What is the difference between a shipper owned container and a carrier owned container ??


  • There are 24.44 million TEUs carrying cargo around the world currently
  • Cargo is carried in a mixture of carrier and shipper owned containers
  • Customers are looking at using own containers on chartered ships

Opinion PieceIn the last 65 years, the ubiquitous shipping container has evolved from being just a dumb box to being a smart container capable of being tracked anywhere in the world, in some cases even to the bottom of the ocean and comes in different sizes and types..

As per Alphaliner, currently the top 100 container shipping lines in the world operate an estimated 24.44 million TEUs crisscrossing the world on an estimated 5,460+ container ships..

Of these 24.44 million+ TEUs, 11.39 million+ TEUs are owned by shipping lines like Maersk, MSC, CMA-CGM..

Off these 100 container shipping lines, Maersk owns the most amount of TEUs standing at 2.36 million+ TEUs and China United Lines owns the least amount of TEUs standing at 599 TEUs (China United Lines)..

These 100 shipping lines also handle/operate a total of 13.05 million+ TEUs which is on lease to them from various leasing companies like CAI, Cronos, Triton..


Off these 100 container shipping lines, MSC operates the biggest fleet of leased containers at 2.83 million+ TEUs and Dalian Trawind operating the smallest fleet of leased containers at 345 TEUs..

Since the numbers above has been indicated in TEUs, here is a simple explanation of what a TEU is and why is it calculated in TEUs..

The most common container lengths used currently are 20′ (20 foot) and 40′ (40 foot).. Since 20′ containers are the lowest common denominator and easier to calculate in relation to capacities and volume, the term TEU (which stands for Twenty-foot Equivalent Unit) has become 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′..

Whether owned or leased, collectively, the containers owned and leased by shipping lines are called “carrier owned container (COC in short)” or line owned container.. The term COC is not used much as in majority of the cases, the container used by the customer is the carrier owned container..

Although not included in the list of core carriers, a VOCC (Vessel Operating Common Carrier – also known as Shipping Line) or an NVOCC (Non-Vessel Operating Common Carrier) are also classified as carriers who also own/lease containers..

There is another layer of containers that are also in operation across the globe and that is a “shipper owned container“.. As the name suggests, when a container is owned by the shipper, it is termed as a Shipper Owned Container (SOC in short)..

The difference in definition between the two needs to be looked at a bit deeper..

 

Why on earth would a shipper want to own a container..??

So why would a shipper want to own a container when seemingly the carriers have plenty of containers and also considering that a 20′ container can cost anything between $ 3000-4000 and a 40′ container can cost anything between $ 6000-8000..??

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 may be generally on a project basis.. For example, let us say an exporter has an order to ship cargo to set up a power plant or a mine in a remote area of Mali..

Usually in such remote projects, the receiver may not have the space or facilities to store the cargo and may use the container as a storage location..

If the shipper uses a carrier owned container, the line will need to 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..

MoneyA simple calculation.. Say the cargo for the project needs to be stored for a 100 days and the carrier charges demurrage of $45/day/20′ container..

The receiver may end up paying $4,500/20′ as demurrage to the carrier whereas they could “buy” a new container for between $3,000-4,000/20′ (a used container will be lesser) 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 and because they trade in many areas, it may be worthwhile for them to own their own containers..

However, as far as the main carrier is concerned, a container owned by an NVOCC 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 owned container..

 

Which customers will use a shipper owned container..??

As mentioned above, a lot of SOCs are used by project management and project logistics service providers or big engineering firms who used these containers..

However, COVID-19, its impact on global trade and the resultant port congestion, space crunch that all customers are currently facing have forced some of the big BCOs and freight forwarders to buy their own containers and charter their own ships..

It has been widely reported that BCOs like Walmart, Home Depot have chartered ships to handle their own shipments instead of having to depend on the shipping lines and avoid exorbitant shipping freight rates..

Ikea recently became the latest BCO to confirm that it will also start to ship its own goods on its own containers using chartered vessels..

 

How would one identify a shipper owned container..??

Are there differences in the markings on a container whether it is a shipper owned container or a carrier owned container..??

A carrier owned container will have all ISO and BIC related 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..

shipper owned container and carrier owned container

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.. The carrier will also deregister it from their fleet..

So if you are looking to buy a container or ship a shipper owned container, remember above..

 

Conclusion

With all the container shipping lines hard pressed for space and equipment, and no immediate solution in sight for the current crunch with predictions for the end of this capacity crunch ranging from 1st quarter of 2022 to half year of 2022, it is very likely that more and more shippers will go the route of Walmart, Home Depot and Ikea in chartering ships and operating SOCs or even piggy back on these BCOs..

There may be times when these customers may have to use the shipping services of the incumbent carriers to ship their containers which will then be classified as shipper owned containers.. It is understood that some shipping lines are encouraging shipper owned containers currently as they run out of inventory which may be stuck in various countries around the world..


Article republished after some critical updates

*** End of Article ***

38 thoughts on “What is the difference between a shipper owned container and a carrier owned container ??”

  1. Excellent article, very helpful…
    Questions- what prevents a shipper from purchasing a used container and then shipping it with the same container number and CSC plate? Where is it required to be changed? Is that a carrier rule or is that mandated by customs authorities? I’m pretty sure there are a lot of retired containers in circulation aboard vessels, correct?
    If someone is only purchasing one container, are they expected to register for a fresh prefix with BIC? That’s expensive. One of the sales agents referenced a “neutral number” that could be obtained…what is that?
    Having trouble finding answers to these questions so any assistance would be greatly appreciated- Thanks!

    Reply
  2. Hi,

    i have one import shipment & shipping line not releasing DO because BL showing SHIPPER OWNED CONTAINER.
    Shipping line asking for LG copy or B/E with container duty paid challan copy. we have already requested to shipper but still not received. can we check this online or any other solution. This is import shipment & POD is Mundra.

    Reply
    • You should contact DG Shipping in such cases to seek their assistance. Also, speak to the import officers at the custom office in Mundra. They will provide you transparent information.

      If you have not purchased the container, then it seem to be a system generated error.

  3. we used SOC and COC on the same Maersk vessel – should we get one bill of lading for each type of containers or we might have one b/l from Maersk with SOC and COC containers ??

    Reply
  4. Kindly advise whether shipping lines ocean freight charges for SOC are lower or higher than COC from Shanghai to India.

    Reply
  5. I have an order coming in a 20-foot container to the USA. The price of the goods includes the container so I own it. How do they deliver the full container to my office? I assume I can not forklift off 20 tons.

    Reply
  6. Hello Hariesh
    Good Time to you

    if a container is owned by a NVOCC carrier (from a leasing like TEX), is it mandatory for that NVOCC co. to change the container marks and number or not?
    cause I see lots of containers with mark TEX (for example: TGHU3956656) that is owned by NVOCC co.

    Reply
    • Hi Indry, yes they have to.. That is the meaning of SOC because it is owned by the shipper and not by the carrier.. So Carrier may have a separate set of charges for containers that are not their own..

  7. Greatly appreciate your article.
    I am interested in purchasing three new or 1 trip 40 ft HQ. I am having a hard time finding a Freight Forwarder that will arrange transport from the factory in China to my home port of Wilmington, NC.
    Any suggestions

    Reply
  8. it’s detail explain the differences between the shipper owned container and carrier owned container. very few shipper know about this

    Reply
  9. A good article to explain the differences between the shipper owned container and carrier owned container with summary for that.

    Many thanks.

    Reply
  10. Very good article, but sometimes is more difficult to indentify a SOC and COC – All carries have contracts with Leasing cos. and when they use those units its impossible to identify if unit is SOC or COC. The only way is check unit number in Leasing web site and verify to which co. its leased to.E.G – unit TCNU5143015 – belong to TRITON Leasing co. This specific unit was leased to PIL as from Jul/2013 until May/2015 – and now is leased to OOCL (under their contract)- as per Leasing’s web site.
    Nowadays Leasing cos. are working with FFW / NVOCC and a few exporters (depend on the qty of unit required).
    In view of above is very difficult to confirm based on unit number – its alway important to check docs. that normally inform SOC units – it there is no remark in the B/L its considered COC.
    Once again very good article, congratulations Hariesh Manaadiar.

    Brgds
    Denise Mendonça

    Reply
    • Hi Denise, yes that could be a problem with short term leases especially.. If it is on long term lease the shipping line usually puts their logo decals in order to help identify which ones are their boxes..

  11. Thanks for the script

    Also note that in some countries , you are required to pay for Custom import duty for the container as well as the cargo in it., But the advantage is that the shipping line will not charge for detention and demmurage.,but you can manueover the import duty on the shipper owned container by changing the prefix number to another alphabet like QSGU ,PSOU ETC.

    Reply
    • Hi Femi, yes, certain countries may charge duty on the container, but as far as I know, these countries only do that if the shipping line sells or scraps the containers without advising customs.. In such countries the container is considered part of the cargo and not as a CTU and in order to ensure that Customs doesn’t charge duty on the container, the shipping line needs to file the inward and outward movement of the container with Customs whether it is full or empty..

  12. I see that shipper owned containers do not have container numbers ( with carrier prefix) and can not use previous container number. so how is tracking/EDI follow up is managed for this type of containers ?
    thanks

    Reply
    • Hi Erkan, whether it is COC or SOC it is important and crucial to have a container number for the purpose of tracking.. As I mentioned, in case the shipper buys a container that is already in circulation, they will need to change the prefix and the check digit of the container before they use it as their own container.. What happens in a sale like this is that the shipping line and shipper sign a certificate of sale/purchase handing over the ownership of the container to the shipper.. Once the shipper changes the container prefix and check digit, they can track it as a normal container.. In most cases even if it is booked as an SOC, the carrier will track the container as long as it under their possession as part of the carriage..

  13. Dear Hariesh
    Good Time

    very good article with thanks.
    some questions are in my mind…

    1- How about CSC Plate for SOC? are shippers have to take a new csc plate with the new container number?

    2-is it a common and specified customs formalities at destination when cargo and its soc cntr arrive at POD?

    3-can shipper and cnee use a soc for several future shipment? how?

    Reply
    • Hi Saeed,

      1- How about CSC Plate for SOC? are shippers have to take a new csc plate with the new container number?

      Reg the CSC plate, as a consequence of the CSC regulations, any container used for international transport must be fitted with a valid safety approval plate.. The CSC regulations assigns responsibility for examinations and maintaining of the inspections to the container owner.. So in the case of the container being sold by the line to the shipper, the shipper is responsible to maintain the integrity of the container including updating of the owners information once the sale is done..

      2-is it a common and specified customs formalities at destination when cargo and its soc cntr arrive at POD?

      Presume you are asking if there are any specific customs formalities for SOC.. Depending on the country, the fact that the container belongs to the shipper must be highlighted in the manifest and in most countries the receiver may need to advise customs what happens to the container after it is unpacked – whether it will be reused for exports or scrapped or redelivered to some depot at the destination etc..

      3-can shipper and cnee use a soc for several future shipment? how?

      Yes, if the business between a shipper and consignee is regular or reciprocal, they can always reuse it as a SOC for several shipments..

  14. Dear Hariesh

    I was working in the Insurance Industry and suddenly switched to Logistics.I was totally ignorant of this industry .
    Your blogs are the best educational blog which I am entrusting and has even asked my juniors to read .

    Thanking you for your tremendous support.
    Regards

    Reply
  15. Good article as always Hariesh.
    In the example you are not considerati g that, most of the time, shipping lines charge more for SOC containers ocean freight (even the double!). It happen to me sometimes from Italy/Spain mediterranea to West Coast South America.

    Reply
    • Hi Fabio, yes this is possible in a lot of the cases.. This is because the shipping line also has their own containers that they would like to use so if they are giving space on a ship, they would rather give it first to clients show use the carrier owned container.. If someone wants to use that space to ship SOC, then the shipping line needs to be compensated for the cost of non-utilisation of their own container..

    • article is highly appreciated.pl mention if we shipped a our own container to dubai
      and cleared by importer. what is the situation of this container.who will keep it or return
      to exporter as empty or stuffed other s cargo.is any rent collected and paid to the owner of container. any charges is collected as return charge

    • Hi KK.. This depends on the arrangement between the shipper and consignee.. Some shippers buy the container and advise consignee to keep the container or get rid of it after unpacking and in these cases the shipper may include the cost of the container in the product price.. The consignee on the other hand may sell it to recover his cost.. In some cases where there is reciprocal business, the shipper and consignee may use the container(s) back and forth..

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