What is the difference between a shipper owned container and carrier owned container ??

What is the difference between a shipper owned container and carrier owned container..

Well, from these two terms, the difference should be pretty obvious – a shipper owned container is a container owned by the shipper of the goods and a carrier owned container is a container owned by a carrier..

But the question may be a bit deeper than just the difference in definition between the two..

First and foremost let me jog your memory about what is a shipping container..

In simple terms a shipping container or a freight container is a solid metal box of a standard size and specification designed to carry goods around the world on board ships..

It is referred to as Container, Box, TEU, FEU, Equipment, Units etc and comes in many sizes and types such as 10′, 20′, 40′, 45′, GP, HQ, OT, FR, RF half-height etc etc etc..

The shipping container is universally hailed as one of the greatest inventions of the modern world, one that completely changed the way in which business has been done since the 20th century and really and truly made the world a smaller place and the one true architect of Globalization..

The shipping container celebrated its 60th birthday in 2016 and has become the standard for transportation of goods and the world’s shipping container fleet is said to be in excess of 35 million TEUs..

For those who might not understand what a TEU is, here is a simple explanation.. The most common container lengths used currently are 20′ (20 foot) and 40′ (40 foot).. Since 20′ containers being the lowest common denominator and easier to calculate in relation to capacities and volume (thanks for the edits Andy Connell), the term TEU (which stands for Twenty-foot Equivalent Unit) became an industry standard reference..

The container ships that carry these containers are designed and calibrated in terms of TEUs and the carrying capacity of a container ship is defined in terms of TEUs.. Since TEU refers to a 20′, naturally a 40′ container is considered as 2 TEUs because a 40′ is twice the length of a 20′..

As per Alphaliner, as of the 10th of January 2018, the top 100 container shipping line’s capacity stands at 6,057 active ships including 5,198 fully cellular ships carrying 21,622,093 TEUs of which 21,213,599 TEUs are fully cellular..

Do the container shipping lines actually OWN all the 35 million odd TEUs in circulation..?? Definitely not.. So who owns these shipping containers..??

A shipping container maybe owned by a

  1. Carrier (Maersk Line, MSC, CMA-CGM etc)
  2. Container Leasing Company (Tiphook, Cronos, Triton etc)
  3. NVOCC (Expeditors, Blue Anchor Line etc)
  4. Shipper (John Deere, Cisco etc)

shipper owned container and carrier owned containerWhen the container is owned, operated or leased (from the above mentioned Container Leasing Company) by the carrier , it is termed as a Carrier Owned Container (COC in short)..

A carrier may be a VOCC (Vessel Operating Common Carrier – also known as Shipping Line) or an NVOCC (Non-Vessel Operating Common Carrier)..

When the container is owned by the shipper, it is termed as a Shipper Owned Container (SOC in short)..

So why would a shipper have their own container if the carrier has plenty of containers and also considering that a 20′ container can cost anything between $1300-2000 and a 40′ container can cost anything between $1700-3000..??

Well there are several reasons for that and it is also important to consider who the shipper is.. For a carrier, a BCO (Beneficial Cargo Owner – in other words a direct exporter), a Freight Forwarder or an NVOCC may be a shipper..

A direct exporter or shipper may own one or more containers, but it is generally on a project basis.. For example, let us say an exporter has an order to ship cargo to set up a plant or a mine in a remote area of Azerbaijan..

Usually in such remote projects, the receiver may not have the space or facilities to store the cargo till they use the cargo to set up the project.. If the shipper uses a carrier owned container, they may charge the receiver demurrage or detention for keeping the container more than the allowed free time..

In a lot of cases where the shipper/receiver know that the cargo may need to be stored for a longer period, they may find it cheaper to rather buy a container, pack it and ship their cargo than use the carrier’s own container and pay for demurrage and detention..

MoneyA simple calculation.. Say the cargo for the project needs to be stored for a 100 days and the carrier charges demurrage of $25/day/20′ container..

The receiver may end up paying $2,500/20′ as demurrage to the carrier whereas they could “buy” a container for between $1300-2000/20′ which makes more commercial sense for them especially if they know that the cargo will need to be stored for that long..

Apart from this, in a lot of projects, after unpacking, a container could be transformed into a site office or living quarters for some of the on-site staff..

An NVOCC may also own and operate their own containers but as far as the main carrier is concerned, it is still a “shipper owned container” for them, because for a carrier, any container that does not form part of their owned, operated or leased fleet is considered to be a shipper own container..

So is there any difference in the markings on a container whether shipper owned container or carrier owned container..??

YES, there should be..

A carrier owned container will have all its usual markings as shown in below image.. A shipper may buy their container from either a carrier, a container conversion company, or a leasing company..

If a shipper buys a container from a carrier, a shipper is expected to replace the decals of the original container especially the container number (prefix – from HLXU to NONE and check digit – from 9 to 6) as shown in below example..

shipper owned container and carrier owned container

This change is mandatory because the ownership of the container has changed and it therefore cannot have the same container number and logo as the original owner..

So if you are looking to buy a container or ship a shipper owned container, remember above..


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26 comments on “What is the difference between a shipper owned container and carrier owned container ??”

  1. By Indry Reply

    When Shipper or BCO/frwd using own container, it doesnt mean carrier has to apply as soc slot, right?

  2. By Victor Reply

    Greatly appreciate your article.
    I am interested in purchasing three new or 1 trip 40 ft HQ. I am having a hard time finding a Freight Forwarder that will arrange transport from the factory in China to my home port of Wilmington, NC.
    Any suggestions

  3. By Dhanashree Reply

    it’s detail explain the differences between the shipper owned container and carrier owned container. very few shipper know about this

  4. By Haitham Al-jazaeri Reply

    A good article to explain the differences between the shipper owned container and carrier owned container with summary for that.

    Many thanks.

  5. By Denise Mendonça Reply

    Very good article, but sometimes is more difficult to indentify a SOC and COC – All carries have contracts with Leasing cos. and when they use those units its impossible to identify if unit is SOC or COC. The only way is check unit number in Leasing web site and verify to which co. its leased to.E.G – unit TCNU5143015 – belong to TRITON Leasing co. This specific unit was leased to PIL as from Jul/2013 until May/2015 – and now is leased to OOCL (under their contract)- as per Leasing’s web site.
    Nowadays Leasing cos. are working with FFW / NVOCC and a few exporters (depend on the qty of unit required).
    In view of above is very difficult to confirm based on unit number – its alway important to check docs. that normally inform SOC units – it there is no remark in the B/L its considered COC.
    Once again very good article, congratulations Hariesh Manaadiar.

    Brgds
    Denise Mendonça

    • By Hariesh Manaadiar

      Hi Denise, yes that could be a problem with short term leases especially.. If it is on long term lease the shipping line usually puts their logo decals in order to help identify which ones are their boxes..

  6. By Femi Ilori Reply

    Thanks for the script

    Also note that in some countries , you are required to pay for Custom import duty for the container as well as the cargo in it., But the advantage is that the shipping line will not charge for detention and demmurage.,but you can manueover the import duty on the shipper owned container by changing the prefix number to another alphabet like QSGU ,PSOU ETC.

    • By Hariesh Manaadiar

      Hi Femi, yes, certain countries may charge duty on the container, but as far as I know, these countries only do that if the shipping line sells or scraps the containers without advising customs.. In such countries the container is considered part of the cargo and not as a CTU and in order to ensure that Customs doesn’t charge duty on the container, the shipping line needs to file the inward and outward movement of the container with Customs whether it is full or empty..

  7. By erkan pehlivan Reply

    I see that shipper owned containers do not have container numbers ( with carrier prefix) and can not use previous container number. so how is tracking/EDI follow up is managed for this type of containers ?
    thanks

    • By Hariesh Manaadiar

      Hi Erkan, whether it is COC or SOC it is important and crucial to have a container number for the purpose of tracking.. As I mentioned, in case the shipper buys a container that is already in circulation, they will need to change the prefix and the check digit of the container before they use it as their own container.. What happens in a sale like this is that the shipping line and shipper sign a certificate of sale/purchase handing over the ownership of the container to the shipper.. Once the shipper changes the container prefix and check digit, they can track it as a normal container.. In most cases even if it is booked as an SOC, the carrier will track the container as long as it under their possession as part of the carriage..

  8. By Saeed Reply

    Dear Hariesh
    Good Time

    very good article with thanks.
    some questions are in my mind…

    1- How about CSC Plate for SOC? are shippers have to take a new csc plate with the new container number?

    2-is it a common and specified customs formalities at destination when cargo and its soc cntr arrive at POD?

    3-can shipper and cnee use a soc for several future shipment? how?

    • By Hariesh Manaadiar

      Hi Saeed,

      1- How about CSC Plate for SOC? are shippers have to take a new csc plate with the new container number?

      Reg the CSC plate, as a consequence of the CSC regulations, any container used for international transport must be fitted with a valid safety approval plate.. The CSC regulations assigns responsibility for examinations and maintaining of the inspections to the container owner.. So in the case of the container being sold by the line to the shipper, the shipper is responsible to maintain the integrity of the container including updating of the owners information once the sale is done..

      2-is it a common and specified customs formalities at destination when cargo and its soc cntr arrive at POD?

      Presume you are asking if there are any specific customs formalities for SOC.. Depending on the country, the fact that the container belongs to the shipper must be highlighted in the manifest and in most countries the receiver may need to advise customs what happens to the container after it is unpacked – whether it will be reused for exports or scrapped or redelivered to some depot at the destination etc..

      3-can shipper and cnee use a soc for several future shipment? how?

      Yes, if the business between a shipper and consignee is regular or reciprocal, they can always reuse it as a SOC for several shipments..

  9. By Sruthi Reply

    Dear Hariesh

    I was working in the Insurance Industry and suddenly switched to Logistics.I was totally ignorant of this industry .
    Your blogs are the best educational blog which I am entrusting and has even asked my juniors to read .

    Thanking you for your tremendous support.
    Regards

  10. By Fabio Reply

    Good article as always Hariesh.
    In the example you are not considerati g that, most of the time, shipping lines charge more for SOC containers ocean freight (even the double!). It happen to me sometimes from Italy/Spain mediterranea to West Coast South America.

    • By Hariesh Manaadiar

      Hi Fabio, yes this is possible in a lot of the cases.. This is because the shipping line also has their own containers that they would like to use so if they are giving space on a ship, they would rather give it first to clients show use the carrier owned container.. If someone wants to use that space to ship SOC, then the shipping line needs to be compensated for the cost of non-utilisation of their own container..

    • By k.k.mohamed

      article is highly appreciated.pl mention if we shipped a our own container to dubai
      and cleared by importer. what is the situation of this container.who will keep it or return
      to exporter as empty or stuffed other s cargo.is any rent collected and paid to the owner of container. any charges is collected as return charge

    • By Hariesh Manaadiar

      Hi KK.. This depends on the arrangement between the shipper and consignee.. Some shippers buy the container and advise consignee to keep the container or get rid of it after unpacking and in these cases the shipper may include the cost of the container in the product price.. The consignee on the other hand may sell it to recover his cost.. In some cases where there is reciprocal business, the shipper and consignee may use the container(s) back and forth..

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