, making it ideal for long-term supplier contracts.
Final Word
FCL shipping offers extensive benefits to retail businesses of all sizes and scales. Adopting this shipping solution can drive cost-effectiveness and operational efficiency for the supply chain, especially with the geopolitical obstacles in 2024. As such, business owners have good reason to switch to FCL shipping rather than sending their goods in small batches through multiple containers.
