What is off-hire?

Off-hire is mostly used in conjunction with containers. It refers to a particular stage of the container within a leasing lifecycle.

When the term off-hire container is used, it can involve two scenarios:

  • Leased container which is nearing the end of its leasing period, but in possession of the leasing party. OR
  • Leased container which was returned to the container owner after the stipulated lease time was over.

Any type of container can be an off-hire container, including standard dry containers, refrigerated containers (reefers), or other special containers as well.

Off-hire Container & Leasing

The containers can be owned or rented, depending on the freight and shipping requirements.

When the shipper is not sure about the demands and frequency of shipping, leasing a container is a preferred option. The entity that gives the container for rent is called a lessor and the one taking the container is called a lessee.

The container leasing happens as per a contract for a specified period of time. It can be a master lease, one-way lease, long-term, or short-term lease.

When the container nears the end of the leasing period, or when the container is returned to the original owner (lessor) within that time, it is called an off-hire container.

Off-hire Container & Trading

Off-hire containers can also be traded or listed to be rented out, even when they haven’t been returned to the container owner, but are at the end of their leasing duration.

So, for example, you’ve rented out a container one-way from the port of New York (US) to the port of Hong Kong (China). On its way back to New York port, this off-hire container gets a buyer who is interested in renting it. This container is nearing the end of its leasing period. Here, if you rent or sell the container to the new buyer, you’d deal in an off-hire container between yourself (as seller) and the buyer (receiver). The deal is called “off-hire trading”.

So, essentially, off-hire trading means that you rented/sold the container to another entity while it was already rented out but nearing the end of its leasing term. In logistics, such deals are also called Gate-Buy.

Shippers engage in off-hire container trading because it is time-effective and cost-effective.

As the container is already available at the depot/port, the container owner (lessor) can ask the container renter (lessee) to directly drop the container at the next buyer’s location (off-hire trading lessee). This saves the trucking costs and container moving costs from port to depot of the new buyer (new lessee).

Container traders and shippers can maximize their profit margin by combining container leasing & off-hire container trading. This is usually done by empty container repositioning.

Off-hire Container Surveys

Containers go through various levels of inspection called a container survey. After the leased container is returned to the owner (lessor), a thorough inspection is carried out to check for damages outside the agreed leasing terms. This survey is called an “off-hire survey”.

Terms related to Off-hire

About Container xChange

Container xChange simplifies the logistics of global trade. We connect all logistics companies through our neutral online infrastructure that connects all logistics companies. Whether you’re in the business of leasing or trading equipment or want to be on top of all container movements, Container xChange supports simplifying and automating those processes. Want to learn more about leasing at xChange? Click here for more information. Interested in trading? Learn more here.