Why are the Leasing Terms updated?
The BIMCO Terms that have governed leasing transactions on xChange so far were introduced in 2016 and have not been updated since. In the thousands of leasing transactions that have been accepted since, we have learned that some rules are missing (e.g. cancellations or storage rules) and some rules need to be changed to cover more of the edge or special cases that can happen in a leasing transaction. To ensure that suppliers and users have a safer and frictionless experience, we are now updating the terms. From the 21st of September, 2023, 00:00 CEST - All leasing transactions that are accepted from that point onwards will be governed by the new terms. Leasing transactions accepted previously will still be governed by the BIMCO Boxchange agreement.
➡️ For the full details refer to the xChange Standard Leasing Terms
What are the most important updates?
- Cancellation Section
- Going forward the side in a leasing transaction that breaches a “main obligation” (e.g. for the supplier not providing a release reference, for the user not picking up the containers after a deadline given by the supplier) needs to pay a $50 USD cancellation fee per container to the other side. Please review the following articles to learn more:
- Storage fees Section
- After a free storage period of 14 days, storage fees will be counted per container that is not picked up per day. Contrary to the previous rules the storage fees will now also be charged in case the leasing deal is canceled or in case containers are picked up after the free days (previously storage would only be charged if the deal is canceled). Please review the following articles to learn more:
- DRV Section
- Since DRVs are always a critical “friction case” (the supplier needs the containers back in the agreed condition and in time / The user potentially needs to pay big sums to cover DRV for non-returned containers) we have introduced a specific section that makes the rules when and how DRV can be claimed even clearer. Please review the following articles to learn more:
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What are the Leasing Payment Handling Terms and Conditions?
We will introduce a separate set of terms for how xChange will handle payments in leasing transactions (previously this has been handled in our general platform terms and conditions). The goal of this change is to make it clearer and easier to understand what exactly xChange covers and how the payment processes work.
With this “moving” of the terms to a separate document comes also some changes: Going forward xChange will guarantee the newly introduced cancellation fees in cases of cancellations, the storage fees in cases containers are picked up too late and DRV payments to the supplier in case containers are not returned (against a 25% payment handling fee).
How will the new cancellation rules work?
Leasing Transactions can be canceled by either the supplier or the user under certain circumstances:
- Cancellations within 12 hours from the acceptance of the transactions can be done by either party without having to pay a cancellation fee
- In case either of the parties breaches a “main obligation” the other party can cancel the transaction
- For suppliers main obligations are:
- Providing containers in the agreed-upon condition and the agreed-upon location
- Providing the user with a valid release reference at the latest 3 days after the leasing transaction was accepted.
- For users main obligations are:
- Picking up released containers latest after a 14-day deadline given by the supplier (deadline can only be given after the free days)
- If a user definitively refuses to pick up containers the containers are canceled without a deadline or confirmation from the supplier
- In case of a cancellation the party that breached a main obligation has to pay a $50 USD cancellation fee per container to the other partner. If the deal is handled with payment handling by xChange, this cancellation fee is automatically credited and guaranteed by xChange.
- Check Section 12 (Cancellation) for the full details.
- For suppliers main obligations are:
How will the storage rules work?
Going forward storage will be charged for containers that are not picked up within 14 free storage days. (counted from the day of release) Each started day over the free storage days will count. Storage is charged for whole leasing transactions once all containers are picked-up (or if it becomes clear that not all containers will be picked up).
In case a leasing transaction is canceled after the 14 free storage days (containers were already released, but not picked up within the free storage days) storage will also be charged (in that case the storage fee will be calculated until the cancellation date).
What are the xChange Claims Terms and Conditions?
The xChange claims terms and conditions are a set of terms that govern eventual claims (like on-hire, off-hire or DRV claims) that could arise in a leasing transaction. They already govern all leasing transactions since December 2022 but are now also mentioned in the xChange Standard Container Lease Agreement to make the connection clearer.
With the update of the xChange Standard Container Lease Agreement we are also making some updates to our Claims Terms and Conditions:
- We are introducing a dispute framework for reported gate-out and gate-in date (data can be disputed until the 13th of the month following the reporting date).
- We are introducing a sub-clause that requires the supplier to prove ownership of the equipment or provide a confirmation of the owner when claiming for the DRV of a container.
How are DRVs going to be handled?
There are two main reasons for a DRV claim by a supplier:
- The User informs the supplier that the containers are lost or damaged beyond repair.
- The containers are not returned after 365 days on-hire.
In both cases a DRV claim has to be raised according to the xChange Claims Terms and Conditions - if a claim has been approved as valid by xChange the DRV amount is promptly invoiced and has to be paid by the User. If the payments for the specific leasing transaction are handled by xChange the DRV amount is guaranteed to the supplier and gets instantly credited after a claim has been approved. xChange charges a 25% service fee for this to the supplier.
Why does xChange charge a 25% service fee for DRVs?
DRV cases are rare (it is claimed for less than 0.5% of containers), but if they happen they are critical for every supplier and pose a financial risk in case the User does not pay (or does not pay in time).
xChange wants to reduce this risk for the suppliers on the platform by giving a DRV guarantee. This is possible by “distributing the risk overall transactions”. Since the historic collections rate for DRV cases has been 75%, xChange will effectively guarantee 75% of the DRV in all cases to the supplier (also in cases where the User is not paying the DRV - the 25% handling fee will be used for these cases).