Explained about Sea Shipment -SOC container by Video
What SOC Container is
Hello, it’s Iino.
This time, I’d like to explain about SOC container.
First, Shipper’s Own Container (SOC container) is a generic term for containers that belong and are managed by freight forwarders and shippers.
On the other hand, Carrier’s own Container (COC container) is a term for containers that belong and are managed by shipping lines.
So, what are the differences between the two containers?
Let’s take a closer look.
Who does container belong to ?
What does “owning containers” mean?
When an individual or a company exports and imports above a certain volume, they use 20’feet or 40’feet containers to transport their cargo internationally.
By the way, who do these containers belong to?
Do exporters and importers purchase them?
Or do they belong to someone else?
Today’s topic is to talk about the “owner” of containers.
COC Container and SOC Container
There are two types of container ownership patterns.
1. A shipping line which operates vessels（= leasing company）
2. A client who requires cargo to be transported （shipper）
There are other types as well, but for this topic and to simplify the story, we will use these two types as examples.
These two types are referred to as the followings.
1. COC container.
2. SOC container.
Why are there COC container and SCO container?
What are the advantages of them?
Now, I will tell you the conclusion.
If you are a shipper in a normal situation, there is no advantage to use SOC containers.
This is the conclusion. Now, let me explain each type in detail.
About COC Container
First, COC container.
COC container is as previously explained owned and managed by shipping lines.
COC containers are used in the trading business by general shippers.
The advantages and disadvantages are explained next.
Advantage of COC Container
The advantages of using COC containers are.
1. You don’t have to deal with empty containers.
2. If there are surplus of containers, the transport cost could be reduced.
There are the advantages.
The cost of COC container is normally included in the transportation cost.
Once the cargo is transported and emptied, all you need is to return the empty containers.
You don’t have to worry about where to store the empty container after devanning.
If there are overflow containers at ports due to supply and demand balance, the transportation cost might be reduced.
Actually, as containers in the world travel between different countries, supply and demand balance is constantly changing.
In locations where they don’t have enough containers, the cost will increase.
On the other hand, if they have surplus of containers, the transportation cost is reduced to improve occupancy rate.
Many of you may have experienced this due to current container shortages, but when there are no containers, sea freight could be tripled or increased by up to 10 times depending on the location.
Disadvantage of COC Container
Now, the disadvantages of using COC containers are as follows;
1. Transportation costs will increase if numbers of containers are unbalanced
2. Detention charge may be required
As explained in the advantages section, if the balance of supply and demand fails, transportation cost will increase and this may be invoiced as xx surcharge.
Also, the containers are owned by shipping lines and they need to be returned. So you always need to be careful of the detention charges.
About SOC Container
Next, let me explain SOC containers.
SOC containers are owned and managed by NVOCC (freight forwarders) and general shippers.
As they do not belong to shipping lines, you can minimize the cost of transport when you need to use in irregular situations.
However, as explained in my conclusion, when things are normal, SOC containers options are not preferable compared to COC containers.
The advantages and disadvantages are as follows.
Advantage of SOC Container
The advantages of using SOC containers are;
1. You can move and store cargo without taking it out from the container
2. You can prevent a cargo accident by not using poor quality containers
These are the advantages. Let’s take a closer look.
SOC containers are normally owned by shippers, so they can use the imported container to store cargo for a long period.
As they do not require to be returned, detention charges are not applicable.
Also, another highlight is that the shippers can manage their containers by themselves.
If you use COC containers, you won’t know what condition the container is in when making the booking. Sometimes, empty containers arrive with holes in them.
You might be provided with containers which are in poor condition. So, using SOC containers becomes an advantage as you can manage and maintain containers by yourself at all times.
Disadvantage of SOC Container
Next, disadvantages of using SOC containers are as follows.
1. Initial investment is required
2. It costs and is time consuming to manage containers
Another disadvantage of using SOC containers is you need funds to purchase containers at the beginning.
Your funds will be obligated to the containers and it will affect your cash flow.
Also, as you own the containers, “management costs” will be required.
For example, storage of empty containers, stocktaking, management and maintenance costs and labor time will incur.
These are the differences between SOC and COC containers.
Now, let’s summarize today’s topic.
There are two main types of sea shipment containers.
COC containers are owned by shipping lines, and SOC containers are owned by freight forwarders and shippers.
These containers have advantages and disadvantages.
The advantages of using COC containers are.;
• You don’t have to deal with empty containers.
• If there are overflow containers, the transport cost could be reduced.
Disadvantages are as follows.;
1. Transportation costs will increase if numbers of containers are unbalanced.
2. Detention charges may be required.
On the other hand, the advantages of using SOC containers are.;
1. You can move and store cargo without taking them out from the container.
2. You can prevent cargo accidents by not using poor quality containers.
1. Initial investment is required.
2. It costs and is time consuming to manage containers.
Due to the recent container shortages, some shippers may consider whether they should introduce SOC containers. However, sea shipment requires vessel’s space availability as well as containers.
We will take a look at this topic in the other video.
That’s all for today. Thank you.