Richard Butcher is a senior manager at the Bulk Container Group and former port technology consultant. Richard gained extensive maritime knowledge over the last 30 years in container logistics, market analysis studies, sales and business development and technology audits.
Richard published white papers that focus on “Smart Ports”, “Global Container Pooling” and “IoT asset tracking” and found now the time to talk to us about the tremendous storage charges shipping companies pay for end of life containers. You can get in touch with Richard on LinkedIn.
As an expert in port technology you just sold Kale Europe to the Bulk Container Group after only 11 months. Why did you choose to sell, and how did your role within the company change since then?
The Decision to sell Kale Europe was mainly due to the synergies we found in talking with the Senior Management of the Bulk Container Group. We established solid areas of collaboration with the skills and mindset that Kale brought to the table along with our extensive industry network and access to technology resources.
Kale wanted to engage and align with an organization that we are creating a stable re-occurring business model within a radically changing Global Container market. Bulk Container felt that our collective experience and synergies would be valuable in strengthening their senior management team they also wanted to bridge the Pond with a European operation that could help them develop and grow their business model.
In your latest LinkedIn update, you mention that $8 billion is collectively spent by various operators in storing agent equipment. Why is that so, and how can you help leasing companies and liners save costs?
Indeed, the Global Container (Leasing and Ocean Carriers) spend a conservative $8.0 billion per annum on the storage of end of life containers. Many operators find the challenge of selecting the ideal drop off locations for these containers -with the steady flow of new containers coming into service the problems continue to be challenging. The Operational and Disposal Teams are having to assess what demand they might have from a particular region – but most of the times they Stick a finger in the air to check which way the wind is blowing and sometimes based on calls to their Operational teams from container traders. But these equate to a small percentage of container sales. The shelf life of these old assets is the driver – with CFO’s having already written down these assets at 60 months and with disposals occurring at 120 months they look at a the residual asset value -and place a conservative $ dollar value on these assets – with a daily clocking ticking on unsold assets these soon become financial burdens with any margins eaten up by a number of charges from Corporate Administrative charges to Repositioning and Transport charges, Depot rental fees, Damage incurred to the containers during storage and Pick up and Drop off charges. These costs swipe the value of the asset in a very short time frame.
BCG have developed their trading solutions that provide an easy place for Leasing Companies and Ocean Carriers to place their end of life containers – they can list what equipment will be coming off hire, condition, age, type and any particular comments on these units. BCG have the Buyers already lining up on the Platform – we map their profiles, buying requirements and we can identify when and where containers will be required -we then deal with the financial processing and ownership transfer. We help the Buyers obtain the right equipment and we provide valuable intel to the sellers on where and when containers will be required – it’s just the same concept as leasing companies positioning their new equipment in supply and demand areas. By helping the sellers better visualize the process, making it effortless we can help free up cash flow faster, and mitigate these high costs that will ultimately be incurred by the Seller while he might sit and wait to sell these units. Our value add to the end customers is we help to provide that First-class Customer service wrapped in a digital environment. A true “Win-Win Scenario”
With your container logistics background and tech knowledge, what are the major challenges for container owners and users coming through digitalization?
The Container shipping industry is moving in uncharted waters as they approach Digitalization and Blockchain with some trepidation as they start to assess the enormous challenges and barrier to entry. All can envisage the potential savings and end goal of streamlining their operations and making their businesses more transparent, but many are struggling with the physical challenges and the insurmountable contact points that need to be touched to benefit a digital blockchain environment truly. The other challenges is the sheer costs for going digital off course the big players (Maersk, MSC, CMA, One Group etc) are undertaking steps and engaging with big box technology companies but these are very unchartered waters and its hard to quantify what the overall costs for transformation will be – of course, Big-Box Tech companies will upsell the potential savings and benefits, but most couldn’t put a hard number of what it will all cost – for they themselves are still in that transformation phase. Another major pain point is the level of integration and ability to link with their various partners – how many of these smaller 3rd party service providers will be able to conform to the ocean carriers demands for seamless digital integration and of course the various industry standards and protocols. Yes, I believe that Blockchain and Digitalization is going to reshape the way cargo and freight are handled, but the time and costs to achieve these goals will be on most CEO’s minds.