Wednesday 12th Dec, 2018

INDUSTRY OPINION: The great empty container debate

Photo: Shutterstock
Photo: Shutterstock

MAERSK Line Australia recently announced that they will be introducing a “Return of import containers to Australian shipping terminals” policy. This practice, which is already common among a number of shipping lines, seems to have become more widespread recently.

Empty repositioning of containers is a non-revenue-earning part of the container logistics chain in Australia, caused by the large imbalance between import and export containers. Twenty-five percent of the total Australian container task is returning empty containers (mainly 40ft) to SE Asia and China.

Some of the Australian container terminal operators introduced a hybrid solution many years ago (and offered this integrated service to their shipping line customers) to circumvent the Empty Container Parks (ECPs) by having an integrated ECP adjacent to the container terminal. These facilities receive (de-hire) empty import containers after unpacking, store them and then pass them ‘through the fence’, usually by forklift, to the container terminal yard at the last minute for loading onto a vessel. This saves both transport costs and valuable yard space at the terminal.

The motive for the ‘direct return’ is to save the extra move to and from the ECP with the associated transport and handling costs. There has already been concern expressed by a number of stakeholders in the logistics chain about the potential increased costs in implementing this ‘direct return’. I believe the biggest losers will not only be the ECPs (some of which are owned by shipping lines) but also the transport operators and ultimately container terminal operators as container volumes increase and yard space at the terminal is at a premium.

There are implications for the transport operators with this practice. Instead of returning the empty containers to the ECP, with a quick turnaround for the trucks, the transport operator must coordinate the timing of the container unpack at the importer (usually during ‘banking hours’), lodge a Pre-Receival Advice (PRA), book a Vehicle Booking System (VBS) time slot and hope for a quick turnaround at the container terminal.

There are a number of reasons why the ‘direct return’ practice (which has been common overseas, much to the chagrin of the container terminal operators) has increased recently in Australian container terminals:

  • the continuous drive by shipping lines to reduce costs
  • increased competition between stevedores with pressure by shipping lines to offer ‘direct return’
  • stevedores currently have sufficient yard space to accommodate the empty containers and store them for a longer period in the yard (resulting in an increase in container dwell time) rather than receive them at the last minute for repositioning on a vessel
  • stevedores can now ascertain the condition of the container (i.e., record any damage) when it arrives at the terminal receival gate using Optical Character Recognition and CCTV technology, enabling the shipping line to check if the container was damaged before it arrives at the container terminal and assign liability to the importer if this was the case. Damage checking has traditionally been carried out manually by the ECPs.

It will be interesting to see whether this new practice leads to an increase in the truck-loading factor and greater two-way running at the container terminals, or to more staging of empty containers at transport operators’ yards. If the latter was to be the case it will lead to an increase in the cost of the container logistics supply chain, which will be borne by the importer.

If this practice becomes widespread, when container volumes increase yard space at the terminals will come at a premium and storing empty containers will not be the main priority. Terminal operators might rue the day when they reluctantly agreed to accommodate the shipping lines.

* Peter van Duyn is Maritime Logistics Expert at Deakin University’s Centre for Supply Chain and Logistics

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