Container Glut Won’t Dent The Financial Appeal Of SOCs

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Shipper-owned containers (SOCs), notwithstanding the surplus of machinery and the decline in freight rates, can be less expensive to rent than carrier-owned containers, as reported by The Loadstar.

Increase in SOCs

According to Consulting Container Xchange’s annual survey, this is likely due to the lack of equipment in inland locations and the fact that SOCs are not subject to unforeseen demurrage and detention fines.

Similar to its earlier studies, Container Xchange employed covert means to learn the SOC and COC rates for transporting logs between European ports and China’s Ningbo port.

82% of the carriers contacted could offer both SOC and COC rates; the remaining 18% could only do so because they did not use or were not familiar with SOCs.

Wan Hai, Yang Ming, HMM, TS Lines, ONE, SITC, Sinokor, Tailwind, SeaLead, Transfar, Emirates, and Samudera were among the liner operators open to SOCs. 36 of the forwarders contacted were aware of SOCs, which is a threefold increase from 2019.

Major benefit

While certain COC estimates may appear alluring at first glance, shippers are actually given all-inclusive pricing for their ocean freight that takes into account both the utilisation of the container and the available space aboard the carrier’s vessel. The SOC quote, though, only applies to the slot.

For both SOCs and COCs, Container Xchange provided a quote of $500 for a 40-foot container but added: “One of the biggest benefits of using a SOC is avoiding detention fees, while COCs are prone to them, especially when shipping to hinterland locations or when there are expected delays from geopolitical events.”

Shortage of containers

Container Xchange stated that “carriers should be more than willing to get more of their own equipment into that place” if cargo is sent to a location where there is a shortage of containers. “In that situation, you ought to be able to acquire their equipment for a reasonable price, making COC the preferable option. But, the carriers and container owners could charge you more if your shipment ends up at a site with excess capacity. They have no interest in spending money on storage or moving the containers to the final port. It might be simpler to carry your own container if you decide to go anyhow so the carrier doesn’t have to deal with it.”

The equipment situation at your pick-up site is the same. Carriers are prepared to give them to you at a greater price if you want to convey cargo from a container surplus site since you are preventing empty container moves. If you help NVOCCs move their empty equipment, you should be able to negotiate a favourable deal because even they must pay shipping lines to move empty containers.

Of the 50 carriers that Container Xchange looked into last year, Ningbo had one of the lowest average D&D fees ($245 per container after day 14), yet the carrier supplying this price is known to charge an average of $501 across all ports.

Decreased cost of employment 

Chinese forwarder Pudong Prime, which participated in the poll, claimed that the decreased cost of employing SOCs allowed the business to increase the volume of goods it moved.

The statement read: “Low spot rates, pick-up fees, and daily fees were the main drivers of our business last year. Also, our clients had to retain our containers for two to three months because the majority of warehouses needed equipment. This played a significant role in our performance improvement in 2022.

Qingdao Shengyun, another Chinese forwarder, disagreed. According to a spokesman, forwarders provide several SOCs in the market nowadays. Only those that export in significant quantities will be given their own containers, as this will enable them to save money on transportation. The liner operators can control the potential surplus of COCs by returning leased boxes.


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Source: The Loadstar


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