Less than Container Load (LCL) consolidation has been gaining a lot of traction lately as a way to continue the movement of goods while the ocean market faces container shortages, events impacting global trade like the Suez Canal blockage, and overall strain on supply chains. Expeditors' Manager of LCL and Network Planning Brian Murphy expands on LCL, while Director of Retail Vertical Bryan Ransford shares how the retail industry is using LCL to adjust to trends changing their products and access to end customers.

Chris Parker (Host): Hello, everyone, and welcome to The Expeditors podcast, where you can hear about front of mind topics in the logistics and freight forwarding industry through the lens of a global logistics provider. I'm your host, Chris Parker, and today we'll be talking about LCL consolidation to learn what it is and how current ocean market conditions have affected shippers that use it. I'm also going to take a closer look at the retail industry and how rising trends have challenged retail, having them look to LCL as a viable option for continued success. To talk about this, I've brought in our Manager of LCL and Network Planning, Brian Murphy, and our Director of the Retail Vertical, Bryan Ransford. Gentlemen, thank you so much for joining me today.

Bryan Ransford: Thanks for having us.

Brian Murphy: Yes. Thank you. Good morning.

Chris Parker: Since you're both named Brian, for the sake of clarity, as this is an audio-only format, may I refer to you as Murphy and Ransford, private investigators?

Bryan Ransford: Or attorneys at law.

Chris Parker: Or attorneys at law. Yeah. Murphy and Ransford.

Bryan Ransford: Yeah, absolutely.

Brian Murphy: That's great. Yes.

Chris Parker: All right. Cool. All right. So Murphy, let's start with you. Let's get to know you a little bit more; get a little bit of your background here. What is your responsibilities around LCL and network planning? How do those two kind of pair together?

Brian Murphy: Sure. Yeah. Thank you. So I've been with Expeditors 25 plus years now.

Chris Parker: Wow. Yeah.

Brian Murphy: On the ocean product, in the last about ten years, I've been in charge of our LCL product globally. And so, really, the LCL product for Expeditors is a global product, and it involves all of our network. So a lot of my work is around not just the product of LCL but how our network, ocean, trucking, all of our services work together to develop that product and deliver that product.

Chris Parker: Yeah. Excellent. And Ransford, you as Director of Retail Vertical, how did you fall into that, and how can we understand retail? What does that mean? What does that cover?

Bryan Ransford: Yeah, it's interesting because, over the course of my career, I've worked in several roles within Expeditors, including operations, account management, and also within our customs product. And kind of throughout that history, I've worked with several of our retail customers and at one point was the global account manager for our largest retail customer at the time. And so it's given me kind of an opportunity to kind of see a little bit of the inside of how retail, at least from the logistics standpoint, works. The retail vertical role is really to kind of be the, I guess, subject matter expert, if you will, within our organization, understanding kind of the trends within the marketplace, what's happening with retail, and how that relates to our customers so that we can first ensure that we're offering services that meet their needs. And then working to share some of the kind of best practices that are happening with our retail customers and across sectors as well to really kind of help make sure that we're supporting our customers in their logistics needs and helping them plan for what they need in the future.

Chris Parker: Excellent. We've got a lot to cover here, and we're going to start with Murphy first talking about LCL, and then Ransford; I'll switch over to you to get a better understanding of how LCL works in the retail industry and how it's being used. So simply put LCL, and I know it's an acronym, I should've said Less than Container Load. Can you explain what that is?

Brian Murphy: Absolutely. Yes. We love our acronyms. So LCL, Less than Container Load, is an ocean freight solution where it's loose freight. Loose freight that's turned over at an origin point or a service provider, a consolidator, takes loose freight from multiple different customers, and loads it into their own container, moves the container to a destination point where the containers in devanned and each one of those individual loose shipments is made available to the customer.

Chris Parker: Because typically, a customer would have to reserve a whole container to fill up and then move around. This is if they're not meeting that capacity or they have smaller shipments to move. This is where they can just kind of pitch in... Everyone pitches in on a single container. Is that right?

Brian Murphy: Absolutely. Yes. So instead of buying a full container or FCL, where you can buy you buy a 40-foot container, you put as little or as much as you want in that container. With LCL, you're buying the space. So you're paying for just the space that you use inside that single container.

Chris Parker: Now I kind of talked about it a little bit just right now, but when, or why would a shipper want to use LCL?

Brian Murphy: Yeah, that's a great question. So LCL is used for many, many different reasons. So the easiest is there's a shipper, or a customer has a lane where they simply don't have enough volume on a consistently or in a given week to load their own full container. So there's a break-even point where it's less expensive to buy space inside a container than paying the full amount for a full container, then say only putting one pallet in it. So that's the basic reason. And then customers use it for a lot of different reasons, right? So maybe they need to get smaller quantities of freight to fewer destinations. Or destinations where they don't have their own volume to build their own full containers. We see a lot of with the trade wars, Brexit, those kinds of things changing as buying patterns are changing and those lanes change. We see customers really looking to LCL to use on those new lanes where they just don't have the weekly volume to build their own containers yet.

Chris Parker: So it's not just a tool for export, but import as well.

Brian Murphy: Absolutely. Yes.

Chris Parker: Gotcha. Okay. Now LCL has been around for a very long time. I did a little bit of research and saw that the history ties to carloads and trains and stuff like that. This goes back hundreds of years. Let's look at the last ten years. Has LCL seen any evolution or innovation? Or is it pretty static and a pretty reliable method?

Brian Murphy: Yeah. And thanks for keeping the history only to ten years. So yeah. And it is a pretty static method. 10, 12 years ago, LCL was kind of the dreaded necessary evil, right? If you didn't have enough freight, you would have to go LCL. And it was a challenge in that just the information on where my freight is, how it's being moved, who's moving it, supply chains; information systems were just not evolved to the point. So it was really kind of, you'd push a pallet off your back dock, and eventually, it would show up where you need it to – just a mystery.

Brian Murphy: So in the last ten years or so, what's really evolved is the information and the sophistication around not only retail supply chains but just supply chains in general. So ocean supply chains have gotten much more consistent and, believe it or not, reliable. And the information flow between all the providers, there's multiple different touchpoints and providers and subcontractors involved in an LCL move. And it's just much easier these days to share information, to get the status of where that shipment is, and what's going on with that shipment at any one time. That's really the... The sophistication of the supply chains have made it a much easier and much more reliable mode of transportation.

Chris Parker:The  ocean market, let's say, has been through quite a year, right? With container shortages. I talked with Scott Kelly a couple episodes ago about shipment schedule reliability, and we recently had the whole Suez Canal situation. How has LCL been able to meet customer's needs and help them navigate such a turbulent market?

Brian Murphy: Yeah. And it is a crazy market. It's a struggle, right? So some of the things that have really changed and evolved with LCL is LCL generally has more options for more lanes on how you can move cargo. There have been developed more and more kind of differentiated service levels. So if there's opportunities to speed up or perhaps slow down on specific lanes, a lot of those options are available. And really just ability by a lot of LCL service providers to perhaps route cargo around some of the key congestion points.

Chris Parker: Yeah. Absolutely.

Brian Murphy: Yeah.

Chris Parker: You're talking about whether you're speeding up or slow down, how much flexibility does it give a company over the momentum of or the pace of their flow of goods?

Brian Murphy: Well, LCL on its own gives some momentum, but really when you start to look at LCL as a tool in your overall supply chain toolbox along your spectrum of full cost, full speed air freight to kind of standard slow ocean, LCL starts to add some opportunities in between there on the spectrum. So you can perhaps use LCL and maybe some expedited services when you need to get it there faster than perhaps a standard ocean transit would get it, but not next day or within three days like full price air.

Chris Parker: They’re still on a boat that has to float across an ocean.

Brian Murphy: And it's also, as people look at their overall supply chains, LCL can give the opportunity to maybe peel some of that freight out. Maybe you don't have to inject all of the freight into your DC network. So there may be smaller portions of freight that are always going to have to go either to your specific stores or DCs, or maybe your customer's DCs. So you can start to use LCL to start to segregate. You're going to have full-cost air freight, that's... Sorry, that's going to happen. You're going to have, hopefully, the bulk of your supply chain can go on the best cost ocean methods, FCL. But maybe you can pull some of that out and use it as LCL and save costs by not having to touch it within your network as much.

Chris Parker: New companies are going to start moving their goods, or they're going to start surfacing and starting out in a really trying period in transportation right now. What does the new customer look like? And are they doing anything with LCL that perhaps more tenured or a more traditional company would not have considered using LCL in the past? Are they coming up with new ideas or new ways to use LCL?

Brian Murphy: Yeah. So new customers, new and existing customers, but really to look at that spectrum, we're seeing a lot of customers with obviously today's market and the things going on in the world, supply chains are flattening out. And customer buying patterns are changing. So we're seeing more customers really that need to get smaller quantities to more places, closer to their immediate customer. So we are seeing a lot of customers look to LCL as a mode to really flatten and spread out their supply chain and kind of rightsize it and make sure they're getting just the right quantities to the specific places they need them to go.

Chris Parker: Now, Ransford, let's switch over to you to learn more about retail and its relationship with LCL. I'm going to kind of echo this question again. So what trends have you been seeing retailers are finding themselves in that necessitates this continued use of LCL?

Bryan Ransford: Well, it's interesting. A lot of it touches on what Brian was talking about in today's market because of schedule unpredictability and congestion in the current market. It allows a retail brand to ship orders as they're available, instead of having to wait until they have enough product, production has produced enough to fill a full container. They can ship orders, either smaller orders or partial orders, by ocean and avoid the higher cost of having to move it by air or the delay of having to wait for enough product to be able to fill a container. So it gives them more flexibility that way.

Bryan Ransford: The retail market, especially in the US right now, is dealing with very significant inventory shortages. The sales to inventory ratio is really at 20 plus year lows right now in the US. And so retail brands are looking at all types of options to speed up orders and try to replenish stock within their inventory network. And so this gives them one more option in terms of continuing to keep product flowing so that they can try to meet the needs of their customers where they are. Brian touched on a couple of other points, sourcing changes that are happening. And we've seen that over the last couple of years, as the implications of the China-US trade tariffs were implemented. New markets were starting to be found for retail production, especially apparel and footwear, but it's difficult to move production from one country to the other and have the same quality and the same production rates. So you had less predictability around their ability to have product ready to ship.

Bryan Ransford: So this, again, gives them the option that perhaps only half of an order passed quality control. So they could at least ship that half of an order by LCL instead of having to hold it until the other half of the order could be redone and the full container loaded. So it gives them the option to continue to flow product through their supply chain. Probably of the biggest trends that also is a benefit of the less than container loader, or LCL, is sustainability. It allows, as we've talked about, the mode shift for smaller orders from air to ocean; if they are not as time-critical and don't need to be there with within matter of the couple of days, then they can be loaded in a consolidated LCL container. And the carbon footprint of that shipment would be significantly lower than if it was shipped by air. So that's been a continued emphasis of retail brands. And this definitely supports that.

Chris Parker: Now you've kind of touched on it a little bit, but what special needs or requirements does the retail space bring when they're looking to move goods via LCL that you find different from other industries?

Bryan Ransford: I think visibility now is becoming a much bigger need. I think traditionally, LCL was looked at as a cost-savings option for instead of shipping by air or shipping a lower utilized container with empty space in it, they can use an LCL program and save some costs associated with it that way. But that raises challenges at the time, especially if co-loaders were being used, and there was unpredictability in the schedules and lack of visibility because you have a third party introduced in that. But the benefit really to using LCL today is the visibility gains that Brian touched on. For retail, the supply chain and the speed and agility in that supply chain has become paramount.

Bryan Ransford: And being able to position the product closer to the consumer, like Brian was talking about, is critical. So we're seeing things like smaller distribution centers in urban locations to be able to position a product closer to the consumer, but at the same time, they need to know where that product is at any given point. Because there's a lot of dynamics happening, right now especially, that dictates where that product is needed. Now markets are opening up at different paces, and, of course, consumer demand is different in different locations. So they want to be able to make sure that they have the right product in the right place for the customer.

Chris Parker: Now that access to visibility is improving, you still got unpredictability. If I only need, let's say, 25% of a container's space to fit my goods, but there's no capacity, has that been proving a big challenge right now? How do you mitigate that?

Bryan Ransford: That's absolutely been a huge challenge. And then being able to... Right now, one of the biggest problems is just actually gaining access to a container to load. There's container imbalances within the supply chain across the globe. So one of the benefits of this is that an NVO or a forwarder has that container that they're consolidating LCL loads for. So again, it allows that product to continue flowing, keeping it on the move closer to the customer than if you were waiting for your own container to load.

Chris Parker: Sure. So we've got capacity issues. I mean, visibility is improving, but these all sound like really big considerations. And we as a freight forwarder, we always want to be able to answer the question, "Where's my freight?" And so for retailers specifically, how can this cost of capacity and visibility be justified to make LCL a viable option?

Bryan Ransford: Really today, Chris, to be honest, there is no justification for it because the retailer needs to have visibility to their product throughout their supply chain. As we see markets opening up at different paces, as we see the rise of e-commerce, of course, it makes it... The customer expectations are that as soon when they press that purchase button, that they know exactly when that product is going to be on their doorstep or available for them to pick up at the store. So the retail brands really need that speed and visibility within their supply chain to be able to make sure they're positioning the product closest to the customer to be able to fulfill that order. And that's going to be something that we see, I think coming out of this, and one of the future market dynamics as retailers now are using sales data and analytics, actually on a daily basis to make... Looking at where the demand for specific product is the highest, to make sure that they position that product as close as they can to that consumer and get it there as quickly as they need to, to meet customer expectations.

Chris Parker: Where there are these gaps in access and availability, LCL essentially, while Murphy, you called it... It used to be known as this necessary evil; it's a crucial tool that can help people kind of maintain their flow. But they're looking to data then to kind of fill in the gaps where there would be in a traditional LCL move right now to help them succeed. Is that what you're saying?

Bryan Ransford: And the point that Brian made about one more tool in their toolbox is a great analogy because it just gives them greater flexibility around to do different things within their supply chain too. It gives them greater agility for direct to store programs where instead they can bypass their distribution center if there's a specific product or programs that they want to be able to deliver directly to the store. Or gives them greater flexibility around delivering smaller loads to these smaller fulfillment centers that are popping up in more urban locations, instead of trying to schedule and maneuver a full 40-foot container into the middle of Manhattan.

Chris Parker: Sounds doable.

Bryan Ransford: Now you're... Yeah, that's a challenge. Now you can deliver with a box truck, and it's more like a regular delivery. With e-commerce, especially now, you're seeing greater sales of bulkier items too. So things like furniture is something you don't want to try to air freight because of the costs associated with that. So LCL gives the opportunity to utilize different services to get that coffee table or whatever it is closest to the consumer and speed up the delivery without having to incur prohibitive costs of air freighting.

Chris Parker: Yeah, yeah, absolutely. Murphy, let's switch back over to you for these kind of closing questions that I've got here. How has LCL played out in the success of some companies or other industries?

Brian Murphy: Yeah, we've seen it in many other industries in much the same way, as their supply chains have flattened, certainly as buying patterns have changed over the last few years. That's been a huge use for LCL in industries where merger and acquisition is big and larger companies either acquire each other, other smaller companies, and they need to get their arms around all of the freight that they're moving, LCL is a way that they can kind of start to split off and rightsize those lanes that they pick up in the new business. And really, a lot of it is, again, around where is LCL able to work as a strategic solution, mode solution, within their overall supply chain.

Chris Parker: It sounds like it's a really a transition tool of some sorts. So when a company is going through a big change, they're going to look to LCL to help them, like you said Murphy, rightsize things, or Ransford, as you were talking about, sourcing changes. Transitioning to... From one location to another, without having huge impact on the rest of the supply chain or on the rest of their customers, their end customers. For the companies that are kind of starting out and in the smaller organizations, how does LCL fit into their growth? How do they use it to grow?

Brian Murphy: Yeah, I think small companies and companies of all sizes use it to grow. So a small company in particular, maybe starting out, maybe they're buying in smaller quantities as they get their business going. So really, it's a more cost-effective way for them, like we said earlier, to rent space in a container rather than to buy the full container, to ship air. And maybe as a small customer is just starting out in today's global marketplace, all of their product may not be going to one place and not even one country. So LCL helps them to immediately have a global supply chain. They can send pallets of freight all over. And then the ideal is as they grow, they can develop those patterns and those economies of scale. And if they can get the full container, very consistent volumes, and still keep LCL as part of their overall strategy where they can peel those smaller shipments off and really keep their supply chain intact.

Chris Parker: For sure.

Brian Murphy: I think that the variation in service levels with LCL as well as really helped that out because now it's not just ocean or air freight. You have some grades of lead times within there that they can manage too as well.

Chris Parker: Yeah. For sure. What special considerations would an organization need to think about to know when LCL is the right option for them? And something I like to ask everyone kind of as we're closing, is, what is the most overlooked detail for LCL?

Brian Murphy: So I would say the most overlooked detail for LCL is that it's a viable option. It's a good strategic choice. And in the big details, when you look at your supply chain and where will it fit, you got to look at your products and your lead times and what services are out there to satisfy those lead times, and then start to really look at your partners and who's going to help with that. LCL has a lot of touchpoints. So there's opportunity for things to happen within those touchpoints. So how do your partners manage, not just their network, but their network of suppliers and subcontractors? So how does that keep not only your freight moving and your freight safe but manage your brand? So all those considerations.

Chris Parker: Absolutely. Ransford, what about you? Any overlooked details that you can think of?

Bryan Ransford: I would kind of agree with Brian that I think that understanding how to use it as another option to ensure your lead time, you have more flexibility in your lead times. And making sure that, of course, aligning with the right partner, as Murphy said. In terms of visibility, to be able to make sure that you can use it as a tool to be able to execute on your sales and your fulfillment strategies to position product where it needs to be and get that customer experience that... Getting that product to them as quickly as you can after their order.

Chris Parker: Well, Murphy and Ransford, attorneys at law, if people wanted to know more about you guys or get into contact with you to learn more about whether it's retail or LCL, how can they find you? Murphy, let's start with you.

Brian Murphy: Well, you can reach out to any of your local Expeditors offices and ask about LCL. The global network staff is very well... We have information about LCL on our Expeditors website that can lead you to some information and some solutions and help you get in touch with our people as well.

Chris Parker: Cool. Ransford?

Bryan Ransford: Yeah, and on the external website. And there's also a retail and a fashion page within the industries we serve. And so you can contact me through that. We have a regional team in Asia, Europe, and North America as well. So we have regional managers that can be contacted as well, and I can direct you to the right person there.

Chris Parker: Cool. Well, I will include those links in the show notes, but until then, Brian Murphy, Bryan Ransford, thank you so much for joining me today. This was a lot of fun to chat about. And I hope you guys have a great day.

Bryan Ransford: Thanks, Chris. Appreciate it.

Brian Murphy: Thanks, Chris. Appreciate it. Take care.

Chris Parker: Thanks for listening to today's episode. If you've got any questions or want to learn more about today's topic, check out the show notes for more information. And before you go, make sure you're subscribed on whatever podcast app you're using so you won't miss the next episode. To learn more about Expeditors, you can find us on LinkedIn, Facebook, Instagram, and Twitter, or simply visit us at expeditors.com. Take care, and I'll see you next time.