Big Boxes bring Big Questions

Thoughts about APL's new 53 ft. ocean containers

I spent part of the weekend thinking about APL's new 53 foot ocean containers. These new containers should be a major boon to US retail importers.   However, I also had several questions about their operational practicality.  In writing these down however, I realized that these same questions applied back in the last century when APL introduced the 45 footer.  Given today's challenges with port congestion, pollution and a weak dollar, these questions still seem relevant.

How will the Big Box 53's impact Decon Operations in So Cal?

One of the advantages of APL's new 53 foot containers is the possibily of skipping deconsolidation / transload facilities in Southern California while still retaining transportation efficiency.  New Balance and Toys R Us were the first to try the new containers on the South China to Los Angeles tradelane.  Footwear and toys are nice cube cargoes. While this increases speed for these customers, the value may not translate equally for all retailers.  Importers who can create pre-distribution lists while the cargo is still in Asia can take advantage of the savings created by skipping the deconsolidation step.  Unfortunately many retailers still have order systems that can only allocate goods to the stores once it is received into a warehouse.

Deconsolidation still allows merge-in-transit, value added services such as kitting and other product manipulation opportunities. Transload/Decon is not going away. However, the customer base that will use it will become smaller and transportation efficiency won't be as much of a key selling factor because 53 ft containers will be a potential alternative.

In order to be used in ocean transport these new boxes are said to be stronger than the 53 ft units used in US domestic commerce. What do these new boxes weigh?  Does the additional box strength come with a premium on additional weight?

Will the new containers require new chassis?  How will that chassis fleet compete with land at the already congested west coast ports?   When 45's were introduced,  sliding chassis that could be extended to 45 feet came into use.  This is a very economical solution.   What I don't know is will a sliding chassis work with a 53 ft ocean container that is heavier than its domestic cousin?  JB Hunt and others who use all steel domestic 53's use a fixed 53 ft. chassis.  Those new chassis may require additional investment by the line, and will have a footprint of their own on ocean terminals.

53 ft. containers work beautifully for import cargoes from Asia, where the goods are volumetric. However, how is APL going to manage the back haul to Asia?  US Exports tend to be raw materials such as chemicals, paperboard, lumber, clay, etc.  These are dense materials not suited to these big boxes. Will APL be building the cost of the back haul into the head haul? If so, the economics could be offset in premium rates.

How long before Maersk, Evergreen, NYK, MOL and most of the other first tier ocean carriers have the same equipment?    What will that do to port congestion?   

A rising tide raises all boats.  APL is introducing disruptive technology.   How long will APL have the advantage?   Have they ordered enough equipment and will they have it quickly enough to impact the transpacific retail trade for the 2008 peak season?  Slots will be limited and so will the equipment.  You can bet APL will be charging a premium for the big box "value".  If I know anything about APL, availability of this equipment will also be tied to the size of the service contract signed!

I am a big supporter of this new box size, but the efficiency of the extra cube, may well have some operational trade offs that will show up in the freight rates.

Eric

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Comments

[Eric]

Hi Doug. welcome!

The font is a free font publically available on the internet copyright free.

[Doug Rubin]

Just discovered your website - very interesting. I will make it a regular stop.
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Still, you might want to rethink that font choice - Disney is super-agressive on its intellectual property. Or am I missing something?

[Eric]

I thought I'd throw an addendum in here in the form of a comment.

I was at the Intermodal Expo/Transcomp show here in Atlanta this week and specifically sought out the big boxes. There werent any APL units there, but there were pacer stacktrain units etc. Man, a 53 ft hicube container is one big mutha.

Im less concerned about chassis now because there ARE 53 ft slider chassis. Im assuming thats what the shipping lines will use in the terminals because the same chassis that would be used for a 45 possibly could be used for a 53.

Eric

[Eric]

Splatty, thanks for checking in. The chassis situation is probably simpler off terminal than on.

Eric

[Splatty]

Eric,

You bring up some excellent points. I was thinking about this over the weekend as well (what does that say about our work/personal priorities)? I agree that transloading will not go away entirely, especially for those customers who use ocean freight and transloading as a virtual warehouse. Transloading provides an option for customers to decon product and truck directly to their retail customers. You also mention the potential equipment issues. This will probably be a huge concern for smaller inland cities where there might not be chassis' available for local 53' container deliveries.