The Benefits of Container Exchange between Carriers: A Case Study

Abstract

The paper proposes that the container exchange mechanism is an effective solution to the container inventory imbalance problem. Drewry Shipping Consultants state that about 20% of total container flows at sea around the world are empty, and the costs of re-positioning are about USD 400 per container. There is a tremendous pressure on reducing logistics cost and carbon footprint. The fundamental reason for Container Inventory Imbalance (CII) is the external trade imbalance of countries. A major challenge revolves around re-positioning of empty reusable containers. It is noted that the exchange mechanism works well with respect to the shipping space (slots) that has proved immense benefits to carriers as well as to the industry in general. However, the carriers believe that there is no opportunity for container exchange as the intrinsic trade imbalance is commonly applicable to all carriers. The industry has not made any attempt to evaluate the benefits of container exchange due to this myopic view.