Production shift from China and weak ocean rates boost LCL shipments

Chamber of Shipping > Blog > News > International > Production shift from China and weak ocean rates boost LCL shipments

Shippers are increasingly turning to less-than-container (LCL) shipping for their cargo due to slowing outbound Asian containerized volumes and excess inventory at key destinations. Lower ocean rates are making LCL more attractive compared to costlier air cargo delivery, contributing to the growth in LCL volumes. Manufacturing shifting away from China, particularly towards Southeast Asian countries and India, is also driving the demand for LCL.

The trend of nearshoring, which involves moving manufacturing closer to destination markets, is further fueling the demand for consolidated LCL solutions. While production in Eastern Europe and Southeast Asia cannot fully compensate for the large volumes out of China, the smaller volume from these regions, combined with the competitive rates and availability of ocean and warehouse space, is prompting shippers to opt for LCL.

With ocean rates falling and ample space available, shippers are reviewing their product needs and finding it more beneficial to ship smaller quantities at competitive rates rather than filling entire containers and adding to already overloaded inventories. Many companies and retailers have excess inventory due to over-ordering and economic uncertainties caused by inflation, leading to smaller and less frequent orders to match the current market demand.

Overall, the combination of reduced outbound Asian containerized volumes, lower ocean rates, excess inventory, and manufacturing shifts is driving shippers towards LCL shipping as a cost-effective and flexible solution.

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