How a Hamburg-based startup is changing international container shipping

Hamburg-based start-up xChange offers support to companies to find the right partners to interchange containers, and not leave ports ‘empty-handed’, saving effort, costs and reducing CO2 emissions.

I get a lot of LinkedIn requests every day, but only a few gain my attention. When Florian Frese, the Marketing head of xChange, contacted me through LinkedIn, to be honest, I did not pay much attention. But Florian did not give up. “I want to tell you how our company is saving 6 million tonnes of CO2 every year,” he wrote. “I know your time is valuable, but I would like to introduce xChange to you,” he insisted.

By this point, I knew I had to get in touch with Florian, and at the end of our conversation, I did not regret it at all as he demonstrated xChange was not only able to save 6 million tonnes of CO2 every year, but could solve the global container repositioning puzzle.

The pursuit of interchange opportunities

Every day, thousands of containers land in Hamburg. To keep costs at a minimum, shippers strive for a quick turnaround – unloading, uploading and carrying the goods to the next port. The reality, however, is far from ideal. In fact, every day millions of containers are repositioned empty because there is no cargo for the return tour. Each day a container lies idle in a port, it costs carriers a fortune, affecting the price consumers pay.

To put this in numbers, repositioning of empty containers amounts to $15 billion - $20 billion every year. Not only does this burn a hole in operators’ pockets, but also the ozone layer.

When I first heard of this, my instant reaction was to wonder how was it possible that in an interconnected world, containers are not optimally utilised? To this Florian said,

“Indeed, the efficient utilisation of containers is one of the biggest challenges global freight distribution is facing today. Of the 200 million containers shipped every year, a third are empty. But the solution is simple. Through an efficient marketplace, carriers can interchange their empty boxes and avoid a third of repositioning costs”.

The founding team of xChange

The container shipping industry has historically been mostly paper-based, and digital transformation in the ocean freight industry has been a slow process.

This posed an opportunity for xChange’s CEO Johannes Schlingmeier. As a child, Johannes wanted to become a captain on a container vessel and while that didn’t become true, he now heads Container xChange.

Johannes studied shipbuilding at the Technical University of Berlin, followed by an MBA in Management at Salisbury University (Maryland, US) and a PhD in container logistics cooperation in Hamburg. For years, Johannes worked with some of the largest logistic companies for The Boston Consulting Group. During his stint there, he met and worked with Christian Roeloffs on several logistics projects. Together they saw potential in developing a digital solution to bring actors from the container industry together.

“In the past, container carriers used their personal contacts and networks to pursue interchange opportunities. This resulted in inefficient processes and countless hours of employees fixing problems, troubleshooting and searching for containers,” says Johannes.

Jan Matysik joined xChange in 2015, bringing in deep technology know-how and experience in platform building. The management was complete, and ready to sail!

Saving efforts, costs, and CO2 emissions

Container xChange was launched in 2014 with a vision to develop a neutral container logistics information and process clearinghouse that would help all industry participants manage their processes across companies. The startup was backed by the Boston Consulting Group.

“It all started with an excel sheet collecting deficits and surpluses of equipment in different locations – the list exploded quickly via word of mouth among companies involved in container shipping,” Christian says.

From the very beginning, transparency has been one of xChange’s guiding principles. “We are a neutral platform – not a broker,” explains Johannes. “Suppliers and users can meet on the platform and identify where their peers have surplus or deficit of containers”.

This means xChange does not interfere in the deal-making process itself but helps partners find each other, negotiate deals on the platform, and track containers in real time. For this reason, xChange is not paid per transaction but has a membership model where every customer pays a monthly fee. Additionally, xChange offers value-added services such as insurance, tracking and payment handling.

The marketplace consists of other useful features as well. A personalised newsfeed shows trends on interesting and urgent demand and supply of containers. A smart search function filters out relevant results and the search engine continuously learns from search queries to help users identify relevant proposals.

Current and past deals can also be reviewed on the platform. “Requests are like an inbox. Users can see all their current deals, negotiate them, and review inquiries from other companies,” Johannes says. “We want to improve alignment across responsibilities, continents and time zones within organisations by keeping all communication and information within one cloud-based system which is accessible anytime and anywhere”.

Improving the product

xChange has more than 200 members as of today, including those from the top 10 leasing companies and top 20 container liners. It offers services across 2,500 locations. “There are currently a few thousand transactions a week with an approximate growth of 20 percent month-on-month,” says Marketing Head Florian. At the headoffice in Hamburg, the startup employs 25 people, while it also has a smaller offshore office in Singapore. The team is composed of more than 10 nationalities.

Johannes acknowledges that if xChange wants to grow its customer base, the product needs continuous improvement and simplification. “When we first started promoting the platform, the management level at organisations we approached was enthusiastic, but the working level did not understand the benefits. We simplified and improved the product to an extent that people working with the platform can integrate it in their daily routine,” he says.

The next big goal for xChange, he says, is to offer additional services. “We want to be the platform for all your container needs. That means increased system integration through API/EDI. Even selling of containers will one day be possible on xChange,” he adds.