Container Transportation Chain
Container imbalance is one of the biggest talking points in the industry.
Companies export, import, or reposition containers. The transportation should always be moving, when one leg of the transport is finished another should pick up. It is irrelevant if a container is empty or filled, the overall costs remain almost equal. The reason behind this is that the capacity a container needs to be transported does not change whether it is full or not – it takes the same amount of space either way. The longer it takes for a specific leg of the transportation chain to pick up where the last one left off, the higher the total cost are. A container that sells for the highest price with the lowest cost, after being repositioned to a location, is the most profitable one.
When a container reaches its destination it is unloaded and ready to return. However, often there is no cargo available or found for the return trip is a result of this the container returns empty.
Global Container Inventory
The number of containers in the world deviates by source, however, most experts agree that the number is somewhere around 38 million TEUs. Additionally, 2 million TEUs worth of containers are manufactured yearly. The demand for containers clearly remains high, and more containers are made continuously.
Approximately 2.5 to 3 million TEU of containers are being stored empty, meaning that close to 10% – depending on the numbers one uses – of all containers and 20.5% of global port handling are empty containers. It is difficult to count the actual amount of all containers worldwide. No entity or person is responsible for keeping count of them, therefore we have to rely on estimates and assumptions.
Cost of RePOSITIONING and its Effects
What is the cost of handling these empty containers? Is it really that significant?
According to Jean-Paul Rodrigue, a Canadian scholar of transportation geography, shipping companies spend up to $110 billion yearly to manage their container assets – which includes purchasing, maintenance, and repairs. Of that amount, $16 billion is used solely for repositioning empty containers, so the costs for empty containers count for 15% of overall operational expenses.
What causes this huge amount of income being used for empty containers is the fact that the containers have to be stored when they’re not in use. Companies store them either in a container terminal or empty depots, which costs money.
Because of this, sometimes the owner of the container chooses to send it empty rather than wait for it to possibly be loaded. Repositioning a container, for example, to Asia is often almost four times more profitable for shipowners than keeping it waiting weeks near a port inland.
To cover all the costs that pile up, shipping companies impose surcharges that affect full containers on some export routes. The range differs between 100 to 1,000$ per TEU. As consequence countries face higher costs for imported goods.
Why Going Digital Might Be the Solution
Having inefficient business practices is a substantial cause for the number of empty containers.
20% to 40% of the time a container is not visible to its owner. While containers are being transported , it is not always possible to track their location. This is further prompted by trade imbalances. When a region has more import than export or more export than import, the number of containers does not stay level. The former causes the affected area to have more empty containers, while the latter creates a shortage of containers.
Usage preferences are also a factor affecting empty containers. For example, shipping lines use containers to market their brand name. Both shipping lines and leasing companies – that own most of the worlds containers – are often reluctant to share container locations or quantities because of the competitiveness of the industry.
Several electronic business systems have been developed to address the container imbalance problem, but we are still far away from solving all the issues. After the usage of the internet got more regular some blindspots involved in the transportation were eliminated since it is easy to exchange information through online channels. A way to improve the business practices of a company is e-business, which is “any form of business that depends on extended use of info technologies and the support of info systems.” E-business is a means to improve productivity, cost reduction, automatization, better customer relations among other things.
Another viable way to make repositioning of empty containers easier and more manageable is digital marketplaces. With these platforms, one can find containers anywhere, which are being sold by companies from all continents. For example, BOXXPORT.com, is a digital marketplace that allows you to save on transportation costs and produce less CO2 emissions by selling the containers where they are. By using BOXXPORT you can easily buy and sell containers with just a click.
Key Takeaways
In conclusion, container imbalance is a difficult topic with many possible solutions and many ways it might be affecting many businesses in the industry. Mostly the imbalance with containers is because of trade imbalance and usage preferences, the former of which is the more solvable issue.
Digital marketplaces and e-business could be a way to make repositioning empty containers easier by selling them on the spot. Both of them rely on the internet, which is continuously evolving, and new things are being invented all the time. Maybe in the future, an actual solution will emerge for container imbalance.
Sources:
Internet in Container Imbalance Management, Edvard Tijan, B.Sc. (2008)
The Geography of Transport Systems, Jean-Paul Rodrigue, 4th edition (2017)
https://www.greenport.com/news101/Products-and-Services/reducing-empty-container-costs)
Leave a Reply