Understanding the financial and operational benefits of leasing versus owning containers is important for logistics providers. Each option offers unique advantages that can significantly impact a company’s flexibility, financial health, and strategic opportunities.
Leasing Containers
Leasing eliminates the need for a significant upfront investment. This can free up capital for other areas of the business such as supply chain consultancy, customs clearance accelerator services or outsourced vendor management. Moreover, leasing containers results in reduced maintenance and repair costs as these expenses are often covered by the leasing company. Beyond the financial savings, as the responsibility for repairs rests with leasing companies, they also bear liability for any cargo damage caused by poorly maintained containers. This holds as long as the lessee has used the container in accordance with the lease agreement.
Additionally, leasing offers forwarders access to modern equipment. As providers regularly refresh their fleets, forwarders can utilize newer and specialized units such as high-cube options for voluminous cargo or silent running models for urban deliveries.
Lastly, leasing allows logistics providers to adapt to fluctuating demands without long-term commitment. This is particularly useful for managing seasonal peaks such as transporting grapes and wine barrels during the harvest season and seafood shipments such as oysters and shellfish ahead of the Christmas holidays.
Purchasing Containers
Buying containers increases a company’s assets on its balance sheet and improves its asset-to-liability ratio. A higher ratio indicates that the company has more resources compared to its liabilities and a better ability to pay off debts and fulfill financial commitments. This increased security can lead to better borrowing terms such as lower interest rates or larger loan amounts. Moreover, the containers themselves can serve as collateral which gives additional security to lenders.
Furthermore, purchased containers have resale value and long-term utility. They can be sold when no longer needed to recover some of the initial costs or repurposed for alternative uses. Potential applications include on-site storage units, cross-docking stations, packing and prep areas, and secure document storage.
In addition to repurposing for other uses, forwarders can modify containers to meet specific operational needs. Customizations might involve insulating for temperature-sensitive goods, adding ventilation systems for perishable or odor-sensitive items, and reinforcing the structure to support heavy or oversized cargo. Other modifications could include setting up shelving systems for better organization of small shipments and installing internal partitions to separate different types of cargo.
Regardless of their use, containers can be recycled at the end of their lifecycle. When they reach the end of their usable life in freight operations, they can be dismantled and the materials, primarily steel and aluminum, can be repurposed.
For containers that are still operational but temporarily unused, they can be rented out to other forwarders or companies. During peak shipping periods, for example, logistics providers with idle containers can rent them out on a short- or mid-term basis to generate an additional source of revenue.