What is Shipper Owned Container? | SOC vs COC

If you are wondering, “Why should I learn about Shipper-Owned Containers?” Well, the answer is simple, in the current Shipping market, the demand for SOCs is increasing greatly, so you must understand the advantages and disadvantages associated with SOCs.

In the International shipping trade, buyers and sellers have the option to lease a container or use their container to ship the cargo. Containers that are owned by the shipper (can be individuals or organizations) are known as Shipper Owned Containers (SOC).

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Who Owns the Containers in Shipping?

Generally, there are two types of container ownership:

Shipper-Owned Containers (SOC): These are metal freight containers owned by the shipper as individuals or organizations. Commonly these shippers are exporters/importers and container leasing companies. After closing a delivery, SOC is returned to the owner, who is responsible for the storage and maintenance, etc.

Carrier-Owned Containers (COC): Carrier-owned Containers are owned by the carriers. The carriers also do the transportation and management of these containers. Carrier provides COC to their clients for transportation is the most common way in the current market.

Now that you know the basic definition of SOC and COC, it’s time to understand why shippers want to buy their equipment.

Why Would You Want to Own a Container?

There are multiple reasons which lead to you/shippers buying SOCs.

• Disruption of the supply chain process due to a shortage of container and their storage
• The hike in Demurrage and Detention charges due to high demand and low supply ratio during the peak season
• Port congestion prolongs the process of receiving and sending cargo
• Some railway companies need to provide COC for transportation, especially for import business to Central Asia.

Two Things That are a Must-Check if You Want to Own a SOC:

If you already own a SOC, or even if you are planning to own a SOC. In either case, make sure that you perform the following checks:

1. Your container is registered and certified by the Bureau International des Containers (BIC)
2. The prefix of your container is not associated with the shipping line

You can confirm the above requirements from BIC or by checking your container documentation.

At this moment, you might be wondering if there is any practical reason actually to buy a SOC. Because owning a SOC sounds like a lot of work, right? Well, of course, there are examples that can clearly explain the practical use of SOCs.

What is the Practical Use of SOC? | Example

Let’s take an example of road transportation from China to Center Asia (Kazakhstan, Uzbekistan, Kyrgyzstan, and more). For this transportation, railway companies do not facilitate the customer by providing a COC.

Reasons Why Companies Don’t Provide COC

The reason is that some of these countries don’t have many exports, and if they offered COC, the railway companies would have to pay a lot for storing empty containers and related charges. So, if you want to send goods to these countries, you’ll have to buy SOC containers yourself.

What Does a Shipper Do in This Scenario?

In this scenario, the importers have to opt for a shipper-owned container. So, the shippers/importers purchase a SOC and send their goods to these countries. But here comes the fun part, once the goods have arrived at their destination, the importers/shippers that have purchased the SOC sell the container to the companies (these can be carriers or container leasing companies) at the destination.

Now, you might be thinking that this is a bad approach to buy a SOC for only one transport and sell it at the destination. Well, it is actually a good approach. You’ll understand why in the next section.

Reason for Selling the Container at the Destination

Once the container has delivered the goods to the destination, the owner has to ensure the storage space for these containers and pay the storage fine. In most cases, shippers do not have any cargo at the destination that has to be taken back to China. Therefore, it is considered a better option to sell the container to the carriers as they are more likely to have some goods to be exported to China.

Cost-wise Scenario:

Currently, the empty container is around $2000. Once it arrives at the destination, it can be sold for around $800. However, these charges change due to the market situation.

If the shipper/importer has goods to send back to China or could find goods to send back to China, they only need to pay $600. But as we know, exports are quite low in these countries. They have to wait and pay for container storage, so most people choose to sell the containers at the destination.

Well, you have now seen a practical example of the benefits of owning a container yourself. Therefore, let’s talk about the certifications and identification of SOCs.

What is Meant by Leasing a SOC?

Leasing a container means renting out a container from the container leasing company (typically different carriers that own containers). But why is it important?

Well, did you know that shipping companies usually provide ocean freight with COC? But here’s something interesting: if you use your own container, known as SOC, the carrier could offer you lower shipping rates.

This means that you don’t always need to purchase your own container. You can rent a SOC from a container leasing company that also wants to move their container to the same destination for selling or other purposes. This way, both parties can enjoy the benefits of paying less money.

For instance, let’s say you have goods to send to a destination, and a container leasing company has a SOC that they want to send to the same location. You can pay less to the carrier by using their SOC, and the container leasing company won’t have to pay for moving their container to the destination.

What is the Certification of Shipper-Owned Containers?

In order to use a SOC, registering your container with the Bureau International des Containers (BIC) is necessary to get a certification of ownership of the container. The BIC will allot your container a valid registration number.

This unique number will identify your container worldwide and be used for registration with ports, vessels, and customs. BIC will also inspect the container to check if it is Cargo Worthy (CW). If the container is found fit for use, the BIC will allow your container a Container Safety Convention (CSC) plate and a CW certificate.

Note: Getting your container certified and owning a CW certificate is highly recommended. It is also advised to schedule your survey from a third-party IICL (Institute of International Container Lessors) certified surveyor to survey and certify your equipment. This step will help you verify that your equipment is in excellent condition and meets all the necessary safe and efficient transportation standards.

You have the basic idea of containers and their registration. Now let’s see how to identify shipper-owned containers.

How to Identify a Shipper-Owned Container?

Now that you know SOCs, you might wonder how to distinguish SOC from COC. Almost all containers are marked with a unique combination of alphanumeric codes with four alphabets followed by seven digits.

If you closely observe the above image, then you can see the following details:

• The starting three alphabets refer to the owner of the container, like “MSC,” and the last alphabet, “Y,” refers to the type of container.
• The starting six digits in the 7-digit code are the container’s serial number; the last digit is known as the check digit, which is always highlighted on a container. The check digit is used as the owner code for the container.

To distinguish between containers because when a shipper buys a container from any of the above sellers. The shipper is expected to make a few changes before he can start using that container:

• The SOC is identified by not having a Logo, whereas a COC has a company logo.
• A change in prefix to NON or XXX or the registered prefix in case of a registered organization and the last digit of the code changed to the number allotted to you by BIC.

As per the rules of international customs, all containers must have a registered container number.

We have covered all the basics regarding SOC and how to identify them. Now let’s understand the benefits and challenges you can face while owning a SOC.

What are the benefits of Shipper-Owned Containers?

There are several benefits of using shipper-owned containers. The main benefits are listed below:

Cost-effective:

Shipper-owned containers are a one-time investment, as they don’t have any penalties or surcharges in the form of Detention. As these charges are associated with the use of equipment longer than the allowed time, they don’t apply to Shipper-owned containers.

However, make sure not to confuse demurrage and detention. Even having a SOC can cause you to run into a Demurrage fine. This is because of the act that the Demurrage is implied by the Terminal for occupying the space on the Terminal.

Control Over Container Use:

Since shippers own the containers, they have more control over how they are used and deployed. This can be especially important for shippers with specialized cargo that requires specific handling or security measures.

Customization:

Owning SOC allows shippers to customize containers to suit their specific needs. For example, they can modify containers to accommodate larger or irregularly-shaped cargo or install specialized equipment for temperature-controlled shipments. However, this modification is mostly allowed for domestic shipping and not for international shipping. If you need to use the modified container for international shipping, then you need to get the container certified again for shipping worldwide. 

Availability:

SOC can help ensure that containers are available when needed, especially during peak shipping seasons when container shortages can occur.

Branding and Marketing Opportunities:

SOC can provide branding and marketing opportunities for shippers. They can customize containers with their logos and colors, which can help increase brand recognition and visibility during shipping and transport.

What are the Challenges of Shipper-Owned Containers?

With many benefits, SOC also comes with some challenges, and two of the biggest challenges that are faced by SOC owners are the following:

Initial Investment and Maintenance:

If you are willing to work as a shipper having your own containers, you’ll need to invest a significant amount of money upfront to purchase the container. Additionally, you’ll be responsible for the ongoing costs of maintaining and repairing the container to keep them in working condition.

Cost of Idle Containers:

Owning a container means you will also have to own a space to keep those containers. Managing the storage space for containers can be time-consuming and may require significant effort on your part to ensure that the containers are properly stored and secured.

Now, think of a container that made a delivery to Houston port and is currently not booked for return delivery. You have two choices: either book storage space and wait until it is rebooked again, or pay an amount to the carrier so it can bring your empty container back.

It’s important to factor in these additional costs when considering the investment of owning your own container, as storage expenses can add up over time.

What are the Key Differences Between SOC and COC?

Well, let’s just summarize everything that you have learned and differentiate Shipper-Owned Container from Carrier-Owned Container in regards to individual categories:

1. Ownership: The main difference between SOC and COC is the ownership of the containers. SOC refers to containers that are owned by the shipper, while COC refers to containers that are owned by the carrier.
2. Responsibility: With SOC, the shipper is responsible for the container’s maintenance, repair, and transport. On the other hand, with COC, the carrier is responsible for these activities.
3. Control: SOC gives the shipper more control over the container’s use and deployment, as they own the container. In contrast, with COC, the carrier has more control over the container, as they own it.
4. Availability: The availability of containers can be different for SOC and COC. In general, carriers tend to have a larger pool of COCs available, while SOC availability is limited to the containers owned by the shipper.
5. Cost: The cost structure for SOC and COC can be different. With SOC, the shipper pays for the container’s purchase, maintenance, and repair. With COC, the carrier bears the cost of the container’s purchase, maintenance, and repair, and these costs may be factored into the shipping rates.
6. Flexibility: SOC can offer greater flexibility in terms of container use and customization. Since the shipper owns the container, they can modify it to suit their specific needs and use it for different shipments as needed. COC, on the other hand, is designed for a specific purpose and may not be as easily adaptable to different cargo types or transport requirements.
7. Liability: With SOC, the shipper bears liability for the container and its contents during transport. This means that if there is damage or loss during shipping, the shipper is responsible for any associated costs. With COC, the carrier typically assumes liability for the container and its contents during transport.
8. Control Over Cargo: With SOC, the shipper has more control over the cargo that is loaded into the container, as they own the container. This can be important for certain types of cargo that require specific handling or security measures. With COC, the carrier has more control over the cargo that is loaded into the container.
9. Resale Value: SOC containers may have a higher resale value than COC containers since they are owned by the shipper and may be in better condition. This can be an advantage for shippers who want to recoup some of the cost of the container when they no longer need it.

Wrap up

Shipper Owned Containers (SOC) offer several benefits to shippers in the freight shipping industry. By owning their own containers, shippers can save money on additional charges and have the freedom to use the equipment.

You should also keep in mind that you will need an initial payment with overtime maintenance charges. Also, you will require a space to manage and store the containers. Overall, shippers should carefully consider the benefits and challenges of using SOC before deciding to invest in their own containers.