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Por: Francisco Mulet November 18, 2020

The importance of SOC containers for Freight Forwarders and Carriers.

Different types of rent. Advantages and disadvantages.

Silversea cuenta entre sus objetivos principales de negocio tender la mano a las compañías de Logística tanto nacionales como multinacionales con el fin de optimizar los costes de transporte marítimo ofreciendo al cliente final las ventajas inherentes al Shipper Owned Containers o SOC.

As a general rule, we find two types of containers in the international market depending on who owns them.

En primer término, hacemos referencia a los contenedores propios del armador/naviera conocidos como contenedores COC (Carrier Owned Containers). 

These containers are owned or leased by a shipping company or line. When the shipment is managed by means of this type of units, the shipowner is responsible for the provision of equipment and transport service. The COC generate costs known as delays when they exceed the free days granted by the shipping company for the return by the customer.

On the other hand, there are also the already mentioned SOC containers (Shipper Owned Containers) . These containers are the property of the shipper and do not generate delays in the case of their return after the deadline. However, this type of container must be duly declared before Customs.

Silversea, as a company dedicated to providing container rental or leasing services to shipping companies and freight forwarders, invests as it cannot be otherwise in special equipment, taking advantage of ports or geographic areas where there is usually a shortage of a certain type team. Therefore and depending on the details of the contract, a specific type of leasing will be established.

First of all, the long-term leasing implies the purchase of the unit by the company and does not entail any administrative service for the organizationThe objective for the company is to be able to amortize the purchase during the rental period, which does not exceed half the useful life of the container, approximately 15 years.

The shipping line is committed to a fixed number of containers for a specified period of time. It should be taken into account that the longer the period, the less flexibility the shipping company has to reduce the fleet. It is for this reason that operators usually make this type of rental contract with a return clause that entails a payment of a monetary amount to the leasing company.

Second, the short term leasing It proceeds when there is a growing demand in the market for a certain type of container. This demand can be cyclical or it can be unexpected; for example, when one of the strong companies has a void positioning crisis in the demanding port. In these cases, the shipping company has greater flexibility to adjust the size of its fleet, and thus be able to avoid unused containers and long standings. However, this type of leasing is more expensive, since the leasing company invests a lot of money to maintain the stock, as well as the different expenses that derive from the entry and exit of the units and the positioning for inspection. For the lessor, it is not a very profitable agreement, since he will find short-term income, but he will have to find new clients to use once the lease with the shipping company ends. Also in this section are one-way rentals, which are designed for the use of the unit from the loading port to any of the previously stipulated destinations. The company must return the unit to the place indicated in the contract once it is emptied.

Finally, and not least, we find the figure of the Master Leasing o Pool

In this type of contract, the container company assumes the logistics management of the unitIt implies a setting of conditions prior to the contract and a financial control system between the contracting parties based on the condition of the equipment at the time of exchange. The leasing company will take care of the maintenance and repair of the units, as well as their replacement after use or termination of the contract. 

This company must work providing the relevant operational services to the lessee, since it will be in charge of the distribution of the equipment based on the situation of the shipping company. This type of contract establishes a leasing obligation for a specified number of containers, through which the shipping company obtains the benefit of the flexibility of its container fleet. This lease must guarantee it for a specified period. For the lessee there is the obligation to take additional containers in stipulated places and leave them in the place where the agreement has been agreed. The shipping company makes a fixed payment for these leased containers, which is usually higher than those for leases with an identical term. 

If the tenant needs more units, he will be obliged to pay a previously stipulated price that will not be conditioned by the market situation at the time the need arises. This type of agreement gives the shipping company flexibility to determine the size of its fleet and avoids generating empty positioning expenses. 

For all types of rental previously described it is necessary to carry out an inspection or survey to determine the current status of the units. Through this system, any possible damage to the units is reflected. The inspector is obliged to send the inspection certificates to the company contracting his services. The certificates include all the damages that the container may have, the type of merchandise for which it can be destined (worthy charge), the date of manufacture and the material of manufacture, among others. 

These certificates will be accompanied by the relevant photos, including detailed photos of the damage, the container number and the plates. 

Consequently, and once we have understood the operation of the SOC container in its different modalities, we can highlight and as a conclusion the advantages and disadvantages of owning your own containers or renting them. 

In the case of its own containers, it is cheaper for the shipping company, its manufacture will be adapted to its needs, it will monitor their maintenance and repair, and it will be able to print its logos and colors as an advertising claim. 

However, as the main disadvantage we can indicate that it requires a considerable financial outlay. The shipping company will take care of the positioning of the units at all costs. If the demand for a type of unit is considerably reduced, the company will have to bear the costs that accrue from this inactivity. 

For its part, the advantages of container leasing are the following: 

It is easier for the shipping company to adjust the size of the fleet in case there is any deviation in demand, since they can return the units to the leasing company. 

It does not imply the necessary outlay to acquire the container, since ownership of it is not acquired. Maintenance and repair costs can be saved by entrusting these responsibilities to the rental company at the time of the contract. Efficient balancing can be achieved as containers can be loaded at one point and returned at another. 

As disadvantages we could indicate that in the event that there is a considerable and immediate growth in demand, the shipping company will have problems increasing the number of leased containers. There is also a disadvantage in the opposite case. When demand drops excessively, the shipping company must pay a series of penalties to return the units.

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