Skills honed by experience × data predictions. Approaching the unknown depths of empty container repositioning!

What image comes to mind when you think about container shipping? Container vessels sailing across the ocean, the cargo they carry, and containers stacked up high in the port... Have you ever wondered where those containers came from, and where they go after shipment? We asked the person in charge in ONE about the little-known journey taken by these containers.

Where are the empty containers taken?

“There are laden containers and empty containers. The destination and route of the former is fixed, but the empty containers have no fixed destination. The destination of these empty containers is determined by looking at which ports have a shortage of containers, and which have a surplus, and by assessing the demand and the cost of moving them around. Depending on how it’s done, it can lead to significant improvements in efficiency and cost effectiveness, so this is where requires our expertise.”

The outgoing route is fixed when containers are released for the shipment, but the return route is on an as-needed basis. Many laden containers leave port on this one-way trip. Once the cargo is unloaded at the destination, where does the empty container go? In the container shipping industry, selecting the next destination for an empty container and taking it there is called “container repositioning”.

Hidetake Matsuoka, Deputy General Manager, has been in charge of container repositioning since 2021, Matsuoka, who previously worked in marketing and Fleet Management team, says that when he took on his new role, he was surprised to find that container repositioning is dynamic without fixed scenario.

Shortage, Surplus, Aging, Trouble...
The hidden challenge behind container availability at ports

“First of all, there are several types of containers. 20-foot containers are used to transport heavy cargoes such as raw materials. 40-foot containers are usually used for general consumer goods. 45-foot containers are used in the US, but in Japan they are forbidden by the law. Containers that hold cargoes at room temperature are called dry containers, and those with refrigeration functions are called reefer containers, and there are several other special types of containers for items that don’t fit into regular dry containers (such as long and overhanging items). Laden containers have the highest priority, and the repositioning destination for empty containers is determined by the movement, characteristics, and conditions of the cargoes and the type of container needed for the route.”

“Due to the difference between import and export, the size and purpose of the container determine where it is needed in next use. That sounds difficult enough just considering the variety of goods that are shipped by containers,” and Matsuoka continued.

“But that’s not all. There may be space on the ship, but due to vessel weight restrictions, the empty container that was supposed to be repositioned can’t be loaded. The container may be old and damaged, and may need repairs before it can be repositioned. It may be approaching the harvest season in a country or region, and we need to send as many reefer containers to that region as possible. There may be rules in a country that empty containers must be removed from port within a certain number of days. When major holidays approach, at which point demand fluctuate drastically. There are countless variables, and no two scenarios are the same.”

“There is no end to the number of scenarios, including the number and size of containers needed in each part of the world, the schedule of vessels to reposition the empty containers, and the specific requirement conditions of the transportation contract with the customer. At the same time, of course we must keep the cost of container repositioning down, but the most important thing is to be able to reliably supply containers anywhere in the world when a customer books for shipment. Our regional offices exchange information on daily basis with our headquarters in Singapore, and work closely with our front-line sales offices to control the perfect balance between the stock situation, export forecast for each container type and size, and the number of containers to be returned after use, along with forecasts of the type and size. The number of containers ONE handles is not in the hundreds or thousands but in millions.”

“You may think it’s a given that there are containers at the port, and you will be able to use one any time you need to make a shipment. Of course, as a shipping company, it is our mission to provide containers when they are needed, but I would like people to know that behind the scenes we put a large amount of effort into the repositioning of empty containers.”

Efficient container repositioning requires both technology and human power

ONE handles around 1.7 million containers worldwide. To efficiently manage and reposition such a huge number of containers around the world, we make decisions based on optimization and demand forecasting using a variety of proprietary IT systems.

“Eagle+" is especially useful in optimizing the movement of empty containers. Eagle+ is equipped with a variety of functions, including strict inventory management for each type of container scattered across the world, movements in past cargo data, and forecasts of current and future transportation demand. It is designed to let users to see at a glance the inventory at each location and the status of empty containers transported between locations, making it easy to identify areas for improvement. In addition, “OASIS” is empowered by AI to accurately determine appropriate container inventory for each of several hundred container locations around the world, and how much is likely to be a surplus or shortage. Our core operational system “Opus” and “IBIS+”, which manages the operational status of container vessels in detail, are two more platforms that we make full use of in our daily efforts to optimize container repositioning.

However, it is not possible for just anyone to make efficient predictions using these systems...

“As I said earlier, there are many scenarios that can’t be predicted, such as trouble with the weather and its effects, strikes at the ports, regional issues, etc. Rather than leaving everything to the system, we use human knowledge to make a comprehensive decision of the rational and optimal approach based on past experience as well as daily updated information and forecasts from around the world. While making use of the power of technology, at the end of the day what is needed is a close cooperation and exchange of information among the various teams within the company, as well as unbiased knowledge and experience in marine transport and movement in the market. Needless to say, it is a difficult task, but operating and properly managing a massive number of containers on a global scale may only be possible through unrelenting daily effort and experience combined with the most advanced IT systems.

Overcoming the challenge of container shortage during the COVID-19 pandemic

Experience and human judgment proved invaluable during the COVID-19 pandemic.
People may have heard in the news when a severe worldwide container shortage occurred after the outbreak of the COVID-19 pandemic in 2020. A variety of factors are behind this, but one of the triggers was the steep decline in export demand from China in the early stages of the pandemic. China is well known as the world’s export base, but since there was a large drop in exports from China in the early stages of the pandemic, there was a surplus of containers in many other parts of the world. There was no point in holding stock of containers that would not be used, so many shipping companies started letting go of their leased containers, and as a result, the movement of containers, which had been circulating smoothly around the world, suddenly slowed. Consequently, empty containers were scattered in ports around the world.

You may think that this is the opposite of a shortage, but the problem was what happened after that. Due to stay-at-home orders in North America and Europe, there was a sharp increase in demand for consumer goods, and the demand for containers in Asia, which is the source of exports, saw a drastic increase. But the containers were not in Asia! This later led to a global shortage of containers. It is worth noting what ONE did at that time.

“When the volume of exports from China dropped suddenly, there was a tendency within the industry to reduce the number of vessels and containers. But we thought that the decrease in cargo movement would be temporary, and that at some point there would be a sharp rebound. So ONE continued to hold its containers, and to save up as many containers as possible on the Asian side for the recovery that would come at some point. At the same time, some shipping routes were suspended, so we had a number of vessels on standby. We loaded a large number of empty containers onto these vessels and had them standing by off the coast of China. As a result of the successful coordination and collaboration of multiple departments in the company, we were able to make a correct decision, and when demand recovered, we were the first to put our vessels into operation and supply containers to the ports that required them as quickly as possible.”

He says that this decision was based on what they learned from the experience of the global economic crisis in 2008. At that time, after a steep drop in cargo demand, there was a sharp increase in cargo volume.

“But there were still many challenges. Since we couldn’t always provide the container type specified, we substituted containers of other sizes with the customer’s agreement. To meet changes in demand so we temporarily secured vessels that we called “sweepers” that were used exclusively for container repositioning.  When  ONE vessels schedule allows from one route to another, we took advantage of that move to transport empty containers. We came up with other arrangements through close cooperation between departments.  This flexible approach carried us through the container shortage.”

Matsuoka reflects on that time. The experience gained during the crisis is accumulated within ONE and will provide new strength to overcome the next challenges that come along. The unknown journey of the containers is supported by a lot of ingenuity and experience, as well as the latest technologies.  Knowing the challenges of container availability, will you view them at the port in a different light?