Expert here: I'm a consultant for small to medium size container terminals and various hinterland container logistics operations. This article is a pretty good introduction to the subject, but could go further into the economic interests at play here.
If you book at a shipping line, there is really a tree of companies being engaged to work. There are two empty depots involved for empty pickup and delivery. The container is usually owned by the shipping line, but stored at various third party locations. Then there is the two sea side terminals, who need to do 4 billable operations usually called Terminal Handling Charges or THC for short. These are in order gate-in land, out onto ship, in from ship, gate-out landside. Then there is the temporary storage at the sea side terminals on either side. For you as the shipper you can usually deliver the full container a few days before the cargo closing for outbounds, and you get a few days to pick up the full container once it is discharged off the ship. Failing two meet these time windows will result either in your container getting rejected at the gate, which is expensive because you have to pay for the hinterland transport 3 times instead of once (try #1, return after fail, retry). Alternatively you pay the storage costs, these are often called demurrage charges. In addition to these all there are restrictions on the time you as the shipper can take to stuff or strip (fill/empty) the container, going over this you're going to get charged something called detention charges (a late fee or "renting" free for the container, you get X days included in the transport).
The tricky part comes in when the ETA of the ship shifts. Say you already picked up the container from the empty depot to stuff it, but then the shipping line notifies you the ship is delayed by a week. You now have to store it somewhere, and if you're not careful, the shipping line will try and charge you detention fees. If you deliver it "early" to the terminal (e.g. in time for the old ETA, but early according to the new ETA) you've created a problem for the terminal (high yard utilization), you're going to get charged a demurrage fee, or the terminal will not accept the container and send the trucker on their way again, causing you to have to pay for the transport. Notice how in none of these cases the shipping line is impacted, and sometimes they even profit off of it.
One of the ways to avoid this might be to book more door-to-door transports (or 'carrier haulage') as opposed to arranging the hinterland transports yourself (or 'merchant haulage'). This is often not ideal because it requires shipping lines to have specific knowledge of the hinterlands they serve, but also puts the onus on them and them only to fix this. It also does put even more power into the hands of shipping lines, which is something the sector should probably avoid.
The removal of the 2-high stacking limit only helps to relieve pressure on the 'hinterland' storage equation of it all, it does nothing for the sea side terminals which are already running at capacity.
I’d love to see a business flow diagram of how all this works and which parties are responsible at each step. The deeper I look into the shipping process the more complex and grift-oriented it seems to get.
It is incredibly interesting to me, yeah. I’m not going to lie, I have 25 pages of a book sitting around in my Google Drive, but I quickly realized two things:
1) this will be the most boring book in existence, and requires a much better writer than me to make for an interesting read. And 2) lots of my knowledge is specific to the European situation, which can sometimes be wildly different. The shipping industry can be surprisingly locally focused.
But I might draw out a few diagrams and write a blog post some day :)
> The deeper I look into the shipping process the more complex and grift-oriented it seems to get.
The more industries I start to get deeper into, the more I realize this applies to almost every single industry, no matter size or for how long it's been around. Industries seems get into "extract as much money from as many parties as possible" really quickly.
What happens when the fees due on collection get so high that the importer / final delivery company / final customer changes their mind about collecting the container? Who has to store and ultimately dispose of the contents? Do they get to auction it off and keep the proceeds?
I have no clue, never have heard of that happening, but then again, I never bothered to ask. I suspect that customs issues would be the more common use case to not actually want to pick up a container though.
The fees are not usually due on collection, but as part of the contract between shipping line and shipper. Not picking up the container probably does nothing to get you out from under that contract.
Yes and no. Yes because you can't run a ship carrying some containers on a certain line as often, which means that the wait after missing a ship is likely going to be bigger. But also no because fundamentally the problem of having 10 delayed 2000 TEU ships is not that different from 1 ship of 20,000 TEU. Not to mention that ships only got about 2x bigger over the past 20 years, so the numbers I just pulled out of my ass are quite arbitrary.
More smaller ships would give a bit more flexibility, but I don't think it's an easy fix for the current problems.
Yes, probably! This is directly related to the detention issue: many containers stay on the same chassis from pickup at the empty depot until they get delivered at the sea terminal. Equipment to handle containers properly is not cheap (think reachstackers, not regular forklifts). ETAs of ships getting pushed back means longer waiting times till the containers can be delivered and thus they spend longer on chassis. I’m not too sure who bears the financial impact of that, it might be that trucking companies include chassis rent in the transport, or they might similarly charge after X days of usage. Pretty sure the shipping line does never assume liability for this though, so either the shipper or the trucker is getting shafted.
> Similarly, I could stack the containers much more closely together, sacrificing the "random access" property in the process, to create extra space in the port that might increase average throughput. However, this would destroy any guarantee that a given container will ever get out of the port. Humanity as a whole might be better off, but the owner of that particular cargo will be severely affected.
Doesn't averaging already handle this exact problem?
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If you book at a shipping line, there is really a tree of companies being engaged to work. There are two empty depots involved for empty pickup and delivery. The container is usually owned by the shipping line, but stored at various third party locations. Then there is the two sea side terminals, who need to do 4 billable operations usually called Terminal Handling Charges or THC for short. These are in order gate-in land, out onto ship, in from ship, gate-out landside. Then there is the temporary storage at the sea side terminals on either side. For you as the shipper you can usually deliver the full container a few days before the cargo closing for outbounds, and you get a few days to pick up the full container once it is discharged off the ship. Failing two meet these time windows will result either in your container getting rejected at the gate, which is expensive because you have to pay for the hinterland transport 3 times instead of once (try #1, return after fail, retry). Alternatively you pay the storage costs, these are often called demurrage charges. In addition to these all there are restrictions on the time you as the shipper can take to stuff or strip (fill/empty) the container, going over this you're going to get charged something called detention charges (a late fee or "renting" free for the container, you get X days included in the transport).
The tricky part comes in when the ETA of the ship shifts. Say you already picked up the container from the empty depot to stuff it, but then the shipping line notifies you the ship is delayed by a week. You now have to store it somewhere, and if you're not careful, the shipping line will try and charge you detention fees. If you deliver it "early" to the terminal (e.g. in time for the old ETA, but early according to the new ETA) you've created a problem for the terminal (high yard utilization), you're going to get charged a demurrage fee, or the terminal will not accept the container and send the trucker on their way again, causing you to have to pay for the transport. Notice how in none of these cases the shipping line is impacted, and sometimes they even profit off of it.
One of the ways to avoid this might be to book more door-to-door transports (or 'carrier haulage') as opposed to arranging the hinterland transports yourself (or 'merchant haulage'). This is often not ideal because it requires shipping lines to have specific knowledge of the hinterlands they serve, but also puts the onus on them and them only to fix this. It also does put even more power into the hands of shipping lines, which is something the sector should probably avoid.
The removal of the 2-high stacking limit only helps to relieve pressure on the 'hinterland' storage equation of it all, it does nothing for the sea side terminals which are already running at capacity.
But I might draw out a few diagrams and write a blog post some day :)
The more industries I start to get deeper into, the more I realize this applies to almost every single industry, no matter size or for how long it's been around. Industries seems get into "extract as much money from as many parties as possible" really quickly.
If you don't like what you see, then you shouldn't look into advertising and ad tech.
The fees are not usually due on collection, but as part of the contract between shipping line and shipper. Not picking up the container probably does nothing to get you out from under that contract.
More smaller ships would give a bit more flexibility, but I don't think it's an easy fix for the current problems.
Doesn't averaging already handle this exact problem?