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- by Leo
In the context of the Covid-19 pandemic, the influence of containers exert on freight shipping is ever-widening. Slower container circulation and a shortage of containers have crippled the original balance of the global supply chain. To buffer the cushion, some major BCO (Beneficial Cargo Owner), and NVOCC (Non-Vessel Operating Common Carriers) have bought their own containers.
Containers play a big role in the shipping industry. Be it a freight forwarder, a carrier, or a shipper; containers are important assets for them in terms of organizing, protecting, and carrying goods. Generally, shippers/carriers want the cargo transported to the exact right place at the exact right time with the lowest possible costs. To do this, they are looking at two options: SOC and COC.
Buy or rent? In this article, we will cover the basics of SOC and COC and clarify their differences. So you can determine whether to invest in buying your own containers. Read on.
- 1. What is COC?
- 2. Pros and Cons of Shipping COC Containers
- 3. What is SOC?
- 4. Four Benefits of Using SOC Containers
- 5. Is It Worth Buying Shipper Owned Containers (SOCs)?
- 6. Conclusion
1. What is COC?
COC stands for Carrier Owned Container. If a container belongs to a carrier or a shipping company, it is called COC. The carrier will be responsible for the management of COCs.
COC containers will be rented out to the carrier's consignee for shipping cargo. And COCs will be returned to the carrier after the completion of delivery. Under the agreed terms, the consignee has use of it until the due date.
In most cases, COCs will be in service for standard sea shipments when there is abundant cargo flow. That means you will have a much more traditional shipping experience because you need to wait for the COC container to be available. If there are enough containers available in some ports, shippers can go fetch them at the nearest container yard so trucking fees can be saved. When there is a glut of containers in some ports, using COCs can probably bring along freight rate discounts.
2. Pros and Cons of Shipping COC Containers
Pros of COC Containers:
Carriers or shipping companies will take responsibility for supplying containers. Using COC containers can be relatively hassle-free because it falls upon the carrier to control the majority of the transportation. The consignee makes an "all in" payment, and the carrier will supply containers. The "all in" payment means that customers only have to pay for the physical use of the container. The costs of maintenance are borne not by consignees but by carriers. Once the container is returned to the terminal or yard after the unloading of cargo, consignees no longer have to worry about it.
Cons of COC Containers:
However, do not forget the costs associated with logistics delays. LFD (Last Free Day) refers to the date when the free storage period ends. Extra charges like DET (Detention) and DEM (Demurrage) become payable if a container is overdue or the "last free day" has passed. The long-term shortage of containers at some ports may lead to increases in freight rates because carriers have to wait for the vessel to be fully loaded, thus forcing shippers to eat the shipping costs.
3. What is SOC?
Essentially, SOC means Shipper Owned Container. SOCs are usually owned by a shipper or a freight forwarder. Likewise, SOCs are used in importing, exporting, and storing cargo. When the delivery is complete, the container will be returned to the shipper, who is responsible for storing and maintaining the container.
As a shipper, owning a container instead of renting one may bring convenience and save costs during business operations. For example, a port with a limited stock of containers will charge you higher fees, and carriers will make you cover the costs at remote places where it is hard to provide containers.
4. Four Benefits of Using SOC Containers
- ● In addition to shipping cargo, SOCs can be used to store the cargo for a long time when there is no space to do that.
- ● Using SOCs can keep your supply chain stable and effective when you cannot load and ship your cargo in time because of a shortage of containers.
- ● Shippers can check and confirm whether their SOCs are aging and damaging so the exposure to relevant risks can be reduced. After all, SOCs mean that shippers have control over containers.
- ● If a shipper fails to return the container within a certain period, using SOCs can absolutely help them avoid Demurrage Charges and Detention Charges.
5. Is It Worth Buying Shipper Owned Containers (SOCs)?
Purchasing containers instead of renting indeed can do some help to your business since you have control over them. But whether it is worthwhile to do that remains a question.
For a shipper, whether to invest in SOCs calls for careful consideration. If you are going to transport goods from and to locations that lack enough cargo flow, buying SOCs can be cost-effective for your business. Or, if you know the cargo may be stored in containers for a long period, using SOCs can be even cheaper because there is no need to pay for DEM and DET.
However, purchasing SOCs can be really expensive. A 20-foot SOC may charge you 1,500-2,200 USD, and a 40-foot one may cost you 1,800-3,200 USD. Besides, you are required to pay for maintaining, storing, and managing SOCs.
Investing in containers is not something that can be taken lightly. You should weigh the pros against the cons before reaching a decision.
In this article, we have given an overview of how COCs and SOCs will make your service look. We hope we can help you choose an option best suited for your business.
If you have bought SOCs, you may want to optimize their use. There is one thing you may want to bear in mind: using SOCs requires you to apply to the shipping company in advance. And that's what a freight forwarder can do: reducing paperwork and simplifying procedures for you. At Seabay Logistics, we provide shipping and logistics services. Contact us and let us become your reliable logistics partner.