SOC Report 2021 Read the Container xChange mystery shopping report to learn about how the 50 largest freight forwarders gain flexibility with SOC ...
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SOC Report 2021 2nd Edition Read the Container xChange mystery shopping report to learn about how the 50 largest freight forwarders gain flexibility with SOC containers.
Executive Summary ............................................................................................................................................. 3
SOC containers solve 3 crucial problems ............................................................................................................. 5
Expert interview: Wolfgang Lehmacher about SOCs, Carriers and COVID-19 ...................................................... 10
Benchmarking the world’s largest freight forwarders ......................................................................................... 14
The winners of the Mystery Shopping ………................................................................................................... 15
Good performance concentrates at top ....................................................................................................... 17
2020 Trend – Interest in SOC containers increased by 66% ....................................................................... 18
How to take the hassle out of managing SOCs ................................................................................................... 20
Solving operational challenges ..................................................................................................................... 21
Source and manage SOC containers online ................................................................................................. 22
2
Executive Summary
Why SOC Container Mystery Shopping 2020?
COVID-19 has introduced significant challenges for the entire supply chain, and
specifically, equipment availability has become practically impossible to predict
throughout the year. As a consequence, SOC containers* become more relevant for
freight forwarders to increase availability and maintain stable profit margins. As we
wanted to understand the SOC usage by the world’s largest freight forwarders, analyse
the impact COVID-19 has on their equipment choice, and how the numbers changed
compared to last year, we had set the SOC Mystery Shopping.
* SOC Containers compared to COC Containers
More freight forwarders are able to offer SOCs now
Last year, only 3 out of the 50 world’s largest freight forwarders could organize SOC shipments and source
the containers for us - some did at least offer leasing or buy-back deals to help us out. To find out if things
have changed, we reached out once again to ship industrial machinery parts ex China to Europe using SOC
containers. To underline the need for SOCs, we have required 45+ days of storage time inside the
container in Germany.
Let’s start with the good news! 10% of the freight forwarders we’ve reached out to have accepted our
request and were able to organize the SOC move and source the containers without major restrictions.
The top performers of the mystery shopping report are Kuehne+Nagel, CEVA Logistics, Hitachi Transport
Systems, Nippon Express and Kerry Logistics.
3
Executive Summary
This figure of 10% compares to just 6% of the companies last
Top performing Freight Forwarders year. Although still relatively low, the number has grown by 66%,
indicating the growing interest in SOC containers.
In addition to that, bring your own container was something we
had been told in 10% of the cases and in 4% of the cases freight
forwarders have at least offered us units to buy – in both cases
the forwarders would have been at least able to organize the
SOC move for us.
Experts believe in growing importance of SOC containers
Industry experts like Wolfgang Lehmacher (former Head of Supply Chain and
Transportation Industries of The World Economic Forum) believe in SOC
containers. “SOCs empower forwarders and NVOCCs to offer a broader spectrum
of options to their customers to increase flexibility, mitigate risk and manage cost”,
Lehmacher says, “The fact that ocean freight costs have skyrocketed, will possibly
lead to an increase in SOC market share!”.
We hope you enjoy our mystery shopping report and learn a lot about SOC
containers on the following pages. If you have questions, feel free to reach out Wolfgang Lehmacher
anytime. We’re looking forward to hearing from you. Supply Chain Strategist
4
SOC containers solve three crucial problems
SOC stands for Shipper Owned Container and implies that a shipper brings his own container and
only books the slot on the vessel directly with the shipping line. The main reasons for using SOC
containers are increased flexibility and cost savings. Key themes are:
First, when facing equipment scarcity in inland locations, SOCs
can increase reliability of equipment supply, allow you to control
trucking and shipping with the carrier of your choice.
Second, there are freight rate savings when shipping to special
destinations with equipment surplus resulting in discounted
freight rates, and inland locations by saving on the return trucking.
Third, SOCs are an insurance against demurrage and detention
costs as the user will not be subject to these fees, which can
quickly add up at any time and are often “hidden” at the time of
booking
5
SOC Container Benefits
1. Use SOC containers to overcome
equipment scarcity
Shipping lines are usually pretty good at making equipment available
in ports but container supply in inland locations can be a challenge.
The distance between the loading point and the nearest point of
equipment availability increases trucking costs that can substantially
add to your freight bill.
The same applies for landlocked countries like Rwanda, war zones
such as Iraq and Afghanistan or just smaller ports that are not on one
of the main trade lanes. SOCs can increase reliability of equipment
supply, allow you to control trucking and shipping with the carrier of
your choice and lower trucking costs.
With SOCs you are also independent from the shipping lines in terms
of equipment type, quantity and container condition. In case you need
40HCs but the shipping line is only offering 40DCs you better source
them on your own.
6
SOC Container Benefits
2. SOC containers can be cheaper than COCs*
when shipping to special or surplus locations
If you ship into a location with a deficit of containers, the The same applies for the equipment situation in your pickup
carriers should be more than willing to get more of their own location. If you want to ship cargo from a container surplus
equipment into that location. In that case, you should also be location, carriers are willing to give them to you at a bigger
able to get their equipment at a good rate, making COC the discount as you help them avoid empty container moves.
better choice for you. But if your shipment goes to a surplus Especially if you help NVOCCs reposition their empty
location, the carriers and container owners might charge a equipment you should get a good price as they even have to
higher price. They have no interest in paying for storage and pay for moving empty containers with shipping lines.
repositioning of the containers in the port of destination. If
* SOC Containers compared to COC Containers
you still want to go there, it might be easier to bring your own
container, so the carrier doesn’t have to deal with it.
7
SOC Container Benefits
3. SOC Containers help you avoid
demurrage & detention charges
The concept of demurrage & detention charges is simple:
demurrage applies for the time a container is used within a port,
detention for the time outside of a port. If container users (e.g.,
freight forwarders, BCOs or shippers) exceed the free-days
granted by the shipping line, demurrage & detention charges will
be levied.
These charges can be significant! After free-days are exceeded
(usually not more than 4-5 days), costs per day typically increase
in predefined intervals — up to hundreds of dollars per day and
container according to the Demurrage & Detention Benchmark
2020*.
With SOC containers you almost completely avoid demurrage &
detention charges as container owners are interested in having
you reposition their equipment from surplus to deficit location.
Hence, they usually offer 30 to 45 free-days and only charge a Average Demurrage & Detention charges accumulated
few dollars per day and container (depending on the location) if
the container user exceeds the granted free-days. … when free-days exceeded, across the 10 biggest shipping lines
and across Antwerp, Hamburg, Jebel Ali, Los Angeles, Rotterdam,
* Demurrage & Detention Benchmark 2020 Shanghai and Singapore per day*
8SOC Container Benefits
An example: Detention costs can
quickly escalate to hundreds of dollars
How much time do you need to load your container? How
long will it take to clear customs? How far do you need to
truck at your destination? How long will the consignee need
to unstuff it? The answer to each of these questions can
translate into immediate savings.
According to a research study published Container xChange
in collaboration with FraunhoferCML*, it takes shippers, on
average and across regions, 10 days after discharge at POD
to return the empty container at a depot. In 25% of the cases,
it takes more than 14 days to return containers and in 5% of
the cases even more than 30 days.
This would lead to horrendously expensive detention costs
of, for instance, $2400 in Los Angeles or $356 in Jebel Ali
when it takes 14 days to return the empty containers at a
depot (see slide 8).
FraunhoferCML research study: Time it takes (in days) to return * Demurrage charges – Prediction uncertainty high in the Middle East
containers in depot after discharge at Port of Destination. and North-East Asia
9Expert interview: Wolfgang Lehmacher about SOCs, Carriers and COVID-19 Wolfgang Lehmacher is the former Head of Supply Chain and Transportation Industries of the World Economic Forum, advisor, investor and one of the leading experts in the shipping industry.
Expert interview: Wolfgang Lehmacher
What's the impact of COVID-19 on SOC containers? Does Who and why would you recommend to use SOC containers?
COVID-19 increase SOC market share? And how do you think
will be the role of SOCs going forward? Shippers, forwarders, NVOCCs, and carriers, all can benefit
from shipper owned containers (SOC). Simply because
COVID-19 has rippled across the global economy and caused shipper owned containers are an additional instrument in the
significant imbalances in container flows and availability. mix of managing the container enabled supply chain. An
According to the media, all major carriers are experiencing a element that is often forgotten by the parties involved.
shortage of containers at Asian ports, especially in China. The
JOC reported that a forwarder said “The availability of SOCs increase the chance that containers are available for
containers is more about ‘how much you are prepared to shippers, which are called in the industry beneficial cargo
pay’.” In ocean freight, for example, the additional cost of owners (BCOs). Getting the equipment you want is not at all
empty containers skyrocketed from $500 per container to certain in every case. Particularly, in the hinterland BCOs can
$1,200 per container in three days”. A cost close to the price experience a shortage of equipment or high cost associated
of purchasing a container. This situation will possibly lead to with ensuring that they get what they need. Containers can
an increase in the SOC market share. The SOC industry can also be used as storage and office space in some
leverage this moment to increase the awareness of its destinations after the transport is completed, which is
offering and its benefits. It is in the interest of the SOC prohibitive with carrier owned containers (COCs), but a viable
industry to help the shippers and carriers to solve burning option with SOCs. But most importantly SOCs avoid high
problems of imbalances, in the COVID-19 times and beyond. In demurrage and detention charges and increase control over
particular, Covid-19 may stay with us for some time. But it is the activities along the chain as SOCs grant that one knows
not only in the hands of the SOC players. It is a great option with whom one trades, i.e. which trucking company or ocean
for all players along the container value chain, which is worth liner moves the container.
assessing and evaluating to capture the possibilities and Whenever there is uncertainty about the availability of
advantages of this alternative offer to optimize regional and containers or special equipment, like open-top containers
global supply chain networks. SOCs are the safer option.
11Expert interview: Wolfgang Lehmacher
Also, when loading, container handling, customs clearance, Do bigger forwarders pay not enough attention to the SOC
and unloading times are unknown and unclear BCOs may be segment —> a change for SMEs to „close the gap“?
better off with SOCs. When tasks along the chain take longer
than expected and a container is kept beyond the free of I have the impression that the option of using SOCs is still not
charge period offered by the ocean liner for their COCs, high known enough. It would be helpful to find a sponsoring
demurrage and detention charges apply. SOCs can also partner to raise awareness but also credibility.
reduce rates for destinations where carriers struggle to get This can be large carriers and forwarders. Furthermore, the
their equipment shipped back and therefore build the resulting industry needs a playbook for SOCs. What is it? How does it
costs into the shipping rates. work? Once a leading ocean liner uses a SOC platform to
In turn, SOCs don’t make sense on main lanes where optimize its container rotations the industry would pay much
containers are available and rates are highly competitive. more attention to the solution. SMEs are always somewhat at
Hence, SOCs can offer many advantages where they help to the bottom of the “food chain”. It is up to forwarders and
reduce uncertainty for all parties. Even carriers can think NVOCCs to extend the SOC option to SMEs, which is currently
about using 3rd party equipment to reduce their burden of mainly offered to large shippers.
returning containers. On the flip side, SOCs require operational How can carriers benefit from SOCs?
knowledge and work to purchase or lease the containers and
the trucking for example. Carriers can benefit from higher customer satisfaction and
fewer disputes about charged detention and demurrage
charge. They can also solve some of their struggles about
returning containers. Either by promoting the model to be
used by NVOCCs and forwarders, or using the option
themselves. Provided it is digitized, the management of SOCs
should be integrated easily.
12Expert interview: Wolfgang Lehmacher
With carriers trying to integrate the entire logistics value A „drawback“ of using SOCs is a slightly higher operational
chain, how can forwarders retain a competitive edge using process workload. What needs to happen in the industry to
SOCs? change that?
Most probably, there will always be a space for the highly Firstly, I think there needs to be more awareness about the
knowledgeable and skilled expert that helps shippers to SOC option to better manage the container freight value chain.
manage their logistics value chain. Furthermore, forwarders The business case also needs to be clear. Also, the know-how
are getting increasingly digital. They don’t leave the field to the about the process to integrate SOCs into the mix of tools to
Flexports and Fortos easily. They have their digital strategies. manage fluidity and cost along the multi-modal supply chain.
And rightly so. SOCs and the related digital platforms will be a
vital part of the mix of models and tools. SOCs empower Secondly, in parallel to building awareness and knowledge, the
forwarders and NVOCCs to offer a broader spectrum of industry needs to develop tools and automate as much as
options to their customers to increase flexibility, mitigate risk, possible the leasing and purchasing of containers. But also
and manage cost. the management of the entire flow, from loading to trucking
and handling, monitoring and delivering to the final
destination. The more the process is digitized the lesser the
burden.
13Benchmarking the world’s
largest freight forwarders*
We’ve set up a fake company that imports industrial
coffee machinery parts from China to Germany to find
out how many Forwarders would offer us SOCs and Pickup Shanghai
organize the containers for us. Dropoff Hamburg
Storage 45 Days in Hamburg
* Top 50 US and Global Third Party Logistics 2020 Move SOC
Chassis Can be detached
Cargo Industrial Coffee Machinery Parts
This was how our request looked like Container 40DC
Weight 300 kg/ pallet
Incoterms EXW
Factory 3rd Floor, Building 1, No 18, Dongbao Rd,
Songjiang Disc, ShanghaiSOC Mystery Shopping 2021 Benchmark
10% can organize SOC move and source units
10% of the companies we have tested were able to
organize the SOC move and source the containers without
any restrictions. The top performers of the mystery
shopping report are Kuehne+Nagel, Nippon Express, CEVA
Logistics, Hitachi Transport Systems and Kerry Logistics.
Offers ranging from $300 to $2700 per container
Organizing SOC moves and sourcing the equipment comes
apparently at high costs. Offers we have received included
pickup charges of between $300 to $2700. The huge price
range shows that some are able to source equipment on
their own while others either suffer from container shortage
across China or have to buy the container for their
customers first. Actual quote we have received in November 2020
15Benchmark
Second level alternatives
Bring your own container was something we had been told
by 5 forwarders (10%) and 2 forwarders (4%) have at least
offered us units to buy – in both cases the forwarders
would have been at least able to organize the SOC move for
us.
That shows how the largest forwarders try to find solutions
for their customers, but with all the operational hassle it
would be less satisfying for a customer with our request to
buy or long-term lease units instead of receiving a full
service SOC offer.
Responsiveness
Although we did not specifically test digital capabilities,
most of the companies did not offer self-serve forms or
online bookings. For most of the responses, we had to
follow up several times. In the end, 26 freight forwarders
(52%) did get back to us. It seems like they still make it
difficult for new companies to work with them (opportunity
A breakdown of the responses the freight forwarders sent us for smaller forwarders to step in!).
16Benchmark
Good performance concentrates at the top
of the forwarder ranking
Looking at the results of the Mystery Shopping
Report 2020, we’ve noticed significant differences
between the freight forwarders, depending on how
they’re ranked in the top 50 of freight forwarders.
The response rate as well as the ability to organize
the SOC move and source SOC containers
concentrates in top 60% of the freight forwarders.
Outside of the top 60%, only 2 companies were
able to organize the SOC move and no company
was able the source the SOC containers for us.
Reasons for this could include a more regional
focus, a weaker network or even the equipment
shortage across China in Q4 2020.
For more transparency on container supply and to
access a growing network of 600+ potential
partners, click the button below and get in touch
with us anytime.
Cohort analysis: Comparing the results of the Mystery Shopping Report based
on the rank of each forwarder in top 50 list (Cohort 1 = Rank 1– 10, Cohort 2 =
Learn More Rank 11 – 20 etc.)
17Benchmark
Compared to last year…
Ability to organize SOC moves and source
containers has increased by 66% in 2020
Compared to 6% of the companies last year, 10% of the
freight forwarders we’ve reached out to are fully able to
organize the SOC move and container as requested (last
year we only looked at companies who can source SOC
containers and organize the move --> number of forwarders
were able to organize the move might have been higher last
year. Although still relatively low, SOC rate has grown by
66%, indicating the growing interest in SOC containers.
More straight declines but no wrong offers
Last year, 25% of the companies got back to us with a
quote and said, “Yes, we can help you!”. But after taking a
closer look at the quotes we saw that 3 out of 4 quotes
were not for SOC shipments and included demurrage &
detention charges.
This year that was surprisingly not the case. We have not
received a wrong SOC offer and with 27% of the companies SOC Mystery Shopping 2020 compared to 2019
who responded, slightly more companies have declined our
request
18Benchmark
Only one company has offered us SOCs for two years in a row
With Kerry Logistics, only one company that got back to us with an
offer last year confirmed our request this year again. DB Schenker
and XPO Logistics declined our request this year proofing that it still
depends a lot on who specifically you talk to and how much they’re Conclusion
motivated to organize the move for you.
In 2020, the world’s largest forwarders
have increased their ability to offer a full
service SOC move as the numbers have
2019 2020 doubled. However it will be interesting to
find out if that is primarily an effect of the
current crisis or a continuing trend towards
more flexibility.
Hence, in our next report, we will mainly
focus on market development, adding
additional data sources to improve validity
and opening the stage to the forwarders
themselves to comment on the report.
19Cost savings guaranteed but
difficult to handle operationally?
It is striking that 76% of the freight forwarders where not able to, at least,
organize the SOC move – and only 10% of the companies were able to
source the equipment for us. It seems like the world's largest forwarders
do not offer SOC containers to everyone.
20How to take the hassle out of managing SOCs
Solving operational challenges
Why is that? A chance for smaller forwarders to step in
For freight forwarders, organizing SOC moves and sourcing Consequently, the world’s largest freight forwarders only offer
the equipment can be a painful process that takes weeks! SOC containers (1) for very large volumes or (2) their best
customers in order to avoid unnecessary complexity.
It requires freight forwarders, for instance, to find & vet
partners, set up legal agreements, negotiate deals, send As the world’s largest forwarders still seem to struggle with
emails back and forth for pick-up references, the SOC containers, this represents an opportunity for small and
communication with local agents and monitor the deal. medium-sized forwarders to step in.
Aggravating this situation, freight forwarders need a NVOCC They’re usually more agile when it comes to finding new
license to issue their own House Bill of Lading to their competitive advantages and not able to lower prices due to
customers - which is expensive if you only use it for e.g. increasing volumes. Hence, specific solutions such as SOC
project business. containers to increase flexibility are almost made for smaller
companies looking for innovative solutions.
Compared to COC containers, SOC shipments require a strong
agent network to, for example, have someone in the drop-off The remaining question is: How can freight forwarders offer
location with pickup reference to get your containers out of full service SOC shipments at low costs and risk?
the port.
21How to take the hassle out of managing SOCs
Source and manage SOC containers online
Take the hassle out of organizing SOC moves
Let us make an example: You would not reach out to
someone on the other side of the world, who you
found on Google, and ask them if you can sleep at
their place for your weekend trip.
Some people still book expensive hotel rooms (which
makes sense for obvious reasons), but AirBnb
enables us now to book apartments from strangers at
very low risk and costs - because we trust Airbnb, we
trust their vetting process, their performance ratings &
reviews etc. …
It is actually the same in container logistics! With
Container xChange, we help companies find
optimized solutions to their everyday container
logistics problems: saving effort, costs and reducing
CO2 emissions.
22How to take the hassle out of managing SOCs
SOC containers on demand
“
By bringing together freight forwarders and container
owners, and digitizing the underlying operational processes,
we make handling SOC shipments attractive for freight When talking to big and small shipping
forwarders – instead of a few weeks, it now only takes a companies, we can see that the demand for
few seconds to find new partners and use their containers. SOC Containers is growing every year. SOC
containers help increase flexibility and save
As a freight forwarder you just type in your pickup and drop-
off locations into the search fields, select the container type
costs - something that is especially important
and quantity you need and the system shows you a list of now during the crisis. With Container
partners that can supply containers for you. xChange, we’re more than proud to help 600+
”
companies find SOC containers globally.
It depends on the location, sometimes you receive pickup
credits, sometimes they charge you but you always have 30
free days and low per diem charges of $1-3 after the free
days have ended.
Why? Because carriers or container traders are not mainly
interested in a quick turnaround of their equipment, they are
happy that they found someone who repositions it for free –
we call this a win win situation.
Christian Roeloffs
Founder and CEO
Container xChange
23600+ shipping companies use
xChange to find SOC containers.
Want to learn about how they use xChange to find SOC containers? Get in touch with our
team and schedule a quick phone call to get answers to all your open questions.
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