Container Leasing, Owning and Exchanging

Hi all! 

I'm Sreelakshmi M N, second year MBA student at Amrita School of Business Coimbatore. In this blog let us discuss some of the advantages of container leasing over ownership.

For businesses that only require 1 or 2 containers on their premises for storage, then ownership is the correct way. When there is a need for a mobility feature, it is particularly nice, because they act as both storage and cargo transport equipment.

If you need containers for an indefinite time, owning them is more economical, use them often, need to customize them somehow, and maybe not need too many of them. We also imply that demand is constant with regular use and is expected to stay at that constant elevation. Carriers, for instance , try to hedge the risk of fluctuating demand by both owning and leasing.

Depending on the location, form or quantity, buying a container will usually cost you from $1,400 to $5,000. You may buy fresh or used, with the used ones at the lower end of that scale obviously fetching rates. And, as always with possession, full responsibility comes with it.

Even if you have the upfront resources to make the purchase, consider the shareholders' warning when they see your lower profit margins. As an operating cost, those containers sitting on your balance sheet can make more sense to minimize your tax liability and not cause the panic that a drastic cut in income will cause — especially when you choose to run a large fleet.

When container leasing makes more sense than owning. You need containers, but you don't have the cash in advance . No worries, if you don't have the huge lump sum of cash at hand, the way to go could be container leasing. No big upfront expenses , you only rent containers at an reasonable rate. These prices are dependent on several variables, such as market rate, necessary quantity, location, etc.

Moving back to demand forecasting. If there is a temporary demand spike or if you can't reliably forecast the long-term demand, then container leasing is probably the better choice.

Size matters and container leasing firms know it.Leasing companies hold the world's largest share of shipping containers and are effectively an enterprise financial logistics vehicle for leasing the rights to use them. Around 52 percent of the worldwide container fleet is owned by 13 major leasing firms.

Many container owners were pressured to sell containers during the last recession and the leasing firms were there to snatch them up. Leasing companies also provided lease-back options where the container was leased to the leasing company by the carrier and the containers were left to the carrier for continued use under a new lease agreement. Thus, for this purpose, many major shipping liners also use container leasing firms.