Case Sample:
Freight Consolidation (1)
XY Consolidator 'buys' 100 containers of 20' from RS Shipping on vessel S/S AMIGO, Voyage No. 8, the route is from Port A (of the exporting country) to Port B (of the importing country), at a discounted box rate of US$1,300/container. To explain the case, it is assumed that the freight is charged on measure basis only, instead of weight or measure, and assumed that the capacity of 20' container is 33 CBM (cubic meters). As such, XY Consolidator 'buys' a total fixed shipping space of 3,300 CBM at the ocean freight cost of US$39.394/CBM.
If the shipper UVW Exports books 10 CBM of space for a product directly with RS Shipping, on the same vessel and voyage number, the LCL (less than container load) rate is US$55/CBM. If the shipper ABC Exports books a 20' container directly with RS Shipping, the FCL (full container load) flat rate is US$1,500/container, which is US$45.455/CBM. In case ABC Exports is able to load 28 CBM only due to the odd sized export packages, the freight cost is US$53.571/CBM. In general, the CBM cost of FCL is lower than the LCL.
XY Consolidator, which does not operate or own any ships, offers (i.e., 'sells' the space they 'bought') UVW Exports and other LCL shippers to transport their goods at US$54/CBM, against the US$55/CBM from RS Shipping. XY Consolidator offers ABC Exports and other FCL shippers at US$1,450/container, against the US$1,500/container from RS Shipping. In practice, the consolidator 'selling' at the same rate as the shipping company is not uncommon.
XY Consolidator groups all LCLs of individual shippers into FCLs, and then delivers all FCLs to RS Shipping in one lot, that is 100 containers of 20' or less, if the space is not fully 'sold'.
In such a case, XY Consolidator operates as a NVOCC and issues a freight forwarder's bill of lading to each shipper, without receiving a commission from RS Shipping.
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