It is estimated that in 2017 alone, 1.83 billion tons of cargo were transported in containers, and global demand and supply continue to rise. In view of this, we often see mountains of containers in storage yards and facilities, as well as on ships and transportation vehicles such as trains and trucks.
A common question that naturally arises is, who owns all these containers?
To give you a short answer, containers are mainly owned by shipping companies and leasing companies. However, it is not uncommon for freight forwarders, NVOCCs and shippers to own containers as well.
Ownership of a container is usually defined as a “carrier-owned container” (COC), which is a container owned by a shipping company, or a “shipper-owned container”, aka, a container owned by a leasing company, a non-vessel carrier, and a freight forwarder.
There are 5 different entities that usually own containers in the shipping world in total! Let’s explore them in more detail.
1. Containers owned by shipping companies
A large part of the containers are directly owned by shipping companies, also known as ocean carriers. This is why this type of container ownership is called carrier-owned container, or simply COC.
The reason shipping companies own containers is that it allows them to directly control supply. They can then match this supply with their total vessel capacity and overall container distribution. This allows them to provide shippers with a “full price” for moving goods from one location to another.
However, this will also bring some challenges. Due to the huge route network of shipping companies and unpredictable global demand and supply patterns, containers need to be positioned across regions accordingly.
This may mean that certain shipping companies may not have container availability at certain locations due to insufficient supply. Insufficient supply of containers may result in air freight or equipment shortages.
Here are some of the largest shipping companies that own containers:
2. Containersowned by shipper
On the other hand, the shipper can also own the container. However, they only account for a small part of the total number of containers.
The reason most shippers are unwilling to directly own a container is because of its associated costs and impracticality. Containers need to be maintained, repaired, repositioned and purchased. For them, it is much more convenient to transport goods directly from the carrier at all-inclusive rates.
In some cases, it makes more sense for the shipper to directly own the container. An example of this is when their cargo has special requirements (usually project cargo), so the container needs to be equipped or customized in some way.
Another reason is that they or the consignee are located in remote areas, or their goods need to stay in a certain place for a longer period of time. In this case, owning containers can help avoid the high detention fees charged by shipping companies.
You should also note that shipping companies prefer to use their own containers. Therefore, the shipper usually has to pay the SOC fee to the carrier in order to use the container owned by the shipper.
3. Containers owned by leasing companies
The largest share of container ownership belongs to the leasing company. As of 2017, leasing companies owned approximately 52% of the global container population. This number is also expected to increase in the next few years.
Container leasing companies supply and own containers for a variety of reasons. Due to trade and container imbalances, some shipping companies may not have enough containers on hand to hand over to shippers.
This means that when shippers book shipments with the carrier, they do not have the equipment available to the shipper. In this case, shipping companies lease containers from leasing companies to offset equipment shortages.
There are other reasons. Some shipping companies are too small to directly purchase and maintain containers, so they are more willing to lease containers. In rare cases, some shippers will also rent containers to temporarily modify them, or if some carriers face equipment shortages.
4. Containers owned by non-vessel carriers
Non-vessel carriers (NVOCCs) can also own containers. Since they basically act and operate as carriers, even though they do not have their own ships, they may want to do this for several reasons.
If they serve a certain type of market or market segment that requires a dedicated container, owning the container allows customization. NVOCCs sometimes have project cargo containers with unique dimensions and modifications, so general dry cargo containers from shipping companies are not enough.
In rare cases, a non-vessel carrier may have a long-term business relationship with a shipper requesting a certain type of container. NVOCCs will treat this type of container ownership as part of their investment to facilitate the transportation of their customers.
Here are some well-known non-vessel carriers who own containers:
- Kuehne + Nagel
- DHL Global
- DB Schenker
5. Containers owned by freight forwarders
In essence, freight forwarders organize cargo and facilitate the flow of documents between parties. In this sense, certain NVOCCs such as Kuehne + Nagel, DB Schenker or Expeditors are both carriers (NVOCC) and freight forwarders.
Therefore, these types of companies own containers for the same reasons mentioned above. Companies that specialize in freight forwarders can also own containers.
However, container ownership by exclusive freight forwarders is extremely rare. This is because generally larger freight forwarders also tend to act as carriers for their customers (shippers and consignees).
How to identify the entity that owns the container?
There are several ways to identify container ownership. The easiest way is to simply look at the side of any shipping container. Many times, you will be able to see the logo of the owning company.
On the other hand, you can also identify container ownership by identifying the prefix of the container number at the top or door. According to the ISO standard (ISO 6346), all containers must have a container mark made of a prefix and a serial number.
For the example below, you can see that this container is owned by Hapag-Lloyd, as indicated by the prefix HLXU. Each container owner will be assigned its 4-digit prefix.
Should you own the container?
Whether you or your business should own a container depends on the nature of your business and your requirements. Generally speaking, shipping companies, leasing companies, non-vessel carriers, and freight forwarders have a financial and practical meaning to own containers, because doing so helps their core competitiveness.
Regarding the shipper’s ownership of the container, it depends on many aspects. Let’s take a look at some of the pros and cons of the shipper’s direct ownership of the container.
- Control container supply
- Ability to customize the container
- Faster turnaround time
- Lower shipping costs
- Constant maintenance
- Higher overhead costs
- Operator SOC fees usually apply
- Not very practical