Trade imbalances are probably the most important reason for the accumulation of empty containers in the global economy. A country which imports more than it exports faces a systematic accumulation of empty containers. Conversely, a country which imports more than it exports leads to a shortage. If such an imbalance prevails over time, a repositioning of large amounts of containers will be required between the two trading partners, involving higher transportation costs and tying up existing distribution capacities.
Repositioning costs include a combination of inland transport as well as international transport costs. If they remain low enough, a sustained trade imbalance will not have a detrimental impact as containers get repositioned. Likewise if the costs of manufacturing new containers, or leasing existing units, is cheaper than repositioning them then accumulation will happen.
Conversely, higher manufacturing or leasing costs may favour the repositioning of empty containers. At least a third of a container’s idle time can be attributed to repositioning (ROI Container Cargo Alliance, 2001). Given a world container fleet of 19 million TEU in the year 2004, approximately 20 percent were waiting idle to be transferred to the destination of their use at any point in time. This reflects a constant waste of capacity of about four million TEU andconsequently makes transportation more expensive. The capital and handling costs are seldom surveyed and are hard assign to a single transport. Determining the true costs of a given transport is, however, indispensable.
Our Services
PARADIGMA has developed a prototype as part of an EU project to prove the technical feasibility of a method to select empty containers for repositioning, based on internal pricing. Internal prices depend upon the shortage or abundance of empty containers as well as on the distance of the empty container yard. As inventories of containers increase at one destination, the transportation price simultaneously increases for routes with this destination. Whether internal price adjustments will be lowered or raised automatically will depend on shortages or excess supplies of containers.
This creates incentives for units being moved to destinations with a low stock of containers. Because our internal price mechanism takes return transportation costs for empty containers into account, the problem of an imbalance in the distribution of containers is proactively managed.
Your Benefits
Internal price based container management suggests ways to use capacities most efficiently at any given demand for transportation and is suited for decentralized decision making processes, leading to
- reduction of costly ad hoc dispositions, through a proactive management of the transportation demand
- Freeing of the management form operational details
- Higher satisfaction of employees through their involvement in management issues
Why PARADIGMA?
While working on the GILDANET project in close cooperation with SOGEMAR, a dry port in Lombardy, CONTSHIP ITALIA, and the Port of Ravenna, we gained insight into the challenges of container transport. This motivated us to invest in research to develop prototypes for intelligent and innovative solutions in the container industry.
We can draw upon an extensive network of partners and customers, which we have built through participation in international and European projects. As a member in supranational organizations such as UN/CEFACT we reduce the investment risk of our clients by consulting in the adoption of evolving standards at an early stage. This enables us to incorporate client specific requirements during the development. Through a close cooperation in research and design activities with the University of Vienna, the Cardiff Business School and the University of Plymouth, we have early access to innovation, such as the optimization algorithms, helping us give you an advantage over the competition.
