With ocean freight demand reaching record highs, shippers face mounting pressure. Understanding the difference between Shipper-Owned Containers (SOC) and Carrier-Owned Containers (COC) can help you cut costs and stay in control.
A few months ago, global demand for ocean freight container shipping hit an all-time record as shippers sent more than 2.2 billion tons of containerized cargo to other parts of the world.
Amid strained freight capacity and severe port congestions, having your own shipping container alleviates much of the pressure off your logistics operations while it can help reduce freight costs and delays.
Indeed, oftentimes, Shipper-Owned Containers (SOC) are a great alternative to standard, Carrier-Owned Containers (COC).
Let’s see how.
What Is A Shipper-Owned Container (SOC)?
A Shipper-Owned Container (SOC) is a shipping container that is owned or leased by the consignor (shipper or supplier) or the consignee (receiver or end customer). Instead of the shipping line providing the container, shippers are responsible for sourcing their own.
In SOC shipping, you are essentially bringing your own container to the carrier and paying them to transport it (along with your goods, of course!) This approach offers shippers more flexibility and direct control over the container itself.
In fact, SOC shipping is quite popular in the supply chain industry.
Just think that the global SOC container market size was USD 1.80 billion in 2022 and is projected to reach USD 5.72 billion in 2031, growing at an impressive CAGR of 10.6%.
But also Carrier-Owned Containers (COC) accommodate a (probably) equal number of shipments. They are actually the norm for standardized import and export.
What Is A Carrier-Owned Container (COC)?
A Carrier-Owned Container (COC) is a shipping container owned by the shipping line. When booking a shipment, the carrier provides the COC container as part of their service. Carriers are responsible for handling and maintaining COCs, while shippers are expected to use and return them promptly.
When To Use SOC Containers
There are various instances where shippers prefer using their own SOC containers.
Shipping To Distant Or Remote Locations
If you are shipping to some ‘not-so-popular’ destinations, like remote areas or places with less frequent trade routes, you may experience a shortage of available carrier-owned containers.
In such cases, an SOC secures you with a container for your shipment, preventing potential delays.
When You Need Greater Flexibility And Control
With COCs, you are generally bound by the shipping line’s policies regarding container usage and return locations.
SOCs, on the other hand, offer higher flexibility. You can, for example, choose the type of container that’s best for your cargo and ensure that its condition meets your specific requirements.
More than that, you can decide on return locations that are most convenient for your logistics operations without being restricted by the carrier’s network.
For Specialized Cargo Or Unique Shipping Needs
Certain types of cargo may require non-standard containers or specific modifications on common types of containers.
SOC shipping allows you to select or modify units to suit your specialized shipment, which might not be readily available with standard COC options.
For One-Way Shipping Scenarios
Sometimes, returning an empty container can be impractical or expensive, leading to empty container repositioning costs.
Through one-way leasing of SOCs, you can avoid the responsibility and cost of returning the empty container, as the leasing company takes over once it reaches its destination.
Avoid Demurrage & Detention Charges
Demurrage fees are charged for keeping a carrier’s container within the port terminal beyond the allowed free time, while detention fees are incurred for holding the container outside the terminal for longer than agreed.
In any case, as a shipper, you want to save on potential extras. By using your own container, you are not subject to the carrier’s strict timelines for pick-up and return, thus avoiding potentially hefty demurrage and detention charges.
Especially if delays occur due to port congestion, customs clearance, or other unforeseen circumstances, SOC shipping can lead to significant cost savings.
When To Use Carrier-Owned Containers (COC)
Despite all the benefits of Shipper-Owned Containers, COC shipping is generally a more convenient option.
Added Convenience For Standard Shipments
Because all COC container logistics are handled by the carrier, there’s much less planning and coordination that falls on the shipper for sourcing, managing, and potentially returning the container.
That’s why COC containers are generally best for standard shipments and/or routes with a lot of cargo flow where the carrier has ample container availability.
Less Costly For Small, Occasional Shippers
When lower initial costs are a priority, COC shipping helps you avoid the upfront expense of purchasing or leasing a container, making it a cost-effective choice for shippers with limited budgets or occasional shipping needs.
Potential Discounts
When opting for COC shipping, you may find considerable freight rate discounts, especially in shipments originating in high ‘surplus areas.’ It can thus be a win-win scenario for shippers and carriers.
SOC Vs COC Containers: Differences In A Nutshell
Here’s a quick reference table that’ll help you get an idea of which container option is best for your shipment.
| Aspect | Shipper-Owned Container (SOC) | Carrier-Owned Container (COC) |
|---|---|---|
| Ownership | Owned or leased by the shipper. | Owned and managed by the shipping line/carrier. |
| Management | The Shipper: • Plans/coordinates container handling and maintenance. • Ensures its cargo- & sea- worthiness • Has limited carrier support for container-related issues. | The Carrier: • Manages container handling and maintenance. • Arranges all container logistics. • Handles all container-related issues. |
| Flexibility | High Flexibility • Shipper chooses container type, quality, and return location. | Limited Flexibility Bound by carrier’s policies for container usage, return times, and return location. |
| Availability | • Suitable for regions with container shortages. • Easier to accommodate unique shipping needs. • Better availability during container shortages. | • Readily available in standard sizes through the carrier. • Potential shortages during peak seasons or remote regions with limited availability. |
| Charges | Pros: • Potential cost savings on long-term use. • Helps avoid demurrage & detention fees.Cons: • Higher initial investment (purchase or lease upfront). • May incur empty container return costs. | Pros: • Lower initial costs. • Can fall under ‘all in’ freight payment. • Potential for higher freight rate discounts in surplus areas.Cons: • Prone to demurrage & detention fees if timelines are exceeded. • Potentially higher costs for long-term use due to recurring charges. |
| Cost Efficiency | SOC shipping can be cost-effective: • On specific routes | COC containers may be more economical for shorter or simpler shipping routes. |
| Freight Rate Impact | • Large customers using mainly SOCs may get freight discounts. • SOC space is generally cheaper than COC space. | • Potential freight rate discounts for COCs shipped from high ‘surplus areas’. • COC space can be cheaper under special circumstances. |
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