The lifecycle of an ocean container
Developed more than 50 years ago, sea containers have revolutionized the way cargo is transported and the ways in which countries and companies interact with each other (more information). One can talk about the containerisation of international freight, as today, sea containers move around 90% of global trade and are a huge business for carriers, freight forwarders, and shipping lines that are transporting global freight on the seas. Containers are tangible assets that, like everything else, does not last forever. But how long can the same container supply people with goods and what stages does the life cycle of a container entail?
Containers made in China
China is producing more than 90 percent of the sea containers in the world, which is definitely not a coincidence. Not only does the export-oriented country have cheap labour cost and are a large recycler of steel, it also plays an important strategic role in the life cycle of the shipping container aimed at maximizing the time in use. In most instances, new shipping sea containers manufactured in China are loaded and shipped to destinations like The United States or Europe for sale.
These containers are the so-called “one trip” containers that are sold when they arrive at their destinations. Sold as new containers, they only have minor flaws from the one-time use. This approach to container sales extends the lifecycle by ensuring that the container is put into use from the date of manufacturing and not shipped empty at a high transportation cost.
Here at xChange, we work towards avoiding the empty transport of containers, not just at the beginning of the life cycle, but through the entire life of the container. This is done through connecting partners that offers one-way containers, e.g. ex China to Europe easily. In the same manner as the one-trip idea, this is at the benefit of both partners and the environment. Once arrived at destination, the one-trip-old container is sold and put into use by the buyers, typically being carriers, NVOCCs, shipping lines or similar.
Multiple owners for one ocean container
The container rarely stays with its first buyer for its entire life, as resale often takes place multiple times. There are multiple reasons why carriers/liners decide to sell used containers, some of them being oversupply, demand for liquid assets or damage to the container making it unable to carry cargo. As long as the container is classified as cargo worthy, resales often take place multiple times primarily done on a business to business basis through network or contacts. Buyers can be other shipping lines, carriers, or wholesalers distributing them to private customers.
Different container conditions
The usage of cargo containers and the price depends on the condition of the container. Like everything else, the more in use, the worse condition and the cheaper. Here at xChange, we work with the following classifications for conditions of the shipping container:
Cargo worthy: In short CW, means that the shipping container is deemed suitable for cargo transportation under TIR/UIC/CSC criterions. Another criterion is that the container meets all the standards set in its original specification. Typically, it also implies that the container has a valid CSC, which is a safety approval plate that containers used for international transport must have.
Food grade containers: The transport of food sets certain requirements for the shipping container, such as that it has never carried any toxic chemicals or products. Even though the food is packed in bags or similar and hence not in direct contact with the container, the mean of transportation has to be in food graded containers to avoid unnecessary contamination risks.
Brand new: On our platform, this condition applies to containers that are supplied as brand new from the manufacturing country and are needed to be sent to a specific location to be used or sold as one-trip containers.
UCIRC: Being short for The Unified Container Inspection & Repair Criteria for Steel Containers, it is designed at simplifying container interchanges and includes general requirements about acceptable – and non-acceptable damage, manufacturing defects, wear and tear, structural components and general information about the container.
IICL-5: Referring to the International Institute of Container Lessors condition stamps, IICL-5 is a variation of cargo worthy used for premium containers. In general, IICL criterions are known as the strictest for used containers.
IICL-6: by the same institute, IICL-6 is superseding the previous IICL-5. As long as the container is in one of the aforementioned conditions, it is still in the resell phase of its life cycle and is hence in use to transport cargo. For the same reason, these are also the container conditions we work with on our one-way marketplace platform at xChange.
Life expectancy of an ocean containers
Containers are constructed to protect freight from the harsh conditions of long-time travel at sea and are known for their durability. However, they are not infinitely durable and at a point, they are deemed unable to carry cargo. The lifespan of the container varies, as it is dependent on multiple factors, such as where the container is used and the amount of damage. For instance, harsh climate and minor damages, incentivising the creation of rust, decreases the lifespan remarkably. In a hasty generalization, containers are cargo worthy and used in shipping for approximately 10-15 years. When containers are no longer deemed for shipping and carrying cargo, innovative and creative individuals can buy the containers for reinvention outside the industry. Alternatively, the steel of the container can be recycled. During the past years, containers’ lives has been extended by the rethinking of their use. Examples are container homes, solving the problem of affordable living for many people, pop-up shops, street food kitchens, or similar.
Analysis conducted for the book The Geography of Transport Systems points to the fact that an average container spends 56% of its life idle or empty repositioned. This is not just huge and avoidable cost for companies, but also at a large environmental cost, significantly contributing to the industry’s CO2 footprint. These are the common issues that xChange is trying to address by providing our customers with an easy online platform engaging in use and supply of containers for one-way use.
Aimed at helping the industry to achieve transparency of networks to identify surplus and deficits in the supply of containers, xChange provides new untapped revenue opportunities and savings potential for NVOCCs, Carriers, Freight Forwarders, Traders and Leasing Companies.