I've used them many times but always had funds available to cover the container I was importing. In all cases, me, the buyer, paid for shipping as a separate invoice and was not part of the transaction. I'd buy the goods FOB closest Asian port, and hire my own shipper.
In your case, it sounds like you're on the other end of the transaction, whereas you need the money
up front to complete the order?
May I ask what industry has no inventory and needs money
up front to manufacture an order and in which shipping is part of the LOC?
Also, I never heard of a US banks ever lending money on them. Bogus LOC's do happen and there is no easy recourse to recover funds internationally. I mean think about how they work. Funds are never released until the goods hit the shipping port. LOC's replace trust in international commerce.
If a bank would lend money on an LOC, you wouldn't need an LOC as banks would just loan everyone the money and take the risk. You must have a stellar relationship with your bank.