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The Life of a Shipping Container

27.10.2013 - Posted by Updated On 27.10.2013    

Shipping containers are typically seen on the backs of trucks, stacked up in depots, and we can occasionally see them loaded onto a shipping vessel either coming from, or going to, some far off land.  But, out of the 15-20 life span as a shipping container used in shipping, how much of that time is actually spent carry goods and products versus sitting idle in a port or depot?

Shipping containers are like any other asset or capital investment and the goal is maximizing utilization - keeping the containers loaded and in motion.  In general, shipping containers have three states:  Positioning, in transit, and in storage. While each shipping line and container leasing company has different management strategies and methods for keeping their containers in service, on average a shipping container is in use 85% of the time.

Container Physical Activity Container Fleet Deployment
Empty Positioning
Container depot to shipper's premises
5%
Loading at the shipper's premises
Container loaded with cargo
Loaded Positioning
Inland transport from shipper to port
15%
Port Terminal Handling
Container loaded onto the ship
Ocean Transport
Transported by sea to discharge port
Port Terminal Handling
Container discharged from ship
50%
Loaded Positioning
Inland transport from port to consignee
Cargo Unloading at Consignee
Container emptied of cargo
15%
Empty Positioning and Storage
From consignee to container depot
15%

How Does Utalization Relate to Shipping Container Sales?

The lifetime utilization assumptions above relate to shipping container sales in a couple of ways. There are two main reasons that a shipping line or lessor sells a container: The physical condition, or financial criteria.

The first reason that a company sells a shipping container is because of age and condition. Once a container ages to a certain condition and it's no longer able to pass the rigorous inspection criteria to be approved for international shipping. After all, the last thing that a shipping line wants is to need to repair a damaged container and replace its contents.

The second reason that a company decides to sell is financial, and more related to the chart above. While it's not as common as age and condition, if a container winds up in a location with little exports and no immediate need, the utilization rate would be lower and thus the storage charges would be higher. If the sale price of the container is higher than the estimated storage costs for the time it will be at that location, and how expensive it would be to reposition the container to a new location where it's needed, then the container is typically sold.

The staff of ContainerAuction.com has been involved in the sales, trading, finance, and management of shipping containers for many years. If you have any container related questions, from portfolio management and finance, to trading and sales, we invite you to contact our office with any questions or projects that you night have.



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