Kar-Tainer has since the mid-90s had successful partnerships with all European carmakers building cars in the South African market. Over half a million Volkswagen, BMW and Mercedes Benz vehicles have been shipped on Kar-Tainer cassettes from South Africa bound for European markets over the years.
Besides the inherent quality, safety and handling efficiencies enabled by the Kar-Tainer system, another important reason behind these success stories have been the traditional trade deficit in South Africa, and subsequent North-South container imbalance. With South Africa having imported more from Europe than what it has sent the other way, a financial benefit was early on realized through loading cars in containers going South to North, as opposed to repositioning empty containers on the same lane.
This has been particularly easy to implement in South Africa as many of the OEM’s in this market rely on CKD imports from Europe for their local assembly operations. CKD kits comes in from Germany, CBU vehicle are shipped back on the return haul.
Container Situation: Macro Overview
The container has been one of the big drivers behind globalization. In 2019 the global container throughput reached 802 million TEUs, safe to say, containers are handled more than ever before, and are being shipped around the world at an unprecedented rate. However, global trade is not balanced, and containers are often required to be shipped empty within countries or regions, or across the globe to even out the equipment imbalance caused in turn by the global trade imbalances. Experts estimate that up to as much as one third of global container moves are empty containers.
When looking at the Macro situation in containerized trade the far biggest trade lanes are the Trans-Pacific lane, the Asia – Europe lane, and the Transatlantic lane. In 2018 the Trans-Pacific lane saw 13.5 million more loaded TEU’s going from Asia to North America than the other way around, the Asia-Europe lane saw 10.4 million more loaded TEU’s from Asia to Europe than what came in return, and 1.8 million more loaded TEU’s moved from Europe to North America than in the opposite direction.
Below table shows some of the world’s biggest exporters of containerized goods, with a comparison of loaded export containers over loaded import containers. A negative number indicates this country could stand to benefit from switching transport mode on import goods and commodities which are imported using alternative modes over to container, while a positive number indicates alternative goods could be switched to container loading for export moves.
The imbalance lined out on the different trade lanes and countries above does not however exist in a vacuum. Containers are not repositioned directly back from destination to origin, but do rather take part in a global network where the container owners and operators to the best of their ability try to position the equipment where it can create the most value. The imbalance in trade does however give a good overview of in which direction most empty containers are moving around the world. Using these Macro trends as a starting point for looking at opportunities for alternative cargo loading solutions is a credible approach.
Regional Examples
To identify the specific lanes and regions with a big imbalance requires us to delve further into the imports and exports of individual countries, regions, or individual ports. Besides the South Africa example highlighted in the introduction to this post, China as the “World Factory” is another clear scenario where shippers stand to take advantage of the imbalance in containers and the high volume of empty containers being repositioned back to Chinese ports.
Another good example can be found looking at Myanmar, whose large textile and apparel export industries are creating huge demands for export containers which are not satisfied by the current containerized cargo imports to the country.
Looking to the American Heartland further unutilized empty container lanes can be observed. A significant part of American agricultural export is loaded in containers (often due to a similar mindset as we line out in this post: to offset the container imbalance on the Trans-Pacific shipping lanes, achieving cheaper shipping cost on Asia-bound agri goods). However, the containers used for these agricultural exports usually must be repositioned empty from the coastal ports to the Midwest. In a market where the auto-dedicated railheads at peak times are operating far beyond capacity, alternative solutions to transporting cars to the American Heartland while at the same time bringing in containers used by agri-exporters would be a win-win scenario for all parties.
At the time of writing the World’s shipping and logistics industries are facing rising prices and operational difficulties due to big container imbalances caused by the Covid pandemic. This is a temporary situation and will be corrected over time, but nevertheless showcases how reliant global trade is on having containers available where and when export cargo is ready.
Opportunities & Solutions
An issue with such global implications will never have a one-fix solution. Trade flows switch around over time, type of goods and commodities being shipped changes in the advent of new technology, vessel sizes changes, new technologies are implemented to better optimize container flows, foldable containers have been suggested for a long time. All in all, there is many factors and options out there that affects the container imbalances around the world.
One manner to help alleviate the situation and find opportunities for win-win scenario across the industry is looking at possibilities of containerizing cargo which normally is not shipped in containers. To reduce the need for empty container repositioning around the globe, cars could be shipped from countries with a surplus of export containers to countries with a shortage of containers.
A survey presented by the Visual Capitalist showed that cars were the most traded product globally in 2016. Value and ranking changes a bit from survey to survey and year to year, nevertheless, finished built cars have been among the top 5 export products globally for decades. Point in case: There is a huge opportunity to utilize this product type when finding cargo to be shipped on regular empty container lanes.
The bulk load of cars transported around the world are done so by dedicated RoRo vessels, vessels which due to their specialized nature experiences much the same (if not even worse) issues on equipment utilization as what we observe among the container liners and the above outlined need to reposition empty containers. In an ideal world container liners and bulk carriers would align on asset utilization to create the most cost efficient, sustainable, and flexible shipping solutions wherever possible. In such a scenario, the solutions offered by Kar-Tainer which enables standardized, secure, and efficient loading of cars in containers would allow for quick turn-over of containers at ports and terminals.
Besides alignment amongst the shipping liners, there is also ample space for automotive OEM’s and freight forwarders to take advantage of the empty container lanes when organizing automotive transport around the world. A shipping lane or port which has more outbound than inbound cargo will usually offer highly competitive shipping cost on inbound containers, creating cost savings for the car-shipper, while helping the container liner move equipment into a port where it is needed for export.
If you have interest in figuring out how the Kar-Tainer system can help optimize the amount of vehicles loaded in each container have a look at the different Transport Systems we offer; if you want to figure out how we can help improve container turn-over through our extremely efficient loading and unloading methods, read our latest blog post on The Secret to Efficient Loading of Cars in Containers;otherwise, get in touch with your closest Kar-Tainer representative or reach out to us through the website contact forms, on www.kar-tainer.com
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