In the container transportation industry, effective empty container management can make a significant difference in operating costs and profitability. Every trip running without cargo, every container sitting idle at a depot for too long - these are invisible yet substantial wastes. This article will provide detailed guidance on building processes for managing and allocating empty containers, helping transportation businesses optimize container flow and reduce transportation costs.
Why empty container management is a critical challenge in container transport
Empty container management isn't simply about tracking the location of empty containers. It's a complex logistics problem that directly impacts the operational efficiency and costs of the entire transportation system.
Direct financial impact
Empty container transportation costs can account for 15-20% of total operating costs for a container transportation business. When a tractor must move to pick up or return an empty container without combining it with a paying load, the business bears the full cost of fuel, driver wages, and depreciation without generating revenue.
Additionally, storing empty containers at container depots incurs costs. Many shipping lines allow limited free storage time (typically 5-7 days), after which they charge daily storage fees. Without an efficient container allocation process, empty containers can accumulate and generate significant additional costs.
Impact on productivity and customer service
When the exact location and quantity of available empty containers are unknown, the dispatch team struggles to respond quickly to new orders. Customers may have to wait longer to receive containers, leading to decreased satisfaction and lost business opportunities.
Conversely, a good empty container management system helps businesses respond flexibly, quickly providing the right type of container at the right place and time to customers, creating a clear competitive advantage.
Asset optimization and cash flow
Containers are high-value assets. Optimizing container flow helps businesses maximize utilization of existing containers, reducing the need to invest in new equipment. This is particularly important in the context of high container prices and limited supply.
Common challenges in empty container management and allocation
Lack of real-time visibility
Many transportation businesses still rely on Excel spreadsheets or legacy systems to track containers. Information about container locations is often manually updated, causing delays and errors. When dispatch needs to find the nearest empty container for a new order, they must call drivers or check multiple data sources, wasting time and reducing efficiency.
Supply-demand imbalance between regions
A major challenge in container allocation is the imbalance between regions. Some container depots may be short on containers while others have surplus. This is particularly common on one-way transportation routes where export and import volumes are imbalanced.
Without a good analysis and coordination system, empty containers will accumulate at import route endpoints and be scarce at export route starting points, forcing long-distance empty container transportation at high cost.
Poor coordination between departments
Empty container management requires close coordination between multiple departments: sales, dispatch, drivers, warehousing, and finance. When information isn't shared well, each department works in its own way, leading to suboptimal decisions.
For example, the sales department may receive a new order in area A while many empty containers are in area B. If this information isn't connected, dispatch may have to send a vehicle to pick up a container from a more distant depot instead of utilizing the nearest one.
Lack of data for forecasting and planning
Many businesses only handle empty container issues reactively - responding when there's demand rather than proactively planning. Without historical data and analytical tools, they cannot predict future empty container demand at different locations, leading to inefficient container repositioning.
Basic principles to optimize container flow and reduce empty running
Street Turn principle - Direct transfer
Street turn is the most optimal method to reduce transportation costs for empty containers. Instead of returning containers to depots after delivering import cargo, containers are transferred directly to export customers for loading. This helps:
- Completely eliminate empty trips to depots
- Reduce depot entry/exit trips, saving time
- Reduce pressure on container depots, optimizing storage space
To implement street turn effectively, businesses need a container transport TMS that allows connecting import delivery and export pickup needs in the same area and timeframe.
Proximity principle - Prioritize nearest
When empty container transportation is necessary, always prioritize the depot nearest to the next pickup point. This seems simple but requires tools to calculate actual distance (not just as the crow flies) and consider factors such as:
- Fuel costs by route
- Travel time during different time periods
- Bridge tolls, port entry fees
- Expected traffic conditions
Triangulation principle - Triangle optimization
Instead of viewing each trip individually, think about sequences of consecutive trips to form triangles or closed loops. For example:
- Deliver import cargo at point A
- Pick up export cargo at point B (near A)
- After delivering export cargo at port C, return container to depot D near port
- Pick up empty container from depot D for new import shipment
By planning trip sequences, total empty running distance is significantly reduced.
Pooling principle - Centralize and redistribute
Establish central depots in high-traffic areas. Instead of scattering empty containers across many small locations, concentrating at several main depots helps:
- Easily manage and control inventory
- Increase ability to quickly respond to regional demand
- Create conditions for centralized container inspection and repair
Periodically redistribute containers between depots based on demand forecasts to ensure balance.
Process for tracking empty container location and status in real-time
Establish automated tracking system
Modern container transport TMS needs to integrate automatic container location tracking through:
GPS devices on vehicles: When a container is attached to a specific tractor, the container's location is continuously updated according to the vehicle's GPS position. This allows real-time tracking during transportation.
QR/Barcode scanning at checkpoints: At important locations (ports, depots, customer warehouses), staff scan container codes to update status. The system records time, location, and container status (full/empty, condition).
API integration with shipping lines and ports: Many shipping lines and port terminals provide APIs to share container data. TMS should integrate these sources to automatically update when containers are received/returned at ports.
Classify empty container status
The tracking system needs to clearly distinguish different empty container statuses:
Available: Empty container, clean, inspected and ready for new shipment immediately.
In-transit: Empty container en route from point A to point B (e.g., from customer to depot, or between depots).
Pending inspection: Recently returned container, needs condition check before next use.
Under repair: Container has damage, being repaired and not available.
Reserved: Container already allocated for specific upcoming order.
Awaiting return: Container is empty at customer location, waiting for vehicle pickup to return to depot or port.
This detailed classification helps dispatch have an accurate view of truly available containers, avoiding allocation of pre-reserved or problematic containers.
Data visualization dashboard
Build control panel in TMS displaying:
Heat map: Shows empty container density in different areas, making it easy to identify where there's surplus/shortage.
Container list by depot: Quantity and type of containers at each depot, categorized by status and container type (20ft, 40ft, 40HC, reefer...).
Return timeline: Displays containers needing return to shipping lines in different timeframes (today, next 3 days, next week) to prioritize handling.
Alerts and warnings: Notifications when containers are about to exceed free storage time, when depots are nearly full or nearly depleted, when containers remain at one location too long.
Empty container dispatch strategy between depots and container yards
Demand analysis and forecasting
Before dispatching, need to clearly understand demand:
Historical data analysis: Review past patterns - which depots frequently lack containers on which days of the week, month, or season of the year. For example, depots near export industrial zones may need many empty containers early in the week when new orders start.
Forecasting from received orders: Use data from confirmed bookings to predict container needs in the next 3-7 days. If there are many export orders in area X next week, start moving empty containers there now.
Consider market trends: Events like festivals, harvest seasons, or major promotional campaigns can create sudden demand in certain areas.
Proactive repositioning strategy
Scheduled repositioning: Establish periodic repositioning schedules between depots based on demand patterns. For example, every Monday morning, move 10 40ft containers from depot A (usually surplus) to depot B (usually shortage).
Opportunistic repositioning: Combine empty container repositioning with available cargo shipments. When there's a shipment from area X to area Y, after delivery, instead of running empty back, the vehicle can pick up an empty container at a depot near Y to bring back to depot near X if needed.
Emergency repositioning: When there's urgent demand (large order, depot incident), implement emergency repositioning. TMS needs a function to quickly calculate optimal solution: which depot to get containers from, by what method (single truck, consolidated truck, or outsource).
Cooperation with partners and shipping lines
Container sharing: Establish container sharing agreements with other transportation businesses. When you have surplus containers at a location where partners need them, and vice versa, you can exchange or temporarily lend, reducing repositioning costs for both parties.
Flexible depot with shipping lines: Negotiate with shipping lines about flexible container return points. Instead of only being able to return containers at one fixed depot, being allowed to return at multiple depots in the area helps optimize routes.
Drop and pick programs: Participate in shipping line programs allowing you to pick up empty containers from off-dock locations (outside ports), usually closer to customer areas, reducing travel distance.
TMS application in automating allocation and container return scheduling
Smart allocation algorithm
Modern container transport TMS uses algorithms to automatically suggest optimal container allocation:
Matching algorithm: When a new order needs an empty container, the system automatically searches for the most suitable container based on:
- Required container type (size, type)
- Customer pickup location
- Time container needed
- Transportation cost from available depots
- Container condition (priority to inspected, ready containers)
- Container return deadline to shipping line
The system will rank options and suggest the optimal solution for dispatch.
Load optimization: When planning for multiple orders, TMS can optimize container allocation and vehicle routes to reduce transportation costs and minimize total empty running distance. The algorithm considers entire trip sequences for each vehicle, not just individual trips.
Automated container return scheduling
Automatic demurrage/detention tracking: TMS tracks each container's usage time and compares with shipping line free time terms. The system automatically:
- Alerts before free time expires
- Prioritizes returning containers about to incur high fees
- Calculates expected costs if keeping container longer vs. cost of immediate return dispatch
Automatic container return scheduling: Based on:
- Current location of empty containers
- Container return deadline
- Routes and loads of existing vehicles
- Transportation costs
The system automatically creates container return plans, assigns vehicles and drivers, optimizing so multiple containers are returned in the same trip when possible.
Integration with shipping line systems
API connection with shipping line systems to:
Automatically retrieve list of containers needing return: Instead of manual entry, the system automatically synchronizes information about which shipping line containers belong to, which depot to return to, deadline when.
Update container return status: When containers are returned at depot/port, information is automatically sent to shipping line, reducing processing time and disputes over fees.
Electronic empty container booking: When needing to pick up empty containers for new shipment, TMS can automatically send booking request to shipping line and receive confirmation, container number, and pickup location.
Mobile app for drivers
Provide mobile app for drivers to:
- Receive empty container pickup/return orders with detailed information (container number, type, location, time)
- Update status during execution (arrived at depot, picked up container, in transit, delivered)
- Photograph container condition when picking up/returning as evidence
- Receive notifications about order changes or new priorities
Data from drivers is immediately synchronized into TMS, ensuring information is always updated.
Calculating and minimizing empty container transportation costs
Identify cost components
To manage and reduce costs, first need to clearly understand the cost structure of transporting empty containers:
Fuel costs: Depends on distance, vehicle fuel consumption (often higher when running empty due to lack of balancing load), and current fuel prices.
Driver costs: Driver wages/pay for time executing empty trip, including waiting time at depot if any.
Equipment depreciation costs: Portion of tractor and chassis depreciation for distance traveled.
Bridge tolls, depot/port entry fees: Fixed fees must be paid regardless of whether vehicle carries cargo or runs empty.
Opportunity costs: Time vehicle runs empty is time that cannot be used to carry cargo generating revenue.
Container storage fees: If container repositioning delays lead to containers remaining beyond free time at depot.
Cost calculation model in TMS
Build cost calculation formula for each empty trip in system:
Empty trip cost = (Distance × Cost/km) + Fixed fees + (Time × Cost/hour driver wages) + Container storage cost (if any)
TMS needs to store parameters:
- Cost/km for each vehicle type
- Cost/hour driver wages
- Bridge toll tables, depot fees by route
- Container storage fee tables from shipping lines
When planning, system calculates costs for each option and prioritizes lowest cost option (provided service requirements are met).
Specific cost reduction strategies
Maximize street turn: This is the most effective way to eliminate empty transportation costs. Set goal to increase street turn ratio in total trips. For example, if currently only 15% of trips are street turns, set goal to increase to 30% within 6 months.
Create incentives for street turn: Encourage customers to be flexible about pickup times to facilitate street turns. Can offer preferential rates for customers willing to receive containers directly from import delivery points instead of from depots.
Consolidate empty moves: Combine multiple empty containers in one trip when possible. For example, use flatbed trucks or special chassis to transport two 20ft containers simultaneously, reducing half the transportation cost compared to transporting separately.
Optimize depot locations: Periodically reevaluate depot locations. Depots located in strategic positions (near main customer clusters, near ports, convenient traffic) will reduce average transportation distance.
Negotiate terms with shipping lines: Negotiate to have multiple container return points, longer free storage time, or be allowed to use shipping line containers for domestic routes (SOC - Shipper Owned Container) before returning.
Cost reporting and analysis
TMS needs to provide detailed reports:
Empty transportation cost report: Total costs by month/quarter, analyzed by route, container type, customer, shipping line. Identify which routes, which depots are generating highest empty costs.
Root cause analysis: Why must run empty? Due to lack of regional orders, due to cargo flow imbalance, due to shipping line requirements, or due to suboptimal dispatch process?
Before/after improvement comparison: Track cost trends over time to evaluate effectiveness of implemented improvement measures.
Benchmark: Compare business's empty running ratio and costs with industry benchmarks (if available) to determine competitive position.
KPI metrics to evaluate empty container management effectiveness
Empty Running Ratio
Calculation: (Number of empty trips / Total trips) × 100%
Or: (Empty running km / Total km) × 100%
Target: Good container transportation businesses typically maintain this ratio below 20%. Ideal target is 10-15%.
How to improve: Increase street turn, optimize routes, improve forecasting and container allocation.
Street Turn Ratio
Calculation: (Number of street turn trips / Total import trips) × 100%
Target: Depending on market characteristics, but should aim for at least 25-30%. Some excellent businesses achieve over 40%.
How to improve: Build customer network balanced between import and export, use TMS for automatic matching, flexibility in time and location.
Average Container Turnaround Time
Calculation: Average time from when empty container is returned to when it's used for next shipment.
Target: Shorter is better, ideally under 48 hours at main depots.
How to improve: Speed up container inspection and repair, improve tracking system to quickly allocate available containers for new orders.
Container Utilization Rate
Calculation: (Days container has cargo / Total days container in system) × 100%
Target: Above 70% is good, above 80% is excellent.
Meaning: Low ratio shows containers sitting idle too much, not creating value. May be due to excess equipment or poor allocation management.
Empty transportation cost to total revenue
Calculation: (Total empty container transportation cost / Total transportation revenue) × 100%
Target: Below 8% is good, below 5% is excellent.
Meaning: This metric shows proportion of "waste" cost to revenue. Reducing this metric directly improves profit.
Average moves per container (Moves per Container)
Calculation: Total moves (both cargo and empty) / Number of containers in system
Target: High number of moves (e.g., > 8 times/month) shows containers are used efficiently. But need to ensure low empty move ratio.
Meaning: Balance between maximizing container use and reducing unnecessary moves.
Demurrage/Detention Rate
Calculation: (Number of containers incurring storage/detention fees / Total containers) × 100%
Target: Below 5%, ideally below 2%.
Meaning: High ratio shows problems in timely container return or delivering containers to customers on time.
Container Request Fulfillment Time
Calculation: Average time from receiving container request from customer to when container is delivered to requested location.
Target: Below 4 hours for regional requests, below 24 hours for inter-regional requests.
Meaning: Fast response time improves customer service and creates competitive advantage.
KPI dashboard in TMS
All above KPIs need to be displayed in TMS dashboard, updated in real-time or daily. Dashboard should:
- Use visual charts (line chart for trends, gauge chart for comparison with targets)
- Have color-coded warnings (green = good, yellow = needs attention, red = exceeds threshold)
- Allow drill-down to view details (e.g., click on high empty running ratio to see specific trips, which depot, which driver)
- Can filter by time, depot, container type, customer
Periodically (weekly or monthly), organize KPI review meetings with relevant departments to analyze, find root causes and propose improvement actions.
Conclusion
Effective empty container management is not just about tracking container locations but a comprehensive strategy encompassing processes, technology, and people. By applying principles to optimize container flow, building rigorous tracking processes, using container transport TMS to automate and intelligentize decisions, transportation businesses can significantly reduce transportation costs from empty running and increase productivity.
Investing in empty container management systems not only helps cut costs but also improves customer service through faster response times and higher reliability. In an increasingly competitive environment, the ability to optimize container allocation and minimize operating costs can create sustainable competitive advantage.
Start by assessing your business's current empty container management status, identify weaknesses needing improvement, and gradually implement appropriate solutions. TMS technology is a powerful tool, but ultimate success comes from harmonious combination of systems, processes, and execution teams.
