The shortage of containers continues to plague the liner shipping industry, and freight forwarders cannot meet the growing demand for self-owned containers
Since the outbreak of the new crown pneumonia epidemic, the smooth operation of the global supply chain has faced challenges. The low efficiency of empty container rotation has led to soaring logistics costs. "One container is difficult to find" has become the new normal. The shortage of containers is still plagued by the liner shipping industry.
According to a survey conducted by Container xChange, a global container trading platform, shippers’ demand for self-owned containers (SOC) is increasing, but currently only a small percentage of freight forwarders are capable of providing self-owned containers.
Container xChange conducted a survey of 50 large freight forwarders around the world and found that only 10% of its own containers can be shipped from China to Europe. A report compiled by it shows that shippers or forwarders can alleviate their own supply chain deadlock, overcome the problem of container shortages, and avoid huge demurrage and detention fees by using their own or leased containers.
The forwarders mentioned in the report that can better provide SOC are: Kuehne+Nagel, CEVA Logistics, Hitachi Transport Systems, Nippon Express, Kerry Logistics.
Capacity of own containers increased by 66% in 2020
According to data from container xChange, the number of containers owned by shippers is still low compared with the total number of containers worldwide, and most containers are owned or leased by container shipping companies. These containers are called carrier-owned containers (COC), and the shipper must pay all freight, including the cost of providing the container itself. Container xChange stated in the investigation report that SOC is rarely used because it is difficult for shippers to find a reliable source of containers.
However, as the shortage of containers will continue to plague the liner shipping industry from the second half of 2020 to 2021, the use of SOC may expand.
The report’s lead author and logistics consultant Wolfgang Lehmacher said: “More use of own containers (SOC) can enhance the capabilities of freight forwarders and non-vessel carriers, and reduce the risk of container shortages and additional transportation costs.”
Lehmacher said: "It is clear from the survey results that SOC is an underutilized resource, especially when freight rates remain high and carriers have a shortage of containers."
It is understood that some Asian-Nordic shippers are paying additional fees of up to US$3,000 to carriers to ensure that they obtain containers on the basis of record high freight rates.
He said: “Carriers make us feel that using their boxes is a privilege. The shortage of boxes is the main driver that we have to pay ridiculously high prices, and at the moment they do put us on a heavy burden.”
The consultant said that the use of SOC will also help avoid charging shippers a large amount of extra fees at the destination port. "At present, the advantage of SOC to avoid demurrage and detention fees (D&D) is a huge business plan." Lehmacher said.
Lehmacher said that container shipping companies can also avoid disputes over demurrage and demurrage. The shipper using the carrier box will be charged D&D fee at the destination port after the free time at the destination (usually less than one week stipulated by the carrier). When there is severe road congestion, these hidden additional costs can quickly accumulate to several hundred dollars.
According to a research report released by Container xChange, after unloading at the port, the average time to return an empty container to the warehouse is 10 days. The report said that in the most congested port situation, this could easily be extended to 30 days or more, resulting in extremely expensive demurrage.
Last week, the US Federal Maritime Commission stated that it has requested container shipping companies serving Los Angeles, Long Beach and New York, as well as container terminals in the same port, to explain how they calculate demurrage charges.
In a survey conducted by the American Port Trucking Association, which represents the transportation and multimodal transportation companies of West Coast ports in the United States, it was found that 80% of the respondents charged more than $200 per container, and 18% of the respondents had D&D. The charge is more than $500.
In the normal market, the shipper can purchase "all-inclusive freight" from the carrier, which includes the supply of boxes, and once the container is opened and returned to the designated warehouse, there will be no more charges.
But now is far from normal. Recently, some freight forwarders and shippers have taken active measures to charter ships directly from Asia to Northern Europe in order to ensure their supply chain, which proves this.