Growing Pains – The Rising Costs of Empty Containers
Transcontinental and intercontinental shipping, either by land or by sea, always make use of shipping containers that organise and protect cargo throughout the journey from source to destination. But what most people don’t know is that these shipping containers are often taken out of service after three to five trips for inspections, maintenance, or repairs, and these inspections take quite a bit of time. These lengthy inspection processes, combined with the short service life of a brand new shipping container and the sheer number of these containers in circulation results in them ending up sitting idly in massive container parks. This pile-up increases waiting times from having to move these containers around, in turn increasing logistics costs.
Container logistics advocacy group Container Transport Alliance Australia (CTAA) notes that this pile-up is caused by bad practices from shipping lines, and warns that, if this continues, container transporters across the country would take a huge hit to their business. CTAA member companies convened in a meeting to discuss problem areas in empty container management. In a July 2018 press release, CTAA director Neil Chambers revealed a list of these problem areas they want shipping companies to help solve.
Direct De-hire to Wharf
Direct de-hire to wharf is an order that de-hires or decommissions shipping containers at the shipping port without redirecting it to an external location, such as a dedicated empty container park. This is a common practice among shipping lines as it lets them get rid of shipping containers without having to go through the trouble of redirecting them, which allows them to save a bit of money on the cost of moving those containers. This, however, results in an unwanted build-up of empty containers at the port, which impacts the port’s operating capacity. To have this issue resolved, the CTAA wants to negotiate with shipping companies to stop direct de-hire to wharf, or alternatively impose extra fees on the shipping lines to offset the additional costs.
Shipping containers are moved around at the discretion of the shipping line but at the expense of the shipping container transporters. And sometimes shipping companies have containers moved on short notice — for example, a container set for direct de-hire at the port could have a sudden redirection order to an empty container park. In other cases, certain empty container parks are instructed not to accept redirected containers which were initially given an order for direct wharf de-hire. That means if a container ends up fulfilling such a case, it would cause planning issues and incur higher logistics costs as the containers have to be redirected to an alternative location. The CTAA notes that shipping companies should stop these practices.
EDI, or Electronic Data Interchange, is a protocol that allows document and information sharing and is often used in the multinational corporate level. The combination of EDI and container tracking systems such as Containerchain makes logging inventory and redirecting shipping containers at container parks or ports much more streamlined.
Unfortunately, this is not exactly the case in the real world. Since EDI information on each container must be entered into the system by the shipping lines themselves, container transport companies have to deal with the paperwork if a container’s EDI data uses a nonstandard data format or lacks the data in the first place. This means container transport companies have to supply truckers with an electronic or physical delivery order document, and each step of the de-hiring process must be processed manually.
In Sydney, about 30% of all empty containers do not have their EDI data encoded into the tracking platforms. Chambers hopes to see shipping lines contribute more effort into encoding the EDI data of all shipping containers passing through Sydney to minimise delays and avoid unnecessary costs.
To reduce container pile-ups, shipping companies usually have a 5- or 7-day grace period for a shipper to load an empty container and send it to the port, or for a receiver to unload the shipping container and return it to the port. If the shipper or receiver fails to respectively load or unload the container within that time, detention charges are incurred. And because of the delays caused by bad practices by shipping lines, container transporters often have containers delayed, which increases the risk of breaching the detention grace period.
With the various issues that plague container transport firms, the CTAA hopes to begin negotiations with local and international shipping businesses operating in the country. Reports from the CTAA’s member companies reveal the issues brought about by shipping lines’ cost-cutting measures, and state that these cost-cutting measures are only saving them money and hurting the container logistics industry as a whole. The CTAA believes that these practices should be rectified as soon as possible to benefit all parties in the logistics industry.