What is the difference between a shipper owned container and carrier owned container..
Well, from these two terms, the difference should be pretty obvious – a shipper owned container is a container owned by the shipper of the goods and a carrier owned container is a container owned by a carrier..
But the question may be a bit deeper than just the difference in definition between the two..
First and foremost let me jog your memory about what is a shipping container..
In simple terms a shipping container or a freight container is a solid metal box of a standard size and specification designed to carry goods around the world on board ships..
It is referred to as Container, Box, TEU, FEU, Equipment, Units etc and comes in many sizes and types such as 10′, 20′, 40′, 45′, GP, HQ, OT, FR, RF half-height etc etc etc..
The shipping container is universally hailed as one of the greatest inventions of the modern world, one that completely changed the way in which business has been done since the 20th century and really and truly made the world a smaller place and the one true architect of Globalization..
The shipping container celebrated its 60th birthday in 2016 and has become the standard for transportation of goods and the world’s shipping container fleet is said to be in excess of 35 million TEUs..
For those who might not understand what a TEU is, here is a simple explanation.. The most common container lengths used currently are 20′ (20 foot) and 40′ (40 foot).. Since 20′ containers being the lowest common denominator and easier to calculate in relation to capacities and volume (thanks for the edits Andy Connell), the term TEU (which stands for Twenty-foot Equivalent Unit) became an industry standard reference..
The container ships that carry these containers are designed and calibrated in terms of TEUs and the carrying capacity of a container ship is defined in terms of TEUs.. Since TEU refers to a 20′, naturally a 40′ container is considered as 2 TEUs because a 40′ is twice the length of a 20′..
As per Alphaliner, as of the 10th of January 2018, the top 100 container shipping line’s capacity stands at 6,057 active ships including 5,198 fully cellular ships carrying 21,622,093 TEUs of which 21,213,599 TEUs are fully cellular..
Do the container shipping lines actually OWN all the 35 million odd TEUs in circulation..?? Definitely not.. So who owns these shipping containers..??
A shipping container maybe owned by a
- Carrier (Maersk Line, MSC, CMA-CGM etc)
- Container Leasing Company (Tiphook, Cronos, Triton etc)
- NVOCC (Expeditors, Blue Anchor Line etc)
- Shipper (John Deere, Cisco etc)
When the container is owned, operated or leased (from the above mentioned Container Leasing Company) by the carrier , it is termed as a Carrier Owned Container (COC in short)..
A carrier may be a VOCC (Vessel Operating Common Carrier – also known as Shipping Line) or an NVOCC (Non-Vessel Operating Common Carrier)..
When the container is owned by the shipper, it is termed as a Shipper Owned Container (SOC in short)..
So why would a shipper have their own container if the carrier has plenty of containers and also considering that a 20′ container can cost anything between $1300-2000 and a 40′ container can cost anything between $1700-3000..??
Well there are several reasons for that and it is also important to consider who the shipper is.. For a carrier, a BCO (Beneficial Cargo Owner – in other words a direct exporter), a Freight Forwarder or an NVOCC may be a shipper..
A direct exporter or shipper may own one or more containers, but it is generally on a project basis.. For example, let us say an exporter has an order to ship cargo to set up a plant or a mine in a remote area of Azerbaijan..
Usually in such remote projects, the receiver may not have the space or facilities to store the cargo till they use the cargo to set up the project.. If the shipper uses a carrier owned container, they may charge the receiver demurrage or detention for keeping the container more than the allowed free time..
In a lot of cases where the shipper/receiver know that the cargo may need to be stored for a longer period, they may find it cheaper to rather buy a container, pack it and ship their cargo than use the carrier’s own container and pay for demurrage and detention..
A simple calculation.. Say the cargo for the project needs to be stored for a 100 days and the carrier charges demurrage of $25/day/20′ container..
The receiver may end up paying $2,500/20′ as demurrage to the carrier whereas they could “buy” a container for between $1300-2000/20′ which makes more commercial sense for them especially if they know that the cargo will need to be stored for that long..
Apart from this, in a lot of projects, after unpacking, a container could be transformed into a site office or living quarters for some of the on-site staff..
An NVOCC may also own and operate their own containers but as far as the main carrier is concerned, it is still a “shipper owned container” for them, because for a carrier, any container that does not form part of their owned, operated or leased fleet is considered to be a shipper own container..
So is there any difference in the markings on a container whether shipper owned container or carrier owned container..??
YES, there should be..
A carrier owned container will have all its usual markings as shown in below image.. A shipper may buy their container from either a carrier, a container conversion company, or a leasing company..
If a shipper buys a container from a carrier, a shipper is expected to replace the decals of the original container especially the container number (prefix – from HLXU to NONE and check digit – from 9 to 6) as shown in below example..
This change is mandatory because the ownership of the container has changed and it therefore cannot have the same container number and logo as the original owner..
So if you are looking to buy a container or ship a shipper owned container, remember above..
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