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Global container surplus: changes in equipment strategies

In just two years, lots have changed in the container market, one issue at a time the field faced all the issues, and now yet another is knocking at the door of the container shipping world. Already foreseen two years ago, the surplus of containers is now fully present. If during Covid-19 global trade was facing a container shortage – mostly due to labour shortages and yards bottlenecks – now it is facing a surplus of about 6 million TEUs according to Container xChange. The reasons are easily attributable to the pandemic boom, where even scrapped containers were exploited not to lose one single shipment at those impressive freight levels. The requests for new-build containers rocketed, meanwhile, all the trapped equipment from the logistics bottlenecks is available again. With falling demand and lower freights, the market is now oversaturated.

The free-falling demand for new build containers and the end of the global container “shortage” is also affecting the equipment management for both Carriers and Freight Forwarders.

The market conditions led to a renewed life for the SOCs (shipper-owned containers). During the last few years, thanks to the pandemic perfect storm, COCs (Carrier-owned containers) were the only option since carriers were systematically refusing shipper-owned equipment. The last report released by Container xChange confirms the opposite trend: Asking for a quotation to the top 50 carriers, 42% replied, of which 82% offered SOCs shipments.

An excess of containers around the world means more opportunities to buy at a lower price which makes this the perfect time to invest in containers. SOCs were once an older fleet, this new build equipment however appears as an opportunity for the Forwarders to revamp their equipment, making the SOC offer more attractive, convenient and competitive.
Non è stato fornito nessun testo alternativo per questa immagineSource: Container xChange

SOC permits lower costs and reduces the risk of Detention fees from the carriers, especially in the current situation where several countries around the world are still suffering from poor land transportation offers (lack of truckers or chassis especially), leading to potential bottlenecks and Demurrage and Detention charges. While freight rates are back to normal, the D&D costs are still threatening freight forwarders, still rising due to diffused Container Yards bottlenecks that will worsen this year as soon as the last wave of new-build containers will enter the market. On the other hand, shipper-owned containers still require a bigger effort from the forwarder side, involving several documents and information regarding the container (Convention for Safe Containers), but also increases the risks faced by them in case of damaged equipment or total loss.

Container Equipmentsurplus Shipping

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alberto.testino1996

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