The start of a global pandemic in 2020, has proved that there’s more to the shipper owned container business than often assumed.
Despite all the benefits, the market share of SOCs remains low. Wolfgang Lehmacher explains the reasons why and tells us more about the future of SOCs in this masterclass.
Brief summary of Pros/Cons of SOCs
As mentioned many times, the term SOC stands for shipper owned container. There are many benefits of using SOCs. A couple that Wolfgang Lehmacher points out are these:
• SOCs help avoid demurrage and detention charges,
• Using SOCs can reduce the carrier’s rates,
• They are a useful solution in landlocked areas,
• The SOC concept gives more flexibility and control throughout the supply chain.
Alongside the benefits, SOCs also face a couple of challenges. Among these are the additional operational processing workload. A challenge that seems to be the most important. Because managing this process requires knowledge and time.
“But we’ve entered the 4th industrial revolution. And with that, more and more processes are being digitized. More and more platforms arise. And therefore, the additional workload may come less into play. And it’ll be less of a challenge,” Lehmacher says.
Why SOCs aren’t more widely used yet
If there are more benefits than challenges when using SOC containers, why do the SOC market shares stay low?
Lehmacher names the lack of awareness and knowledge as one of the main reasons, but he also adds that it’s only a matter of time before this changes.
“And as forwarders are under a pressure to bring back the solutions to their customers, I think that the SOC will become more and more a part of the mix that forwarders offer.”
He also believes that in the future, the focus from larger clients will shift to the small and mid-sized companies and they’ll benefit from these additional solutions such as SOCs.
The forwarders can use SOCs to improve their positions, to offer additional solutions, and to advise customers when it’s recommended to use SOCs. Also to caution them about the situations, when SOCs aren’t the best solution. For example, on the very busy lines. These routes already have highly competitive rates and the equipment is available.
The post-COVID-19 supply chain needs SOCs
As Lehmacher notes, COVID-19 has created a lot of imbalances in the container pool. Currently, almost all shipping lines have difficulties providing enough containers to Asia, particularly China. And SOCs are again a solution for the market.
“Because now, prices are increasing for the Asia rates. And these prices are probably close to the cost of the container. Therefore, shippers can – and even the carriers should think about it – use SOCs to deal with those imbalances,” Lehmacher adds.