Hello, it’s IINO.
I would like to broadcast IINO san’s Logistics Radio today.
Today’s theme is about transporting own containers by major U.S. and European shippers.
We are currently in the peak season for ocean container transportation to North America.
It is difficult to secure space and ocean freight rates continue to rise.
Under such circumstances, major American retailers such as Wal-Mart and Home Depot, as well as IKEA in Sweden, have begun to arrange their own container transportation.
Daily Logistics Radio by IINO san in 8th Sep. 2021
Major Shippers’ Transportation Volume to North America
First of all, here are the shipping volumes of Wal-Mart and Home Depot to North America alone last year.
Wal-Mart: 930,000 TEU/year
Home Depot: 530,000 TEU/year
Wal-Mart’s 930,000 TEU means that they carried 930,000 by 20-foot container.
The largest container ship today is 24,000 TEU in size, so you can see how much Wal-Mart transports. When seeing this number, it looks like it would be more beneficial to transport by own company.
Own Transportation by Wal-Mart
And Wal-Mart did twice container shipments in August 2021. They built its own 53-foot containers and transported 177 at the first and 247 at the second.
The ship they chartered at this time was not a container ship, but an open-hatch bulk carrier. This is a great example of proving that bulk carrier can also transport containers.
Cost of a container ship and bulk carrier to North America
Then, what are the costs of chartering bulk carrier and of transporting containers today? Here is a very rough cost.
Current ocean freight rates:
Shanghai – LA: about USD 6,000/40′
Bulk carrier (size unknown):
Nagoya – LA: Approx. USD 300,000/ship
Please kindly note that this is a reference cost when our agency chartered a bulk carrier in 2021.
Comparison of the cost of a container ship and a bulker ship to North America (rough)
・Container transportation arranged by Wal-Mart (August 2021): Approx. 200 containers/ship
・Transported by shipping company (if): 200 containers x USD6,000/40′ = USD1,200,000/ship
・Chartering cost of bulk carrier (if): USD 300,000/ship (NGO – LA)
This is a very rough estimate, but it gives you a sense of the cost.
Potential benefits of using bulk carrier
Containers need to be purchased but you can use many times over. Also, as we reported the other day, high ocean freight rates are expected to continue in 2022.
Even if you consider the cost of purchasing containers, it is likely that major shippers have decided that chartering their own containers will be more beneficial this year and next.
However, it is unlikely that they will arrange all container transportation by themselves.
Mainly during the peak season, when ocean freight rates rise and space becomes scarce, it is expected to see more options for transportation using such bulk carriers.
Own transportation by Wal-Mart and Home Depot has realized a new transportation method in the shipping industry.
It will be interesting to see how these major shippers’ moves will affect the containership and bulk carrier markets in the future.