ARIN Convention 2009

Abstract

The global cost of repositioning containers is enormous and foldable containers have been proposed as one way to address the problem. This study investigates foldable shipping containers from the shipper and sustainability perspectives. In particular, the viability of foldable containers as an instrument of carbon offsetting for the shipping industry is explored. A shadow pricing approach has been adopted to predict the impact of foldable containers on the shipping rates faced by back haul shippers in the Trans-Pacific Westbound trade. The carbon abatement impact from the use of foldable containers is also estimated via an operational activity-based approach, considering inland intermodal transport, truck idling, terminal handling and folding/unfolding. Results show that if foldable containers become prevalent, inland exporters in the Trans-Pacific Westbound trade could face an average of nearly US$500 per FEU (forty-foot equivalent unit container) increase in spot freight rates for the network studied. Furthermore, the impact of foldable container on carbon avoidance is assessed to be up to 0.4 tonne per FEU annually when deployed in a round-trip liner service in the same network. The results imply that while foldable containers would narrow the gap in freight rates between the head haul and back haul trades, back haul inland shippers would be worse off. Furthermore, emissions abatement from the use of foldable containers would be modest, which limits the role that such containers can have in any proposed “cap-and-trade” schemes. This finding has policy implications on the governance of green incentives and carbon accounting in the shipping industry.