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How to reduce transportation costs by using a public feeder

Blog post   •   Jan 30, 2018 07:12 CET

Weekly demand fluctuations in order volume can be troublesome when shipping your cargo with feeder vessels. It can cause either under-utilization of the vessel or cargo overflow, which both are costly scenarios. Using a public feeder can help reduce these hassles. In this blog article, I will talk about feeder service and describe how you can benefit from using a public feeder in relation to using a private one.

Feeding bigger main line vessels for final destination

Feeder vessels collect shipping containers from different smaller ports and transport them to central container terminals where they are loaded to bigger ocean vessels. That way, the smaller vessels containing up to 1000 TEU (Twenty-foot Equivalent Unit) feed deep-sea carrier liners containing 14000 TEU to 21000 TEU. Carriers either use their own feeder vessels or third-party public feeders. The public feeder vessel allocates multiple carriers’ cargo from different ports by offering slot spaces to be booked depending on the needs of each specific carrier.

The importance of identifying variations of the cargo volume

A carrier that is working on a stable market and has sufficient volume to fill their own feeder vessels could just as well do so. However, most often, the target market is not that steady. Shipping lines often work with various markets with weekly fluctuations in the demand. This can result in under-utilization of feeder vessels one week and a cargo overflow during the next week. A container shipping company that is operating its own feeder vessels often uses vessels with sufficient capacity to handle cargo even during the peak periods of the year. This means that during the periods with lower cargo volume, the vessel will not always be filled up to maximum capacity which leads to a higher annual transportation cost. Therefore, it is important that container shipping carriers identify the volatility and variability of their cargo volume.

Why is it beneficial to use public feeder service? Read full article here.

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