Executive Insights – Michael Hohndorf – CAI International

ContainerOne of the biggest enablers of globalisation in my opinion would be the humble, simple but ubiquitous shipping container..

Even without the bells and whistles of special containers, the standard shipping container has been instrumental in bringing the world closer..

Currently, an estimated 24 million shipping containers is in circulation traversing the globe, connecting businesses with businesses and people to goods..

Although there are several shipping lines in the industry, all shipping lines depend on a mix of owned vs leased containers as part of their fleet..

In fact, if you look at the Top 10 container shipping lines, the total of leased containers vs owned containers is 56% and 44% respectively which means that most lines are more inclined to lease containers than own it..

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The preference of owned vs leased containers depends on individual shipping lines because some lines like Maersk, Cosco and Hapag Lloyd seem to favor owned containers with 56%, 53% and 61% owned container fleet respectively where as lines like MSC, CMA CGM and ONE seem to prefer leased containers with 72%, 63% and 66% leased container fleet respectively..

 

In this edition of Executive Insights, we caught up with Michael Hohndorf, Vice President of Technical Services for CAI International, one of the leading container leasing companies in the world and their position in the market..

 

What is CAI International..??

CAI International is a global transportation company offering intermodal container leasing and sales, North American and international logistics services, as well as rail leasing and operations.

With a container fleet of 1.6 million TEUs comprising $2 billion of assets, CAI serves hundreds of the world’s leading shipping lines, shippers, and logistics users.

 

Why is there a preference among certain shipping lines to use leased container more than owned containers? How does it benefit them..??

Shipping lines have some of the most complex financial considerations in the industry. Fluctuations in the market and the lifespan of ships can determine how many containers a ship line wants to own. The option of leasing provides flexibility in capacity.

Additionally, and even more importantly, leasing allows shipping lines to turn what would otherwise be a capital or debt investment into a fee structure, thereby preserving their capital and capacity to invest in their biggest asset—ships.

 

Can you tell us about this Floor Board Base Enhancement you were nominated for at the Lloyd’s Loading List Global Freight Awards..?? We understand this enhancement is specific to CAI’s containers..??

Yes, it was an honor to be nominated. The CAI Floor Board Base Enhancement (FBBE) is an engineered design unique to CAI’s containers that reduces repair costs and increases in-service time. We examined our dry freight containers and realized that a significant portion of costly floor repairs could be prevented.

We set out with a goal of creating a container base assembly that resisted premature failure, making the improved container able to withstand more use with less wear over the life of the asset. We studied forklift travel path and load cycles as well as damage failure locations to design the base enhancement scientifically.

Since we put the design into production in 2013, we have been able to reduce repair amounts by over 80% as compared to standard specification containers. With the average container repair time varying between two and 80 days, the benefit is significant to our customers. Currently, CAI International is the only provider in the marketplace producing containers with the Floor Board Base Enhancement.

 

How has technological changes affected the industry..??

There is no denying that technology has made our industry more efficient and streamlined.

Efforts in automation which may incorporate blockchain and artificial intelligence (AI) technologies are likely to improve the speed and efficiency of cargo movement exponentially by optimizing loading and lane planning.

Additionally, smart containers are being pilot tested to collect and transmit data during the entire transportation process, providing important information and improving operational efficiency. Ultimately these advances, and others like it, will continue to optimize the entire supply chain process.

However, technology can come at a price of reduced personalized service. A proven track record of customer service, that offers availability, willingness, and a “no problem is too big” attitude can make the difference in the case of securing and adequately serving customers in today’s market.

At CAI and CAI Logistics we are in tune with our customers’ needs, we work with technology to provide visibility and ease of all aspects of their moves and adjust specialized team/personnel to ensure we have the right protocol in place to make their shipping experience optimal.

 

Please explain the advantages of being both an intermodal-container as well as third party logistics (3PL) provider..??

There are quite a few benefits to our business model. Since 1989, CAI International has been leasing and selling its container assets to businesses around the world.

Being in the industry this long and continuing to be a high-performing company in the market today, CAI maintains strong relationships with carriers, agents, depots, and shippers.

These relationships, partnerships, and simply being part of the global and domestic transportation network helps our logistics division when opportunities arise to provide both assets and cargo coordination.

 

What can we expect from CAI going forward..??

We will continue to build our reputation as one of the most flexible and responsive players in the market, meeting our customers’ needs and partnering in their success.

While container leasing and sales remain our largest business segment, logistics is another exciting edge of our business. Going forward, we will continue build on our high level of reliability and cost-effectiveness, and to work on new ways to service customers in the digital age.

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