An innovative solution for empty container crisis
Date: Thursday, March 21, 2019
Source: Shipping and Freight Resource
In 2017, global seaborne trade reached 10.7 billion tons.. Of this, containerised trade accounted for 1.82 billion tons..
Containerised shipping is an important component of global trade and currently there are over 22 million containers operating around the world..
The humble and ubiquitous container which was created in 1956 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 Globalisation..
But, as much as it is important in the global trade, to many ports around the world, empty containers seem to have also become an annoying fact of life..
This is because they are taking up valuable yard and stacking space in certain ports.. Especially ports which have a big trade imbalance..
Full import containers are coming in, but there is not enough export cargo going out and therefore empty containers are piling up..
Even as recently as February 2019, it has been reported that the Manila International Container Port (MICP) is facing its worst space crisis since 2014..
About 8,000 empty containers are currently staying at the container yard of the MICP but according to Customs Commissioner Isidro Lapeña, these empty containers have been there for more than 30 days, prompting Customs to limit the allowable stay of the containers inside the yard from 120 days to 90 days “to free up space on the port container yards..”
This is not only creating problems for the port, but also for customers who are now suddenly told that they cannot return empty containers to the port like they used to..
The port authorities, its stakeholders including terminal operators and customs have arranged for the empties to be returned to various private/shared depots outside the port..
While this is a solution, it brings with it, additional problems..
Shipping and Freight Resource got in touch with some of the customers in Manila who said “There is a big problem with congestion in Manila.. Some of the shipping lines are asking us to return empty containers to depots outside the city to areas like Angat Bulacan..
Some of these areas are quite far away and truckers charge additional trucking cost of almost USD100/- per container to return the boxes to these depots and this cost ends up on our table, although the issue is not created by us..
Lines and the Government need to find alternate solutions for these issues as these additional costs are affecting our businesses..”
Lines charge demurrage and detention charges based on the date of return of empty container and when the depots are full and customers are unable to return the empties in time, they are also asked to pay these additional demurrage and detention..
So, for the customers it is a double headache – in the form of additional trucking costs and also additional demurrage and detention..
The issue of congestion caused by empty containers is not unique to Manila.. Countries like Kenya, Nigeria, Côte d’Ivoire, UK have all experienced port congestion due to empty container excess..
One of the solutions available to the shipping lines is to reposition empty containers from these surplus areas to demand areas and while this may assist in relieving the yards of space, it may not be quick enough as the ships are also restricted in terms of space.. Additionally, for each empty container that is loaded from a port, the shipping line may be losing revenue on a full box that could be loaded in that same space at the next port..
Loading of empties is also an expense for the shipping line as they still have to pay for transportation, Terminal Handling Charges, documentation etc involving administrative inputs from the office staff..
Not an ideal situation at all for customers or lines..
But there could be a solution and an innovative one at that..
A container that collapses from a width perspective with a 4:1 ratio which means 4 of these empty units can be efficiently collapsed and combined to form a single unit of the same ISO container dimension..
The COLLAPSECON®, as it is called, is a 40’ high cube container and the brainchild of Nicholas Press, a former Strategic Logistics Officer in the Australian Regular Army, currently CEO of CEC Systems..
Once combined, the space, handling and transportation of this system (i.e. 4 empties combined) can be reduced by up to 75% in comparison to a standard container..
The container is fully CSC certified whether it is a single unit or when combined as a set of 4 and therefor meets ISO container standards/dimensions..
The global shipping and logistics industry is said to be spending close to $30 billion annually as costs for storage, handling and distribution of empty containers around the world..
As per industry estimates, empty container movements across the globe accounted for:
- 15% of all box movements in the US
- 14% in Latin America
- 29% in Europe
- 16% in the Middle East
- and 25% in China
As per JOC, between 2010 and 2017, Los Angeles saw an increase of 35.2% in empties while full containers only increased by 13.8% in the same period..
At Long Beach, empty container volumes increased 40.6% while full container volumes grew 13.7% between the same period..
This collapsible container is reported to allow for a 25% reduction in the transportation cost via road, rail or sea and a 25% reduction in the storage costs at the depots or ports..
This seems like an ideal solution especially in congested ports and countries where customers are forced to fork out higher transportation and storage costs..