When it comes to acquiring shipping containers, businesses have two main options, purchasing and leasing. Each of these choices has distinct advantages and disadvantages, and it is important to understand the costs and benefits associated with each option in order to make an informed decision.
Advantages of leasing containers
Container leasing is becoming an increasingly popular option for businesses in need of extra storage space or cargo transport. Leasing offers a number of benefits over purchasing, but it’s important to understand the short-term and long-term costs associated with each option before making any decisions.
Leasing containers from a leasing company is a cost-effective solution to meet short, or long-term needs of shipping and transportation companies. Many businesses prefer to lease shipping containers rather than purchase them outright due to the associated costs and benefits. One of the biggest advantages of leasing is that it can reduce upfront costs significantly, only requiring a small upfront fee and monthly payments over the course of the lease term. This makes leasing an attractive option if you need to minimize your upfront costs.
The flexibility of leasing containers makes this option much more attractive. Leasing containers provides businesses with flexibility, depending on the type of lease. This allows businesses to control their transportation expenses and adjust them in response to changing market conditions. Additionally, leasing containers eliminates the need for large upfront capital investments, reducing financial risk.
Meet specific requirements
With an array of different container types, leasing a container which meets your requirements or specialist needs can be a great solution, especially if it is a one-off or not required frequently like the more standard 20 and 40 foot standard containers.
In the event where a specialist container or one with a bigger footprint is required, you can supplement your existing assets but leasing a shipping container to fulfill the arising temporary needs.
No maintenance, liability, or disposal hassle
Shipping containers can acquire an aged and worn appearance over time as a result of exposure to various weather conditions. By opting for a leasing arrangement, you have the option to exchange your container for a newer one, ensuring a favorable visual impression. Moreover, when you engage with a container leasing company, they assume responsibility for any damages incurred by the container and its contents throughout the entire lease duration.
Disadvantages of leasing containers
Although there are many advantages to leasing containers, this route does have some other considerations. Here are some potential drawbacks to consider.
Leasing containers can be more expensive in the long run compared to purchasing them outright. While leasing offers the advantage of lower initial costs, the accumulated lease payments over time can exceed the cost of purchasing containers. Leasing rates are based on the many factors, such as the market rate, quantity needed, location and demand. In addition, month-to-month costs are lower than buying, but it leasing won’t allow you to build any equity or gain the asset.
Dependency on the lessor
When leasing containers, you rely on the lessor to provide and maintain the equipment and provide quality containers. If the lessor fails to deliver or maintain the containers as agreed, it can disrupt your operations and cause delays or additional costs.
Obligations and restrictions
Lease agreements often come with specific terms and conditions that you must adhere to. These can include restrictions on how you use the containers, maintenance responsibilities, potential penalties for damages, minimum time period for leasing or early termination. Failing to meet these obligations can result in additional costs or legal issues.
Leasing containers can limit your flexibility to adapt to changing business needs. If your requirements change or if you need to scale up or down, you may face challenges in adjusting the number or type of containers leased without incurring significant costs or complications.
Lease agreements typically involve long-term commitments, often spanning several years. This can be a disadvantage if your business circumstances change or if you need to pivot to different strategies or markets. Early termination of the lease may come with penalties or fees.
When you lease containers, you don’t have ownership rights or the potential benefits that come with ownership. For example, you won’t be able to capitalise on the value appreciation of the containers or use them as collateral for loans or financing.
It’s essential to carefully consider these disadvantages alongside the potential advantages and your specific business needs before deciding whether leasing haulage containers from a leasing company is the right choice for you.
Advantages of purchasing containers
Purchasing haulage containers, also known as shipping containers or storage containers, can offer several advantages. Here are some of the benefits.
Buying haulage containers can be a cost-effective option compared to renting or leasing containers over an extended period. Once you purchase a container, you own it outright and avoid recurring rental fees.
Haulage containers are designed to withstand harsh conditions during transportation across long distances. They are typically made of sturdy materials like steel, making them resistant to weather, pests, and theft. When properly maintained, they can last for many years.
If your business requires additional storage or shipping capacity, purchasing haulage containers allows you to scale up easily. You can acquire multiple containers as needed, expanding your storage or shipping capabilities without relying on external rental services.
Haulage containers generally retain their value over time, so if you no longer require a container, you can sell it in the secondary market. This potential for resale can help you recover a portion of your initial investment.
Purchasing haulage containers can be seen as a long-term investment, particularly for businesses or individuals with ongoing storage or shipping needs. By owning containers, you have a reliable asset that can provide returns and cost savings in the long run.
It’s important to consider your specific requirements and circumstances before purchasing haulage containers to ensure they align with your needs and offer the desired advantages.
Disadvantages of purchasing containers
Although there are many advantages to purchasing containers over leasing, there are some other points to consider before making a decision. Here are some common disadvantages associated with pruchasing haulage containers.
When it comes to upfront costs, purchasing a container typically requires more money than leasing one,especially if you require multiple units. This initial investment can be a significant financial burden for individuals or businesses with limited capital.
In addition, financing the purchase of haulage containers can be difficult, especially for small businesses or individuals without established credit. Additionally, obtaining insurance coverage for the containers may also be more challenging compared to leasing options.
Maintenance and repair expenses
Over time, haulage containers may require maintenance and repairs to keep them in good condition. This can add to the overall cost of ownership, especially if the containers are subjected to harsh weather conditions or heavy use.
Once you purchase a haulage container, you are committed to its specific dimensions and features. This lack of flexibility can be a drawback if your shipping or storage needs change in the future. It may not be easy to modify or adapt the container to suit new requirements.
Owning haulage containers means you need to allocate sufficient space for their storage when they are not in use. This can be a challenge, particularly if you have limited available space on your property or at your business location.
Like any physical asset, haulage containers depreciate in value over time. If you plan to resell the containers in the future, you may not recoup the full amount of your initial investment. This can be a financial disadvantage if you were expecting a higher resale value.
In addition, the resale market for haulage containers can be subject to fluctuations in demand and market conditions. This can affect the ease and price at which you can sell your containers in the future, potentially resulting in financial losses.
It’s important to carefully consider these disadvantages before deciding whether purchasing haulage containers is the right choice for your specific needs and circumstances.
- There are many advantages and disadvantages to consider with leasing from a container leasing company and purchasing shipping and haulage containers. You must weigh up the different options to see what works best for your company, its needs and its budget.
- Flexibility in various capacities is a crucial factor to consider, including being able to response to changing market conditions or having limited flexibility in terms of specific dimensions and features that standard containers do not offer and if your shipping or storage needs change in the future.
- Maintenance and liability are also a critical factor consider. Over time, haulage containers may require maintenance and repairs to keep them in good condition. This can add to the overall cost of ownership, but if you lease, this maintenance is the responsibility of the lessor.
- Re-sale and depreciation should also be considered. Generally containers retain their value over time, so if you no longer require a container, you can sell it in the secondary market. This potential for resale can help you recover a portion of your initial investment.
Here at TEPS, we have a dedicated container lifter called Lucy. Lucy dedicates herself to lifting up to 30 tonnes of container loads and placing them in the yard ready for dispatch. Our investment in lifting equipment makes us a leader in warehousing, storage and distribution in the Hull and East Yorkshire area.
We also specialise in providing container destuffing and management services for businesses of all sizes. Our team of highly trained and experienced professionals has the expertise and equipment necessary to quickly and efficiently destuff containers, freeing up valuable space and allowing your business to focus on what it does best.
If you are a retailer receiving a shipment, or a manufacturer needing to clear containers correctly, we’re here to help.