Shipper-owned containers (SOCs) offer a number of benefits, including increased flexibility and decreased costs—especially when it comes to detention and demurrage fees. But historically, freight forwarders haven’t been too keen on handling them. Largely, that’s due to the added logistical details that accompany SOCs and the resources needed to tackle them.
However, a recent survey by Container xChange indicates that sentiment may be changing.
According to 2021 results, the percentage of freight forwarders surveyed who were willing to accept an SOC request was almost twice as many as the year before and three times as many as in 2019.
2021 Mystery Shopping SOC Report
The survey—the Mystery Shopping Survey of SOC Containers—has been conducted each of the past three years by Container xChange. Noting that SOC containers are primarily used to reduce costs and increase flexibility, the company says that with the significant supply chain challenges introduced by the COVID-19 pandemic—namely, the “practically impossible” ability to predict equipment availability—SOCs have “become more relevant for freight forwarders to increase availability and maintain stable profit margins.”
According to a press release announcing the results, “During the month of December 2021, Container xChange put to a test the world’s 50 largest freight forwarders to investigate how they respond to SOC requests.”
Key findings included:
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“18% of the companies that were tested were able to organize the SOC move and source the containers without any restrictions. This figure of 18% compares to 10% of the companies in 2020, and 6% in 2019.”
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“SOC acceptance and awareness has grown over the last three years. 90% of our respondents were clued up on the SOC market compared to 68% of respondents last year and 35% in 2019.”
Quoted in the release, Florian Braun, Head of Ocean Freight, EMEA, Flexport said, “SOC increases reliability for empty container availability. The downside is that you need a dedicated team/person to manage these shipments.”
Christian Roeloffs, Founder and CEO, Container xChange also weighed in: “Forwarders are increasingly positive about SOCs but are also uncertain of the success of processes around them. The rise in awareness for SOCs shows that industry participants are responding to the supply-chain pressures by diversifying their sourcing strategy.
We’ve observed a growing year-on-year acceptance for SOCs as well as demand to improve the management costs and efforts. We believe the solution lies in digitizing the process to enable forwarders with a seamless, hassle-free opportunity of using SOCs.”
SOCs vs COCs
Container xChange provides an in-depth explanation of the difference between SOCs and COCs in a blog post on its site, noting that a container is considered an SOC “when the BCO, freight forwarder, or NVOCC organizes their own container.” A carrier is hired, a slot is purchased on the carrier’s vessel, and other parties are hired as needed to transport the goods.
In contrast, a container is considered a COC “when the carrier (container liner or steamship line) owns the container and controls the majority of the entire transport chain.” Normally, COCs are used “for standard shipments on stretches with a lot of cargo flow.” If a carrier has plenty of boxes available and the price is right, Container xChange says there’s not much incentive to use an SOC.
The following video provides a brief overview of the difference between the two.
Comparing the Benefits of Both
Container xChange says freight forwarders typically prefer COCs because they’re simple. For one “all in” rate, the carrier provides the container and handles all the logistics for “the in-between.” Plus freight discounts might also be available.
However, when shipments fall outside a carrier’s routine transport flow, using a COC can become more complex—and expensive. This is especially true if demurrage and detention charges start to add up.
In such instances, Container xChange says an SOC may be a better option, since it offers several benefits—including control of:
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Supply: “You can source containers on your own. That is essential for locations where carriers are unable or unwilling to provide boxes or only offer them at very high rates.”
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Ownership: “You can choose accurately which containers you need in which condition for which period of time. It includes the choice between whether to buy or simply lease the container depending on the current need.”
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Cost: “You avoid unexpected demurrage and detention costs as you are not obligated to move and/or return the containers to and from the carrier within a certain time frame. You have to take loading time, customs clearance, drayage, port congestion, etc. into account when planning your shipment.”
While that all sounds great, there are many details to attend to when SOCs are involved—which is why Container xChange emphasizes the importance of weighing the hidden costs of the additional time and effort required.
How SOCs Can Help Tackle Shipping Challenges
In the report, Container xChange says freight forwarders are starting to realize that SOCs may help to address “three crucial problems” related to equipment scarcity and costs. To do so, the company recommends that forwarders keep in mind that SOCs can:
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Help “overcome” scarcity of equipment: “When facing equipment scarcity in inland locations, SOCs can increase reliability of equipment supply, allowing you to control trucking and shipping with the carrier of your choice and lower trucking costs.”
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Be more cost effective than COCs when shipping to certain locations: “There are freight rate savings when shipping to special destinations with equipment surplus, resulting in discounted freight rates and inland locations by saving on the return trucking.”
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Help with avoidance of detention and demurrage fees: “SOCs are insurance against demurrage and detention costs as the user will not be subject to these fees – which can add up quickly and are often ‘hidden’ at the time of booking.”
To learn more about how freight forwarders can make the most of SOCs, please see the full report, Container xChange Mystery Shopping Survey of SOC Containers, 3rd Edition (2021).
