Container Leasing

Container leasing is a major aspect of the liner shipping business. Of all the containers in operation the proportion of containers owned by ocean carriers and other transport operators vis-a-vis leased containers is almost equal. Depending on a carriers business strategy the amount of owned containers can vary between 50-90%. Several operators particularly the smaller and regional lines rely 100% on rented containers.

When a container shipping company requires additional or replacement containers in its fleet, it needs to decide whether to buy or lease the containers. If the need is long-term and the liner shipping company has the necessary financial resources to purchase containers at competitive prices, then most likely decision will be to buy the required number of containers. However, if the need is only short-term or there is a need for flexibility and/or with limited financial resources then the shipping company’s decision will be most likely in favour of the leasing option.

In addition to leasing of containers, container leasing companies help carriers to adjust shortfalls in the number of containers at high demand locations. In the case of a shortage of containers in certain areas, carriers may sign master leasing contracts with leasing companies allowing shippers to pick-up empty containers at areas they desire.

Carriers can choose from many types of lease contracts. The carrier will opt for the one which fits best its operating and trading requirements. The principal contracts for container leasing comprise long-term leases and master leases. The cost of master leasing includes container rental, depot lift-on/lift-off charges, on-hire/off-hire drayage, drop-off charge and off-hire repair cost. Container leasing companies charge per diem rate for long term leases.

In recent years the container leasing industry has been shifting towers long-term leasing and the majority of container leasing firms increasingly place more newly built containers on long-term leases primarily on 5-year contracts. The container leasing industry operates globally and is concentrated.

Under a long term lease, a liner shipping company can have direct interchange of empty containers with other transport carriers. Direct interchange is an item that appears in standard leasing terms and conditions. With direct interchange, a lessee may direct interchange of containers with a third party provided that each direct interchange is pre-approved in writing by the leaser’s office. A lessee is responsible for obtaining the receiving carrier’s written acceptance of the direct interchange prior to seeking approval from the leaser’s office. The lessee will charge a direct   interchange fee as set forth in the agreement.

Liner shipping companies can access as internet-based SynchroBox system to review and select container interchange in a real-time and on-line environment. In principle this information provides liner shipping companies with the ability to monitor and identify potential container interchanges as well as to make logistics decisions on empty containers.