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Sharing could cut Sri Lanka empty container repositioning costs

ECONOMYNEXT – Sharing or pooling containers by shipping lines can reduce the need for costly empty container repositioning, saving money for carriers and Sri Lankan shippers alike, according to a logistics expert.

Annual empty container repositioning cost in Sri Lanka, which imports more than it exports, is about 100 million US dollars a year, said Lalith Edirisinghe, Head of the Department of Logistics & Transport at Sri Lanka’s CINEC Maritime Campus.

That cost is recovered by carriers from shippers and is finally paid by consumers, Edirisinghe said.

Edirisinghe is working on a ‘Virtual Container Inventory’ (VCI) system that he argues is similar to existing mechanisms among shipping lines for sharing shipping space or slot exchanges.

“Other solutions try to reduce re-positioning cost. But this approach tries to reduce the need for empty container repositioning if you cannot eliminate it at all,” he noted.

In the VCI system, carriers exchange containers on mutually agreed terms but continue to control its own inventories.

“As pooling is done virtually, physical storage of containers is not a cost,” Edirisinghe explained.

“On the other hand, VCI expands inventory of carriers beyond their existing individual capacity.”

His model, developed using Sri Lanka as a case study, enables exchange of boxes between lines with an excess and those with a shortage.

Over the last 10 years Sri Lanka’s imports have exceeded exports, resulting in a building up of empty containers in the island.
 (Colombo/October 14 2015)
 

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