October 30, 2018 - Technology startups are focusing on reducing the empty container problem, a challenge that costs the container shipping industry about $20 billion per year.
At any given time, about one-third of the ocean containers in circulation are empty, and the average container spends nearly half its life idle, according to recent research.
Most major shipping lanes suffer from systemic trade imbalances — more loads flow from producing areas such as Southeast Asia into consuming regions like North America and Europe.
Historically there have been fewer loads going back from the West Coast of the United States to China, to reposition containers for the next round of eastbound shipments. Containers pile up in ports such as Hamburg, waiting to be moved back to Karachi, for example.
The majority of costs come from relocating empty containers thousands of miles back to an origin point.
"You will always need to move empty boxes into China from Europe, from Australia and the U.S. and there's nothing really you can do about that," Christian Roeloffs, one of the founders of Hamburg, Germany-based xChange, an empty container matching service, told Supply Chain Dive. "You cannot avoid the whole $20 billion cost, but you can avoid about 30% of it because this amount is caused by inefficiencies."
Empty containers clog ports
Just how bad is the empty container problem?
For major U.S. ports, more than half of outbound TEUs moves are empty. At the Port of Los Angeles, the busiest North American port, 57.7% of outbound TEUs in 2017 were empty, according to Port Tracker data from the Pacific Merchant Shipping Association's July West Coast Trade Report. From 2010 through 2017, empties through Los Angeles increased by 35.2%, while loaded TEUs increased 13.8%. The story was similar at Long Beach, where container volumes grew 13.7% from 2010 to 2017, but empty containers grew by 40.6%.
East Coast ports were not immune to the problem. For example, at the Port of New York/ New Jersey, container traffic grew 11.8% while empty traffic increased 58.5% from 2011 through 2017.
Disruptions to traffic flow can exacerbate the issue. When South Korean carrier Hanjin Shipping declared bankruptcy in 2016, containers piled up at ports in Southern California. Terminal operator Total Terminals International brought in a container ship to move 4,300 empty containers back to Asia, out of an estimated 6,000 Hanjin-leased boxes in the region.
In July, the Nigerian Port Authority blocked access for Maersk Line and Cosco Shipping to terminals in Lagos for ten days due to the buildup of empty containers, The Maritime Executive reported. Lack of space for empties led to truck backups at the port, upsetting local residents. During the ban, 19 vessels were likely delayed.
Source: Supply Chain Dive
