The research refers to 9 objectives and initially identifies 6 basic requirements for container supply to meet the demand, namely, the right type, size, and quality to be supplied at the right time and location (referred to as the “6 R”s). As the combination of this two, that is, demand and supply, produces the container imbalance the carriers should necessarily control the “6 R”s efficiently and effectively. This research found that the container inventory management (CIM) strategies currently practiced by carriers have not provided satisfactory results. For example, on one hand their CIM competence is at border level while on the other hand the share of empty containers as a percentage of total container throughputs has increased alarmingly and estimated to surpass 50% in 2017.

Accordingly, this paper introduces the “3 F” model (Freight; Forecast; and Flexibility) which contain the 6 most effective CIM strategies. Carriers may use the best combination of the 6 components of the “3 F” conceptual model that refers to following CIM strategies: (1) reduction of import freight, (2) reduction of export freight, (3) service agreements; (4) synchronized budget, (5) agile inventory, and (6) exporters’ priority to improve CIM standards.

The validation of the “3F” model is done in Sri Lanka through industry feedback and past industry statistics. Further it identifies that the carriers’ resilience power, container freight station related costs, and expected return on investment from containers as the significant factors that influence current CIM strategies.

As an innovation from the research it develops a tool to measure the CIM competence level of individual carriers and countries extending the results of “3 F” model. Two indices are introduced, namely, container management competency index (CMCI) and carriers’ inventory management competence (CIMC) which provide for self assessment of CIM competence level of the country and individual carrier respectively. Shipping industry regulators can evaluate the effectiveness and efficiency of the CIM of carriers and appropriate policy decisions may be proposed based on the CIM ranking according to the indices. The study constructs CMCI to measure the inadequacy of a country’s CIM strategies. The CMCI for Sri Lanka is estimated at 0.586 which is on the border line (>0.500) and needs to be improved.

It is quite unusual, as it realises in the research that none of the carrier representatives are aware of the existing provisions in their alliance agreements that facilitate container exchange. The main emphasis is on investigating industry perception of container exchange because of the absence of collaboration which, it is suggested, is caused by the myopic view of carriers.

As a result of the survey conducted and the findings that have come to light, it is evident that the proposed concept of the virtual container pool is at present only a theoretical phenomenon mainly for this reason. Therefore, this is the most valuable contribution of the research that was achieved quite comprehensively. In the opinion of this researcher, the principal reason why carriers are reluctant to collaborate even though the major alliance agreements provide for it is the fear that by collaborating, a carrier may be giving a business advantage to his competitor. To prevent him from gaining a competitive edge, the carrier typically does not wish to enter into any exchange arrangement. These concerns were debated during deliberate public appearances and the real insight of the VCP and its win-win outcome is conveyed effectively. Apart from the practical and economic reasons, there is another important factor involved in the reluctance of carriers to collaborate. The shipping business as a whole is a relatively conservative institution; and the container business which is an integral part of contemporary shipping, is no exception. Indeed it is fundamentally just as conservative. The players in the market are by nature cautious and are only willing to accept new ideas when they have been time-tested. Finally, subject to four conditions based on feedback from respondents, the proposed concept achieves acceptance.

The research identifies the variables that influence container exchange between carriers by reference to nine statistically significant variables including – (1) level of freedom to take decisions independently; (2) business culture; (3) mismatch on support at organizational level; (4) organizational marketing rationale; (5) complications due to common tracking system; (6) capacity of container inventory; (7) level of complexity of inventory control; (8) environmental pollution concerns; and (9) additional burden with respect to legal procedures. Having established the necessary background for the VCP, it discusses a mathematical model for the proposed VCP that peruse cost minimization. It considers transportation cost; container exchange cost; holding cost and hiring cost. From the commercial perspectives it assesses the impact of container exchange on shipping cost. It establishes an average cost for empty container repositioning (i.e. 347.60 per 20’ and 568.10 per 40) as distinguished from the presently prevailing TEU based cost. The paper points to a 19% saving through VCP against the current shipping cost based on this more accurate unit cost. It is expected that these findings will have significant implications in container inventory management.