Container shipping rates have more to them than you may think!
A client recently shipped a 40 foot shipper owned container to Madagascar. She was moving overseas and wanted to keep the container.
Okay, now I know this may seem ridiculous to some, because who wants a shipping container anyway, and how could it possibly be cost effective? How much does a shipping container cost, anyway?
Good questions – I’m glad you asked.
First off, it doesn’t matter whether a shipping customer simply wants to rent a shipping line’s container for the duration of the shipping of their cargo, or whether they want to purchase and keep the actual shipping container, either method is proven possible and make sense in their own respective ways.
Here are 5 reasons why buying your shipping container may be the answer for you, even if you’re not a manufacturer or international distributor.
To rent or to buy, to buy or to rent…
First off, it’s not always going to make sense to buy your own container. There are pluses and minuses to both, and it’s up to you, the shipper, to weigh the risks and costs associated with each international freight shipment, both in terms of time and financial resources.
For example, shipping lines typically assess a surcharge for shipper owned containers which can range from $500.00 to $700.00. It may seem a little counter-intuitive that shipping lines would charge you for using less of their resources, but there are more administrative processes for them, because it certainly isn’t the norm.
That said, despite these and a few other extra costs that we’ll touch on, there can be significant benefits to using a purchased container over a rental. (request help from a freight forwarder)
1. How much does a shipping container cost?
Purchasing a shipping container is not as complicated as you might think and only requires a few additional procedures.
They typically cost between $ 1,500.00 to $ 2,500.00 per container, and a competent freight forwarder can use their expertise to assist a customer in purchasing one in addition to coordinating the actual shipment (ask for help).
The purchase is normally done through third party container yards that supply sea containers.
Other costs to consider are that when you bring your own container you will have to provide a certificate or survey that verifies it is sea-worthy and meets all shipping standards for marine transport. It can usually be obtained by the container yard selling it for an additional fee, usually from $ 100.00 to $ 200.00.
2. Demurrage & detention fees begone!
One of the biggest benefits is that your purchased container would not be subject to the shipping line’s demurrage and detention fees that they may apply to their rented containers.
If you were to use a rented container rather than a purchased one because the freight costs of using a rental appear, at first glance, much lower than a shipper owned container, you run the risk of being subject to the shipping lines charges if the rented container is not returned back to the line’s terminals in the time limit allotted after its use.
In the case of an export shipment, shipping lines usually allow a rented container to be out-gated from their terminals for a maximum of five calendar days. This means you only these five days with which to load your container and have it returned back to the port terminal, or otherwise you will be charged a daily detention fee, which usually start at $100 per day.
Five days might sound like plenty of time to the casual observer, but port congestion, especially in times of labor unrest, can have truckers waiting in port lines up to ten hours just to return a container. Quite often in these uncertain times, truckers may wait all day and still not be able to in-gate a container before the deadline.
With a shipper owned container, it is the exclusive property of the shipper and purchaser, so it is not subject to these kind of applied demurrage and detention charges imposed by the shipping lines and their port terminals.
3. … even when customs gets in the way
Sometimes your shipments are subject to customs exams, both at the port of loading and/or the port of discharge. Sometimes these exams can take considerable time and cause a container to go into detention or demurrage if it is rented by the shipping line.
It’s not unheard of to have detention and demurrage fees soar into the thousands of dollars if a rented container is not customs cleared in time before the last free day to have it returned back to the line’s terminal.
Of course, this is a worst case scenario and it is incorrect to stipulate that this kind of event would happen most of the time, but the fact does remain that cases have occurred where a shipper owned container would be less costly then a rented container given the amount of demurrage and detention fees alone.
4. Eliminate costs & delays due to shortages.
Another distinct benefit to purchasing your own container is the possibility of equipment shortages by the line, especially for urgent shipments. Shipping lines often add a disclaimer to their rate quotes stating their prices are subject to their equipment and vessel availability.
If you’re looking for the cheapest and most economical shipping rates without considering any other costs or risks, you are likely to stumble upon situations where there is a scarcity of available containers at the chosen port of loading or inland container yard.
Quite often, the cheapest service does not equate to the best service. Electing the cheapest line can leave you dealing with vessel and shipment delays, having your bookings rolled because there are no container rentals available at the origin shipping point.
With your own container, your shipment would not be delayed because of anything like this. (need help sorting through it? Contact us today!)
5. Reduced trucking or drayage costs.
Another example of savings that may apply to you is with trucking or drayage costs.
What if you were far from an inland container depot or port of loading? Container yards offering sea-worthy containers for sale are quite common, especially in areas of abundant commerce and freight traffic, and can be chosen much closer to your loading location than at a seaport or container depot. This can save you hundreds of dollars in trucking costs associated with hauling it from the port to your loading location, then back again.
… and then back again, when it arrives to its destination. You just keep it at your location until you’re ready to use it again.
You must choose…. but choose wisely.
Buying is not always better than renting. In the case of our client moving to Madagascar, it made sense for them to purchase given the logistics and other influences. They needed a container for an extended amount of time to store their personal effects in Madagascar, and the strict time limit allowed by the shipping line for her to keep a rented container in her possession would have racked up enormous costs.
And the fact that this customer was likely to move again, whether to another country or back to the United States, it was definitely to her benefit to have a shipper owned container at her disposal.
Madagascar is also a relatively unusual destination for container traffic, which means they may have limited or really expensive trucking routes, so reducing those costs by only having to go one way once it arrived was hugely beneficial. The unusual location of Madagascar for container traffic also likely means that there would be a scarcity of available sea containers, which would make her next move quite painful.
In international sea shipping, it is possible to incur hundreds or even thousands of dollars of additional fees not included in the upfront costs. Port terminals and shipping lines have strict logistics requirements and can severely penalize shippers fees that are only applied to rented containers.
Interested in learning more about the costs associated with shipping your freight internationally (including renting vs purchasing your own container)? Get a quote today!