Empty Container Repositioning

 The need for cargo unitization, in order to increase the speed and the efficiency of the loading and unloading procedures and in general, to achieve a greater capability of the whole transport chain in the logistics era, has been expressed through the extensive use of containers (Twenty Equivalent Units or TEUs). According to statistic data, the usage of these steel boxes is rapidly on the increase year by year, ultimately, making liner shipping companies responsible for the command of a ‘second fleet’, made up not from ships, but from gigantic numbers of TEUs.

  However, there are several financial, storage, environmental and other serious issues occurring, as a result of the worldwide use of this innovative way of transport and stem from the intense imbalance of trade between exporting and importing regions.

  Taking a closer look on this issue, we could realize that once the container is unloaded in its destination, a new transport chain is needed, in order to move the box in a new place where it could be easily and effectively reused for its next trip. This is the so called Empty Container Repositioning or ECR and it is a vital and deeply complicated issue shipping and logistic companies have to overcome and optimize, since there is no difference between the handling cost of a full and an empty box and a company only earns a profit on loaded trips. Given the harsh economic crisis testing the liner shipping companies during the last years, there is an extremely high need for an effective plan that maximizes the period that TEU fleets travel loaded and alongside, finds the best place to reposition them, minimizing time and distance the container is on an ‘unpaid’ trip.  

  There are several causes, with the structure of the world trade, which is characterized by exclusively importing and exporting regions, being the main one. Since the majority of TEU flows is west bound, there is a constant accumulation of empty boxes on destination ports. On the other hand, eastern ports in Asia might face the exact opposite phenomenon, the one of container shortage. For instance, according to table 1, the rapidly expanding Chinese production in the years 2007-2012 created almost double numbers of TEUs leaving these ports, compared to those imported, deteriorating further the situation. This situation is also expressed through the price difference between head- and back- haul trips, where deviations of even 50% could be observed between these equal distance routes.

  Moreover, further factors contributing to the accumulation of empty boxes are considered the leasing fees of a box and steel prices which could make the choice of building a new box from scratch in Asia, cheaper than trying to retrieve an old one. Consequently, more than a fifth of the total number of containers a port handles, is empty.

 Taking into consideration that the economic life of a box is around ten to fifteen years and that ports and yards face ,in general space scarcity and congestion issues, combined with the need to minimize both financial and environmental costs, it is necessary to find an efficient and certain way to optimize the problem and limit the redundant movements that harm both the environment and the financial viability of liner companies.

 The costs of repositioning are multiple (handling, transshipment, storage, chassis of road transport) and account for 5%-8% of the operational cost of a transportation company. The procedure that the container management companies follow to tackle this problem relies on the type of the flow, whether it is an import or an export flow.

 As far as the import flows are concerned, the management companies have the following solutions:

1. Repositioning of containers to areas with high demand for boxes while bearing all the costs.

2. Termination of the leasing contract while at the same time transferring the problem to the lessors.

3. Temporary storage in the existent location.

4. Sale to the secondary market, especially if their age approaches the maximum age of use.

5. Cooperation with other shipping companies for needs’ matching. This case is rare since the majority of companies have a container excess in the same areas.

 On the other hand, when the exports exceed the imports, then we refer to an export area and the shipping companies have the following ways of tackling the problem:

1. Container imports from areas with oversupply with the least expensive way.

2. Container leasing from lessors.

3. Buying new containers, especially in areas where the manufacturing cost is low (e.g. Asia)

4. Needs pairing with other transportation companies