In conversation with Seatrade Maritime News Europe Editor Gary Howard, Christian explains the processes involved in moving containers around the world, the old technologies they rely on, and the improvements available.
Gary and Christian’s conversation covers:
- The processes involved in container operations
- Shipper-Owned Containers (SOCs) and Carrier-Owned Containers (COCs)
- The time cost of error handling
- The improvements on offer using existing technologies
- Data sharing in the container sector
- A customer case study
Listen to the episode in the player above or on the app of your choice:
Episode transcription
Gary Howard 00:09
Welcome to the Seatrade Maritime Podcast. You are listening to Gary Howard, Europe Editor, Seatrade Maritime News and today I'm In Conversation with Christian Roeloffs, Founder and CEO at container logistics platform Container xChange in his first ever podcast appearance, Christian and I talk about the technology at play in container operations, the huge efficiency and time gains on offer from upgrading that technology, and a little about the importance of data sharing and the willingness of stakeholders to share that digital gold as ever, I started by asking Christian to introduce himself and tell us a little about Container xChange.
Christian Roeloffs 00:44
My name is Christian. I'm a co founder and CEO of Container xChange. We're a logistics technology company based in Hamburg, Germany. And we have a mission to simplify the logistics of global trade. We do that by building an infrastructure to enable container users and owners to collaborate more efficiently.
Gary Howard 01:03
Now, some of our listeners are probably just familiar with containers from the time they arrive at a port, you know, they go to a different port at the other end, and then they're gone. But that's one piece of a much larger chain and a much larger puzzle. Could you explain what is meant by sort of container operations as a whole?
Christian Roeloffs 01:18
Absolutely. So for us container operations is really everything a freight forwarder has to do in order to get the container from A to B. So of course, it involves placing the booking with a carrier or with a slot operator. It involves adding transportation services via trucking or other intermodal connections;Â it involves making sure that the container in the depo was actually ready for pickup;Â picking up the container;Â making sure that I have container number that I can then pair with my booking number. And then of course, sort of following the container through its lifecycle within the logistics value chain, up to the return of the container, making sure that the container is actually returned in the right location in the right depo on time, and ideally undamaged. Or if it's damaged, making sure that the damage claim is checked, disputed if necessary, resolution is found, etc. So it's really all the activities or the processes that happen around the container that normally a shipper or even an end customer doesn't really have any idea. And that's what we what we mean by container operations.
Gary Howard 02:30
So lots of parties that play in there, lots of interactions and opportunities for things to go wrong. But let's focus in on the technologies, what sort of technologies are used in container sourcing? What are the processes involved in that and the sort of challenges in that area?
Christian Roeloffs 02:45
I would propose to take sourcing in a little bit of a wider context and look at what the freight forwarder not only has to do to find the container, which originally is sourcing but then also the entire container operations part. And what you mentioned is right, it's lots of processes. It's lots of stakeholders and lots of complexity.
And the interesting part here is that almost every step in this value chain is manual, and currently run through, let's call it, not very sophisticated technology, be an email, via WhatsApp, via WeChat, your telephone calls, and very, very limited coverage through systems integrations and actually computers talking to each other, so to speak.
And the result of that is of course, whenever things go wrong, and a lot of things can go wrong in these very manual process, these errors, and issues, and problems also have to be fixed manually. And when we talk to our customers, for example, the freight forwarders or NVOCCs, fixing problems manually is what they do with about 80% of their time. That's why they can't really take holidays, why they have to answer emails on the weekend, etc. Because at some point, somewhere in the world, something goes wrong with a container that's currently under my control. And then I have to go and fix it manually.
If I think about the tech stack of a freight forwarder it's really limited. It's usually they have a transportation management system which they use primarily for internal processes and communication with the customer. So the shipper for example. They use it for quotation we service the shipper for invoicing, etc. And all the processes behind it. On the operational side. It's Google Sheets, it's Excel, it's email, nothing really automated.
Gary Howard 04:33
And is this one of the areas of the maritime industry where we were still encountering the dreaded fax machine as well.
Christian Roeloffs 04:38
Absolutely. Faxes, telexes, so all the vintage technology is still in play some part, yes.
Gary Howard 04:44
Before we sort of move more in depth into the technology offerings from Container xChange, a recent press release of yours and I must commend your team for putting out some really interesting information and analysis, it was quite specifically about SOCs versus COCs. Could you just briefly explain the difference between those and the sort of the nuances of using SOCs s versus COCs.
Christian Roeloffs 05:03
Absolutely. And first of all, thanks for the compliment, I'll make sure to pass it on to the team. SOCs, is "shipper owned containers", and that contrasts with COCs that's "carrier owned containers". And what this really means is that if I book a shipment, for example, directly with Maersk line or CMA CGM or a COSCO, typically what I book is the entire ocean freight so the container plus the slot on the vessel, sometimes also with some intermodal services, brokerage postcards on carriage etc.
And the contrast with that is SOC is where I bring my own container. It's a "shipper owned container", or sometimes also freight forwarder owned container. And I only book the slot on the vessel of the carrier, for me as a shipper or freight forwarder, this can bring many advantages. For example, I get flexibility because I can pair the container with multiple shipping lines with multiple slots rates, and I'm not so bound to the carrier that actually has equipment available for shipment. I'm also a little bit more flexible, both in the port of loading as well as in the port of destination, when it comes to the actual movement of the container. When do I pick it up? When do I return it etc. Because usually if I use a COC container, I'm very much bound to the instructions of the carrier. And if I don't follow those instructions, and for example, return the containers two or three days too late, I incur very high penalty charges, called detention charges, for example. And if I bring my own container, I don't have that. It's either my own or I lease it for $1 to $2 a day. So the damage of rejoining a container ladies is much less.
That was also very interesting in parts during the during the COVID pandemic past three years essentially. On many instances, I can also earn money with using a shipper owned container, because either the slot rates are lower, and the entire all in rate from the carrier because the carrier doesn't have to provide their containers or I do a favour to the box owner in some cases and I leased the container for one trip move and get paid by the box. So a variety of advantages there for using an SOC.
Gary Howard 07:13
I'm sure there was some very interesting calculations to be made during the course of the pandemic when there was such a shortage of equipment and spaces on ships as well.
Christian Roeloffs 07:20
Absolutely. It's also what we learned a lot from talking to our customers that they got very interested in more and more data and insights about container prices, supply, demand imbalances, etc. During the pandemic, which is also the reason why we decided to push that data into our insights product and make it available to our customers. I guess with freight rates as they were the stakes were that much higher.
Gary Howard 07:44
Correct. So within this sort of, you know, fax machine and WhatsApp environment, what's the scope for improvement using current technology? And what benefits could that bring to the supply chains, logistics companies and freight forwarders?
Christian Roeloffs 07:57
I want to say the scope and the potential is unlimited but it's certainly huge because we run a survey just recently with the Copenhagen Business School and with freight forwarders and NVOCCS talking about their processes and how they operate their business. And about 80% of them said they still use emails, phone calls and WeChat just for the simple act of obtaining a quotation from the carrier or receiving an update on a sailing schedule.
So even in this most basic process, just receiving a quotation or receiving an update, digital technologies can already provide time savings and streamline processes. And if you multiply that through the entire, let's say 200 to 250 process steps across the entire logistics value chain that a container typically passes through from port of loading to port of destination, it just multiplies up to a significant time saviour, that just a better communication technology or an integration between systems that facilitate or saving scheduled updates or rate updates could bring to a freight forwarder.
Gary Howard 09:13
And then I guess more specifically, where does Container xChange fit into all of this? And what sort of products and services does it offer?
Christian Roeloffs 09:19
So I mentioned earlier that our vision is to simplify the logistics of global trade. And we do that by providing an infrastructure for container owners and users to collaborate more efficiently.
We started out just with a very simple marketplace where customers could find available containers either for release or for a for purchase. And then we saw that this is just a sort of the beginning or the tip of the iceberg of a huge process map that's super manual and super inefficient. So we started building an operating systems and a payment layer underneath those marketplaces. And this is what our customers are using right now, and where we're heavily investing in. And the current objective is to make communication easier to say "hey, there are standards on what to negotiate on, there are standards on how a container trading or leasing deal is facilitated, what rates are to be negotiated".
There are valuable services that lie on top of that infrastructure that allow our customers to manage their damage claims and container damage claims faster and simpler. And this standardisation of communication and the standardisation of the infrastructure that our customers are using almost mirrors the invention of the container itself. Because if you think about it, you know, the container was invented, let's say 60 years ago. And it absolutely revolutionised global trade, enabled globalisation, it's lifted billions of people out of poverty. And the reason why it was so successful was because it was so simple. And it was the same everywhere. So we're simple and standardised.
And interestingly, all the processes around the container talked about processes a lot today already, they're still manual, error prone, and nonstandardised. And what we're trying to achieve here is making all the processes or round the container handling processes, etc. as simple and as standardised, as the container itself.
Gary Howard 11:22
I think when people outside of the maritime industry, learn about its inner workings, they're often surprised at the inefficiencies that are there and the technologies that aren't being used. That comes up quite a lot in my conversations.
Christian Roeloffs 11:34
Absolutely. I think just a simple analogy, I think is super interesting, right? If you want to book a flight from London to New York, right, you go on to a host of different booking websites and price comparison websites, and you essentially have global supply, including availability and price information at your fingertips, and you also get real time updates on changes. But if you want to try the same thing with a container, you're back into, you know, you're back into the Iron Ages, or Stone Age, you have to call the carriers, you have to find out who's serving this route, you have to manage all of these processes manually. And it's just super hard to understand and comprehend for anybody outside of this industry.
Gary Howard 12:17
Yeah, so there's obviously a lot on the on the table there. Could you perhaps share some success stories that Container xChange has enabled, that you're particularly proud of?
Christian Roeloffs 12:26
Sure. So one of our success stories that we also share on our website, and I do have the approval of the client to talk about it. It's Orange Container Line. It's a smaller upstart NVOCC that essentially from day one started to work with xChange to simplify and automate as many of these operational back-end processes as possible. And Jack, the owner, we talked to him and he said that not only does he get better prices on exchange for leasing of containers and booking slots, but also operational processes are simpler. And he doesn't have to worry about every single step and error handling every single step himself, because many of these processes are in effect standardised, if not automated. And so he's been able to significantly grow his business with xChange.
And of course, that's always something great for us. And probably the best compliment that you can get if somebody starts using your platform, your technology and, you know, we enable him to to grow his business, grow his revenue, gross profitability.
Gary Howard 13:32
Sure. And then where does Container xChange take its revenue from and this process is it sort of a subscription model to access the platform? Is it you know, skimming off the top of every transaction, how do you generate the cash?
Christian Roeloffs 13:42
We don't have a transaction fee, which we started with originally, but we got rid of very quickly because we don't want to tax or disincentivise the individual transaction. And we also want to make sure that we are 100% neutral, we never take a position on a container, we don't try to take some transaction fees, we're completely neutral. And let's say play agnostic.
Where we do earn money is twofold. It's a subscription fee, like you mentioned, where we charge for access to the market places and then hence relatedly, also to the operating system. And secondly, we charge for value added services that we provide or that we also provide through third-party providers. For example, our customers can not only book a container or lease a container on xChange, but they can also ensure a container against damages. There of course, we work with an external insurance company and we have a small margin on top of that.
Gary Howard 14:34
And then just finally, what are the challenges faced in sort of extending the reach of a platform like a Container xChange? Are you facing any regulatory hurdles and are companies confident in things like sharing the data that's necessary to make an operation like that run?
Christian Roeloffs 14:47
When we first started out, the biggest concern actually was "will companies be comfortable sharing this data"? Ideally, in real time, and then up to date, or will they treat data as you know, the new gold or the new oil and lock it away in their basements?
And interestingly, I was talking about, you know, xChange being neutral and absolutely player-agnostic. This has really helped us to gain trust in the marketplace. And companies are now getting more and more willing and free in sharing their data with us. And we can then use it on the marketplace. So the operating system, so that's becoming less and less of a concern. Of course, also, because we stick to that neutrality view very, very strictly. Otherwise, there's no regulatory hurdle.
But of course, I think the general apprehension against change and adopting technologies, new technologies, sometimes unproven technologies within the industry, that's probably the biggest hurdle for us. And it's also a reason why we see the highest growth and the highest adoption rates in customers that are small to mid sized. So out of anything between five and 200 employees is really our commercial sweet spot as well because they're typically where the owner or the main shareholder still has significant operational interest in the business and new technologies and is just willing to test and try new things. Big corporates, enterprises, things just take a little bit longer, I guess, to change their mindsets, as well.
Gary Howard 16:19
Sure. But I do think we're seeing a sort of more of a willing to adopt digital technologies from the larger lines, they certainly put out a lot of press releases about it anyway.
Christian Roeloffs 16:27
That's true. And just recently, sort of the announcement of a commitment to an electronic bill of lading by 2030, I think is definitely a step in the right direction. But we just also have to have to execute it and not just announce and talk about it.Â
Gary Howard 16:44
Well, Christian, thanks very much for your time and for appearing on the Seatrade Maritime Podcast.
Christian Roeloffs 16:47
Thanks a lot for me, Gary was a pleasure.
Gary Howard 16:52
Thank you, Christian for joining us on the Seatrade Maritime Podcast. Keep an eye on Seatrade Maritime News for updates on the container market as there's change in the air for sure. It won't be long before you see some Container xChange data and analysis in our reporting, I'm sure. Until next time, farewell.
