Being an integral part of the industry, you must have come across the term SOC container at least once. But do you know what this container is? Well, this blog will help you understand SOC containers in an in-depth manner. Read on to know the benefits, and how you can get your hands on one. Additionally, it’ll also give an overview of the difference between SOC and COC containers.
Containers are important assets that bring tremendous value to the shipping industry. Containers go through several interactions between the point of loading and the point of destination.
Each of these steps adds complexity and costs to the transfer of goods. Ideally, a shipper (let’s say that is you) wants the goods moved to the right place at the right time. And at the same time, you want to keep costs as low as possible. To achieve this, you have several options for every individual transport needed.
But regardless of what move it is, you first have to decide on whether you want to use a SOC or COC container.
If you’ve been in the industry for a long time and already know the difference between the two, you can directly get a full overview of how SOC containers can help you with your business right here.
Otherwise, you can continue to read this blog to understand every nuance of the SOC container market and the various advantages it brings with it for your fast-growing business. Let’s start by understanding the term.
What is an SOC container?
SOC container or shipper-owned container, as the term signifies, is a shipping container owned by a shipper (individual) or a business to move cargo long distances.
Simply put, a container is considered a “SOC” when the Beneficial Cargo Owner (BCO), freight forwarder, or NVOCC organizes their own container. They then hire a carrier and usually several other parties to transport their goods. Instead of using a container liner’s assets, you “bring your own box”. You then only purchase the slot on the vessel from the carrier.
A frequent example of SOC shipments is project cargoes into remote hinterland locations (think of a construction site in the jungle). Here it might take 30-40 days to return the container back to the port.
When to use SOC container for your shipment?
But with great power comes great responsibility. A SOC allows for control, flexibility, and independence. This also means you must put the time into finding the right partner for every step along with the transport. The more effort it takes to organize a SOC container, the lower the net cost/time benefit gets. There are many touchpoints, so when it comes to a standard move where the benefit of a SOC over a COC is marginal, it might not make sense to go through this process.
When you organize SOCs, you must also consider what to do with the containers once they have reached their destination. This problem can be alleviated by leveraging one-way containers, cabotage containers, or sell-and-buy-back deals. All these are alternatives that are facilitated through our online platform at Container-xChange.com. Here container users can find SOC containers and negotiate and execute one-way container moves.
There is another term that you would’ve come across — COC container. Now you may ask, what is the difference between SOCs and COCs? That’s a valid question as these terms get lost in translation and can get confusing at times. So, here’s what it means.
What is a COC container?
Essentially a container is considered a COC container when the carrier (container liner or steamship line) owns it and controls the majority of the entire transport chain.
COCs are normally used for standard shipments on stretches with a lot of cargo flow. There’s little to no incentive for using your own container if the carrier has ample boxes available. And if you at the same time pay a fair price for the end-to-end move.
When to use a COC container?
A perfect example would be if you’re shipping cosmetics from Hamburg to Singapore. There’s nothing extraordinary about this stretch and usually, carriers have enough containers in Hamburg to supply the move. Moreover, Singapore is not a far-flung location which could entail difficulties for the carrier when re-use or moving the container after discharge.
The real challenge arises when it comes to shipments that move away from the standard everyday transport of a carrier. This often leads to situations where the carrier prefers the shipper to “bring his own box”. Remember Shipper Owned Containers?
A route that could become problematic with COC containers is from Hamburg to Karachi. Karachi is a location with significant overstock and less sophisticated local processes.
The simple and cost-effective COC container in Hamburg suddenly becomes complex. That raises the costs exponentially. If the carrier has limited stock of containers in the port of departure or no need for additional units at the point of return (because in that specific location there are always more imports than exports or it is a remote hinterland location), naturally they will charge you a higher rate to cover their costs.
Penalty costs with COC container
Besides surcharges on freight rates, it does not take much to turn an easy and efficient COC move into a shipper’s nightmare.
The keywords here are demurrage and detention. Essentially you have to pay a penalty if you exceed the agreed free time for using the carrier’s container. While this helps to ensure a fast turnaround of the containers (great for carriers!) — for you it can easily destroy the value proposition of using a COC. Demurrage costs can add up quickly to the tune of 150-200 USD per day and are oftentimes outside of your control. This is especially true for locations that are known to have a high process uncertainty. Places where there are slow customs procedures or unreliable port workers.
Let’s continue our example above. Here you could imagine the container being stuck in customs for 30 days. And thereby racking up additional demurrage charges that destroy your original calculation.
How about you avoid the mounting additional charges levied on you and get SOC containers. It’s time for you to save a few dollars and get your hands on SOC containers. Click the banner below and you can see how easy it’s to find the container you’re looking for within a few seconds in a few simple steps.
Now that you’ve got clarity on both SOC and COC containers. It’s rather simple to understand the advantages of SOC containers. Let’s take a quick look at them.
Benefits of SOC container
⚡️Control of supply:
You can source containers on your own. That is essential for locations where carriers are unable or unwilling to provide boxes or only offer them at very high rates.
⚡️Control of ownership:
You can choose accurately which containers you need in which condition for which period of time. It includes the choice between whether to buy or simply lease the container depending on the current need.
⚡️Control of cost:
You avoid unexpected demurrage and detention costs as you are not obligated to move and/or return the containers to and from the carrier within a certain time frame. You have to take loading time, customs clearance, drayage, port congestion, etc. into account when planning your shipment. Demurrage and detention charges can quickly escalate to hundreds of dollars per day.
Benefits of COC containers
Using a COC is simple: You pay the carrier a given “all-in” rate to move your freight from A to B. The carrier is then responsible for the “in-between”. This includes the provision of the container itself. One resulting benefit is that once the move has been completed, the consignee does not need to worry about the container anymore. After the container is unstuffed, it is returned to the carrier’s depot and there are no further obligations to move or utilize it.
In cases where the shipment originates in a “high surplus” area—i.e. a region where trade imbalances resulted in an overstock of empty containers—using a COC can even yield significant freight rate discounts. The shipper helps the carrier evacuate some of the equipment by using it for export cargo, saving the carrier money.
And for a quick run-down, watch our video here:
Growing awareness of SOC container – A good reason for you to make the right choice
According to Container xChange’s latest ‘Mystery Shopping Survey of SOC containers’, 18% of freight forwarders accepted and organized a request for a SOC move. This number has grown by 80% since 2020.
Over the years, freight forwarders are realizing that SOC containers can help you avoid three main challenges:
- SOCs can increase the reliability of equipment supply in inland locations where there’s a scarcity of containers. With SOC, there’s more control over shipping with a preferred choice of carrier with lower trucking costs.
- Save up on freight rate, especially when shipping to special destinations with equipment surplus. This results in discounted freight rates in inland locations by saving on the return trucking.
- SOCs are insurance against demurrage and detention costs as the user will not be subject to these fees – often “hidden” at the time of booking.
Do you want to know how the 50 biggest freight forwarders gain flexibility with SOC containers? Click on the banner below and gain access to our SOC container report to get an insight into the SOC market and its growing popularity.
How do you source SOC container?
Most exports can be managed perfectly fine using COCs. However, there is a growing number of market participants who turn to SOCs. They can be an attractive alternative to save costs and gain back control over their logistics processes.
Whether in port locations or inland there are many people that can supply you with shipping containers. Especially container traders, shipping lines, freight forwarders, and leasing companies can help you with containers. Sometimes these people own containers or work as a broker. Regardless, in the end, you should get what you need if you approach these companies.
Digging into it
Usually, that starts with asking people you know for references. But often it ends with doing your own research. You try to find the right contact person for a company you have never heard of before. The process of finding partners for SOC shipments includes many steps. Such as background checks, negotiating rates and terms, setting up legal agreements, and adding services. Do your customers with cargo to ship wait for weeks until you finally can confirm their request?
We built a neutral online platform to let you source containers in minutes instead of weeks. Just type in your location and you’ll get a list of results and get deals done quickly. Increase flexibility in your freight bookings and avoid Demurrage & Detention with xChange now. More than 300 companies such as Kuehne + Nagel and Seaco already use the neutral online platform on a daily basis.
See how xChange can help your business and schedule a free demo by clicking on the banner below.