Container lease
| Container lease |
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Container lease - is a term usually used in shipping industry. Basically it refers to the contract concluded by the owner of the container and the entity, which rents this container for an agreed fee. Generally, it is a market answear for the empty containers problem, which is a major challenge for this industry and its efficiency.
Container lease concept
As it has been already said, the concept of the container lease was caused by the problem of empty containers and the need of their fast relocation. It should be mentioned that the relocation of empty containers is a frequent reason for the decline in the efficiency of inland carriers and port container terminals. The congestions, which arose during the waiting time for the delivery of an empty containers, was the consequence of unbalanced global distribution on the largest shipping routes. Therefore, container lease is one of the tools for empty containers management to improve the logistics system of their relocation. Moreover, the purpose of this concept is also to increase the usability of containers, which currently half of their time spends empty in anticipation of relocation or for cargo (Dundović C., Karmelić J., Kolanović I. 2012, p. 223).
Container lease agreement
It has to be mentioned that there two basic categories of the container lease agreements (Jiao W., Pang K. W., Yan H. 2016, p. 3):
- master lease - (also called full service lease), where the shipper has a guaranteed right to correct the number of leased containers and the possibility of pickup or return them at the convenient time without changing the basic terms of the contract, while the lessor is obliged to relocate empty containers as well as their possible repair and maintenance;
- term lease - the terms of the lease are strictly defined, including its duration (short or long term), this contract is used in case of one-time lease and leasing for up to 8 years, while the lessee is that entity, which is obligated to carry out repairs and to maintain the containers.
It should be noticed that there is also other classification of the container lease agreements due to their duration, according to which the following are mentioned (Dundović C., Karmelić J., Kolanović I. 2012, p. 224):
- long term lease (up to 8 years),
- medium term lease (up to 5 years),
- voyage lease.
Obviously, the main task of the container leasing companies is to provide equipment there where is a demand for it, however it is not logistically simple. Therefore, special clauses are used in the agreements, which specify the place of container return so this is some security for the company's interests. On the other hand, to maintain efficiency at an appropriate level, these companies sometimes have to provide the container to the customer's current location and in this case foldable containers are particularly useful. The advantage of this solution is the reduction of service costs, storage costs of containers in the warehouses and overall transportation costs. This is important especially in relation to the high costs of exploitation, which are crucial for the container leasing companies (Konings R. 2005, pp. 243-244).
Container leasing industry
It should be also noticed that the concept of the container lease was caused by an increasing demand for these services, therefore companies specializing in this field have appeared on the market. Besides the container leasing companies there are also other entities in the shipping chain, which are included in the matter of containers. There are such entities as the following (Konings R. 2005, pp. 241-244):
- shipping companies,
- terminal operators,
- empty depot operators,
- inland transport operators,
- shippers and consignees.
References
- Dundović C., Karmelić J., Kolanović I. (2012), Empty Container Logistics, "Promet - Traffic&Transportation", Vol. 24, No. 3, pp. 223-230
- Geng N., Jiang Z., Liu C., Liu L. (2013), Solutions for flexible container leasing contracts with options under capacity and order constraints, "Int. J. Production Economics", Vol. 141, pp. 403-413
- Jiao W., Pang K. W., Yan H. (2016), Nonlinear pricing for stochastic container leasing system, "Transportation Research Part B: Methodological", Vol. 89, pp. 1-18
- Konings R. (2005), Foldable Containers to Reduce the Costs of Empty Transport? A Cost–Benefit Analysis from a Chain and Multi-Actor Perspective, "Maritime Economics & Logistics", Vol. 7, pp. 223-249
- Liang X., Mac L., Xiea Y., Yan H. (2017), Empty container management and coordination in intermodal transport, "European Journal of Operational Research", Vol. 257, Issue 1, pp. 223-232
Author: Agnieszka Wierzba
