Cost Comparison Between Bulk and FCL Shipments

There are many different shipping options available, but the cost is usually a determining factor for whether you should ship your goods in bulk, full-container load, less-than-container load, or another method.

In this article, we'll look at how bulk shipping costs differ from full-container load shipping!

What Is Bulk Shipping?

Bulk shipping is a shipment method where merchants simultaneously ship large amounts of products. This saves the merchant money because they can purchase larger shipments from their shipping companies at lower prices.

Merchants often use bulk shipping methods for items such as clothing, electronics, books, toys, food, and household goods.

In addition to saving money, bulk shipping offers many benefits. For example, it allows purchasing multiple items at once without having to make separate purchases from different suppliers.

How Much Does Bulk Shipping Cost?

In 2019, bulk freight shipping rates rose to an average of $34,000 daily for Capesize vessels. These vessels can hold around 180,000 tons and are frequently used as dry goods shipping vessels.

However, bulk shipping costs tend to fluctuate quite significantly. For instance, near the end of 2019, Clarksons Platou Securities approximated Capsizes rates to be only about $18,000 per day.

Factors that affect bulk shipping freight rates

1) Shipping or freight class

The shipping or freight class depends on the product's weight and size, among other things. For example, a large item like a refrigerator might ship via truck while a small item such as a laptop computer might go by air.

2) Size and weight

Shipping carriers use the NMFC (Nominal Measurement Factor Code) system to calculate the price of shipping goods. This method considers the weight and size of the package.

A good way to reduce shipping charges is to keep track of the NMFC codes. You can do this by monitoring the codes used by the shippers you work with.

There are three main types of NMFC codes: Universal Product Code (UPC), Home Shopping Code (HS), and Dimensional Class Codes (DC).

Most retailers and companies use the UPC. This code contains information about the dimensions of the product and its weight. For example, a single DVD player box might have an NMFC code of 400000115. This number can mean the following:

• Size – 8 inches x 5 inches x 3 inches.
• Weight – 0.5 pounds.

3) Shipping inventory distance

One of the most common methods of calculating shipping cost is factoring its distance. Bulk shipping costs may be influenced by distance, but they typically don't change per mile. Therefore, sometimes per-mile rates get lower with distance. This is because line-haul costs, terminal costs, and different transportation modes can play a role.

4) Dimensional weight

This standard shipping cost calculation formula takes into account the item's dimensions (length, width, height) and density (mass per unit volume).

Shipping charges may vary depending on whether they're calculated by dimensional or gross weights. For example, if an item weighs less than one pound but takes up a lot of space, it will be shipped at a lower rate than something that weighs five pounds but doesn't require as much room.

What Is Full-Container Load (FCL)?

The term "Full-Container Load" (FCL) describes filled containers.

Most ships charge between $2,000 and $3,000 for FCL shipments.

The price of FCL shipments has increased dramatically since the COVID-19 pandemic. While there are still some exceptions, most carriers charge much higher fees for FCL shipping than historically.

Factors that affect FCL shipping freight rates

1) Customs bonds

A customs bond is required whenever someone ships something to the United States. There are three types of bonds: single-entry, annual, and lifetime.

Single-entry bonds cover shipments that occur during one calendar year. They are valid for one cargo per person, address, and port of entry or destination port.

Annual bonds cover shipments that occur throughout the entire year.

Lifetime bonds cover shipments that occur multiple times throughout the bond's life.

2) Duties and taxes

Customs duties vary based on where products originate.

For example, the average customs duty on imported goods coming into Canada is 7%, while it's 3% in Mexico. In addition, products originating in China are subject to a 10% tariff, while those from India face a 5% tax.

3) Demurrage and detention

Demurrage refers to the cost associated with storing cargo in transit. Detention refers to the cost associated with transporting cargo while it sits idle. Finally, penalties refer to fines levied against carriers for violations of regulations.

A common misconception among shippers is that demurrage and detention are the same. While both terms relate to storing goods, demurrage relates to the period during which the goods are stored, whereas detention refers to the amount of time spent storing the goods. For example, a carrier might charge $1 per day for demurrage but only $0.50 per day for detention.

Sometimes additional charges are imposed based on the time the shipping container spends in transit or being detained. These taxes are called detention fees.

On the other hand, the carrier must pay a penalty if the container stays longer than expected. However, the carrier does not incur a penalty fee if the container departs early.

4) Port congestion surcharge

The port congestion surcharge is imposed on containers shipped via rail, truck, ship, and air. This charge can apply to shipments over 500 kilograms (1,100 pounds), depending on the country's maritime regulations.

The fees also vary depending on the mode of transportation used. For example, if you use trucks, the cost is calculated based on the total length of the shipment. On the other hand, if you use ships, the charge is calculated according to the shipment volume.

How Can I Get the Best Pricing?

Getting the lowest freight rates is easier than ever, thanks to technological advancements like computerized quoting systems and online marketplaces. However, you can still do some things to ensure you receive the best possible price.

1) Consider multiple carriers

The most important thing you can do to save money on shipments is to pick one out of various carriers. Reviewing multiple carriers increases your chances of receiving competitive quotes from different shippers.

2) Ask for volume discounts

If you're planning on moving a large cargo, ask your supplier if they offer volume discounts. In addition, many suppliers offer special promotions for repeat customers.

Conclusion

To sum up, it can be cheaper to ship using FCL shipping; however, many factors affect the cost of FCL shipping and shipping bulk cargo. Therefore, it is best to check out the quotations that various shippers offer so you can determine the best option for you.

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