xChange: Repositioning empty containers costs the industry $20bn a year

xChange, a German online platform, is aiming to tackle the issue of repositioning idle containers via digitising the process.

The company was launched in Hamburg in 2015 by Johannes Schlingmeier and Christian Roeloffs. The two founders worked at the Boston Consulting Group for almost five years on projects including equipment management, operations and cost reduction processes before starting xChange.

During their work with some of the biggest carriers worldwide, they came across the issue of empty container repositioning and found it costs the industry billions annually. This gaping supply chain hole inspired them to establish a platform connecting users and suppliers of containers to tackle the issue.

xChange is now an independent company offering a neutral online platform for one-way container moves with more than 200 members and more than 250,000 containers in 2,500 locations.

“We build up the whole process from searching for containers to use/ supply, online negotiation, tracking and offer value-added-services like insurance and payment handling. Through a continuous vetting process, a multiparty interchange agreement and our customer service team in Hamburg, Germany and Surabaya, Indonesia we make sure that only trustworthy partners become a member of xChange,” says Christian Roeloffs, CEO of xChange.

The member companies on xChange including carriers, leasing companies, traders and NVOCCs/ freight forwarders.

Roeloffs has noticed that while carriers and leasing companies use xChange to increase their utilisation rate and to avoid empty container moves and reduce their repositioning costs, there is a high demand from traders, NVOCCs and freight forwarders as the platform helps them gain flexibility, avoid demurrage, save time and make better decisions.

Roeloffs reckons the major challenges facing the container logistics industry these days are high environmental costs, low margins and operational inefficiencies, and a slow recognisation of innovation and digitalisation.

“A typical carrier cost for repositioning empty containers sums up to 5-8% of total operating costs and up to $20bn every year for the whole industry. Avoiding empty container moves increases efficiencies and helps companies save important money,” Roeloffs maintains.

According to Roeloffs, of those empty moves, about one third arise from the limitations of individual companies’ operations—which could be avoided by sharing containers on xChange.

“The average savings is $200 to $400 per interchanged container, arising mainly from the avoidance of expenses related to land transportation and the use of terminals. This corresponds to potential annual savings per carrier of approximately $350m to $700m. Scaling up this impact to the top 100 carriers would promote annual savings of up to $4.5bn,” explains Roeloffs.

For the medium term goal, xChange plans to remain focused on containers and facilitating collaboration between market participants along the entire transportation and logistics value chain.

“Going forward that will mean increased system integration with our clients through electronic data interchange and application programming interface but also extending our service offering to facilitating container sales transactions between xChange members,” Roeloffs concludes.