Background

The implementation of the containers in the shipping sector was one of the major revolutions in the history of transportation, reducing the cost and increasing the speed of international trade and supporting the development of globalization.

However, there are several issues related to the size of the containers and the repositioning of the empties that have remained during this time that are costing a relevant amount of money to shipping lines and traders. During the last years there have been scattered initiatives by public or private initiatives to mitigate the problems, that have worked partially, but given the potential savings a holistic approach involving all stakeholders could be required.

Container standards

The first opportunity for optimization is related to the size of the containers.

Going back in history, during the first 20 years of use of containers, many sizes were employed and only in the United States there were dozens of incompatible boxes. This changed with the introduction of the ISO standards, that however were not aligned with the sizes of the pallets. This created an issue as it was not completely possible to optimize the containers using pallets.

To this day, the main solution employed to fully use the containers is the stuffing and unstuffing of the product in the containers, but this implies an additional cost and time in the supply chain and potential damages to the product. Nevertheless, this is very frequent, especially in low-income countries.  

Number of pallets in the different types of containers

During the last years there have been different initiatives to maximize the use of containers, like the pallet-wide containers that have been on the arena for more than 20 years, or the European Intermodal Loading Unit (EILU), initiative supported by the EU. Out of these, the 45ft pallet-wide high-cube container has managed to obtain a relevant acceptance in some areas (Europe), as it optimizes the container use and it is aligned with the truck standards, reducing the total transportation costs up to 10-15% (according to some sources).

Nevertheless, these initiatives have not completed succeeded due to the potential operational challenges of adding a new standard, the additional costs incurred by the parties or the need to adapt the future vessels to a mix of different standards. However, they can complement the ISO standard containers in some specific trades.

Empty repositioning

Another and even bigger challenge in the container transportation is the empty containers repositioning, which represents a major problem as around one third of the containers globally are moved empty. It is estimated that shipping lines spend more than 25 billion USD per year on repositioning empty containers (this represents about 5% to 10% of a shipping line’s operating costs according to several sources), costs are later supported by the traders.

Foldable container

In order to solve the issue, several ideas have been developed during the last decades, being the foldable containers one of the most well-known. Foldable containers are standard boxes with mechanisms that allow them to fold, reducing the volume to a 25% (commonly) of the original size (being therefore much cheaper to reposition).

Some of the drawbacks of the concept are the extra investment required in the boxes and the operational challenges to fold the containers and do the handling, but it seems there are new initiatives that are now trying to reduce them, making the solution more attractive.  

Example of a foldable container (Image by Zbox)

Containers joint

Another solution proposes to rely only on the twenty feet containers. In case a forty feet container was needed, it could be created by joining two twenty feed containers using a simple mechanism.

The main benefit of this solution is that it can help reduce the number of stock of containers and it can be particularly interesting in countries that have a different profile of imports and exports, avoiding the need of importing empties. Some of the companies that have developed this concept estimate it could bring a potential saving of 1bn USD per year to the shipping lines.  

Example of a containers link

Technologies to mitigate the empty repositioning issues

New software platforms are also trying to reduce the empty repositioning, reducing the market imperfections and improving the predictability of the containers flows. Some of the solutions being implemented include the following:

• Market places: Online platforms that help to find partners to match loads and third-party equipment for container moves.
• Predictive empty container management platforms: Software solutions to support the definition of the optimal plan for empty container repositioning, storage, repair & maintenance, taking into account all the related costs
• Online transportation tools: Online route planners that help companies find the best and most efficient way to transport containers including locations for empty container repositioning.

So far, these initiatives are working well and could be further deployed, but their use of the is still very timid.

Smart Containers

In parallel with all these different projects, there is a new trend that is the implementation of Smart Containers. This corresponds to containers equipped with sensors that help to track relevant data like the container geolocation, the temperature fluctuations, geofencing and predictive ETA, shock detection, door open/close status, late in/out site, any unusual activity, etc. Some shipping lines such as Maersk, MSC or CMA CGM have already deployed smart containers in their networks.  

Smart container network configuration

The use of Smart Containers goes far beyond the empties repositioning, as it allows to obtain active information about the container in a timely way, granting several benefits such as:

• Optimizing supply chain flows (empties repositioning, packaging, out-of-stock scenarios, insurance fees)
• Avoiding any negative incidents (cargo loss, quality deterioration)
• Increased cargo security, better service, and on-time deliveries

As mentioned at the beginning, even if there are many initiatives trying to optimize the use of containers and the empty returns, it seems they are not capable of giving a full solution to the existing challenges. Given the potential savings to be obtained, a full-scale solution based on new container standards and software platforms should be developed, taking into consideration all the stakeholders in the supply chain. 

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About the authors
Rubén Naveiro holds a MSc in Industrial Engineering and is a Director at ALG
For more insights, please check www.alg-global.com or contact:
rnaveiro@alg-global.com