Inside Modular: The Podcast of Commercial Modular Construction
Inside Modular is the official podcast of the Modular Building Institute, the Voice of Commercial Modular Construction. This series will highlight industry news and trends, include conversations with industry thought-leaders, and discuss the advantages of modular building construction.
Inside Modular: The Podcast of Commercial Modular Construction
Shipping Container Buildings: New Industry Trends, Data, Outlooks & More w/ Boxhub
Explore the fascinating and ever-expanding applications of shipping containers in modern construction and beyond. From housing to retail micro-fulfillment centers, containers are gaining traction across sectors. Max Birner, CEO at Boxhub, discusses the challenges of a fragmented market and the undeniable benefits—financial, environmental, and speed—of building with shipping containers. In addition, Max shares the findings of his company's latest industry whitepaper and speaks to the mainstream acceptance of container construction as well as BoxHub's ambitious plans for geographic expansion and product diversification.
Hello and welcome to Inside Modular, the podcast of commercial modular construction brought to you by the Modular Building Institute. Welcome everyone. My name is John McMullen. I'm the marketing director here at MBI. Today I'm joined by Max Berner, ceo at BoxHub. Max is here to talk about the state of the shipping container market and how his company is helping to facilitate container-based construction. Max welcome.
Speaker 2:John, pleasure to be here.
Speaker 1:Thank you so much. Tell me about yourself, max, what's your background and what led you to co-founding Boxhub.
Speaker 2:Yeah, so my background is really tech and specifically, tech startups. I founded my first company when I was 21, back when I was still living in the UK. It was a marketing platform at the time that we later successfully sold. After that, I took a few years off, then thought I, you know, I really want to focus on doing something good for the world. So I, at the time, moved to the Middle East, to Jordan. There was a Syrian refugee crisis going on at the time and I thought I really want to support and help with that situation, and so I co-founded another company there called Nawa, which helps funnel donations to the right charities in the region in the region.
Speaker 2:And after that, again, I took some time off and I was very, very lucky in 2017 to run into a guy called Philip. Philip used to work for Maersk and Maersk affiliate companies for almost 12 years and Philip, through his experience at Maersk and in the shipping industry, came up with the idea for BoxHub. He told me about it at the time. I loved it from the get-go and I joined him shortly after to build BoxHub in the United States.
Speaker 1:Wow, that's quite a background. So what is BoxHub? What's its purpose, how does it work?
Speaker 2:BoxHub really tries to address how traditional container companies sell their containers to end customers, and so there are huge challenges because historically there's not been any technology used and so it was very, very difficult and a tedious process for any type of customer. And so that could be a consumer, could be a farmer, could be a retailer, could be a construction company to source and buy containers and get them delivered. Before Boxhub, the only way for a consumer or customer to buy a container was to find the local container yard and drive to the container yard, negotiate with them and then hope that the container gets somehow delivered, which is obviously a very 21st century experience. And we thought in the future, most people buy online and certainly everybody's used to places like Amazon and other online shops, and so we wanted to bring the of like the Amazon style shopping experience to business and consumer customers for containers. So those customers buy containers for multiple different use cases. The majority of them is simple storage, but another big use case is, of course, modular housing and modular construction. Another big use case is also just to buy them to use them to move somewhere else later, but in any case, all of them we wanted to address and we wanted to provide with the perfect online and offline experience. That was one part of the idea.
Speaker 2:The other piece of BoxUp is that all the containers, before they get handed down via offline wholesalers and local traders and local container yards and then to the end customer. All of them are pretty much owned by big shipping lines and there's 40, 50 extremely large organizations in the world that own 40 million shipping containers that are used for trade. And Philip's experience at MERS showed that these huge organizations sell their old containers every year, millions of containers but they don't really have a team or are not really set up to sell those very efficiently and he saw that from inside a shipping line. And so the other piece of BoxHub is actually making it easier for shipping lines and for large container owners to sell their containers. So, in summary, one, we want to make it super easy for anyone to buy containers and get them delivered and secondly, we want to make it super easy for the big container owners, the shipping lines and the container factories to sell them, and we are that connection in between.
Speaker 1:I'm curious what drew you as an entrepreneur? What got you excited about the shipping container industry?
Speaker 2:Yeah, I thought I was immediately amazed by how little technology had been implemented in this industry over the last five to ten years compared to most other industries the financial industry, the insurance industry, uh, e-commerce, shopping, logistics pretty much most industries had had been disrupted with technology in the last years.
Speaker 2:The shipping industry and specifically the shipping was in a trade had not been at all. I thought it was a great opportunity. I think you know I want to spend my time with something that creates value. I want to build companies that make people's lives easier or better in some way, and I thought this is a huge problem that hadn't been addressed. And by using technology and simple tactics and strategies that are used by other technology companies, by simply implementing that in the industry, you can make a lot of leeway, and I think we've grown since 2017 spectacularly in the US, with a leading marketplace now for shipping containers, and I think our reviews are by far the best in the industry, and I think it's a testament to us not using technology just because we want to, but using technology specifically in a way that makes everybody's experience better.
Speaker 1:So how does this industry work exactly from behind the scenes? I know you, your partner, philip, saw a lot of this from his experience. How does this industry work? What's the life cycle of a container from start to finish? And I'm really curious how does a container go from being shipped from port to port, being owned by one of these, these large companies, to being part of a building?
Speaker 2:Most containers, almost all containers, are produced in China. There are a few countries nowadays that have also new factories, including India or, for example, vietnam, places usually where also things like clothing increasingly gets produced nowadays. So the factory would produce the container at the request of, let's say, a shipping line. The shipping line picks that container up, brings it to another factory in, let's say, shanghai, where it is filled up with goods for Walmart that have been produced there. From there it goes to the port being loaded on a big container ship and then shipped over to, let's say, long Beach. Long Beach is unloaded, put on a truck and then the truck might drive inland up to Salt Lake City or Denver or Texas, where it goes directly to Walmart and the goods are unloaded there. At this point the container owner so the shipping shipping line decides to either bring the container back to long beach on a truck and then ship it back to china, or it decides to store it at a local container yard and then, historically, that container would have been sold by the shipping line to to an offline wholesaler. The offline wholesaler might sell the container to another offline trader or container yard. It's being brought there by a truck and then at the other yard, that other company puts a margin on top and the end customer can buy it there. That was basically historically how the industry worked.
Speaker 2:We think obviously, as I mentioned before, there's a lot of challenges with that. Number one. We do not want the container to be brought back empty to China in the first place A huge environmental impact that we want to reduce and huge costs also for shipping lines. $15 to $20 billion a year are spent on sending containers empty back to places like China. Year are spent on sending containers empty back to places like China.
Speaker 2:And of course, you know historically, if you have a lot of local traders, a lot of offline wholesalers, it creates a lot of intransparency and price. Everybody puts a margin somewhere and ultimately also the experience is not great for customers. So we try to work directly with the shipping line and we tell them don't send a container anywhere. Try to work directly with the shipping line and we tell them don't send a container anywhere. We will take it from you exactly in the place where the Walmart is, where you unloaded it, and then we create a transparent market where prices are easy to see online and we find customers for you in that market and thereby reducing repositioning and also cutting down the moves, even between yards.
Speaker 1:BoxHub has just published a white paper that I was lucky enough to see. Thank you very much for sending it and the white paper dives into the state of the shipping container market and the changing ways that shipping containers are being used. What can you tell me about how this report came together and where did the information come from?
Speaker 2:Yeah, so we of course have a huge customer base, lots of different customers, lots of different use cases. So a lot of the information in that report comes from first party data, so from our own customers. We run surveys, we look at statistics, we visit our customers, talk to them, we visit our suppliers in the shipping lines and talk to them. So there's a lot of data that comes from primary sources. Of course, we also use a lot of third-party data, for example from the Modular Building Institute, and then you know other research macroeconomic research, and then other research, macroeconomic research. So it's a combination of different data points and ultimately, I just spent the last month actually visiting quite a lot of modular container building companies. We also talked to them to really understand trends, what they're looking for.
Speaker 1:Well, fantastic. I'm glad you have all that In your recent memory. I would love to ask you about that. So what is the? The current state of the, the container is industry. Have you seen it? What trends are have you been seeing over the past few years and what are you seeing now?
Speaker 2:So container industry generally has changed a lot, I would say, since 2020 2020. As we all know, covet started. They had huge supply chain disruptions across the entire world, right, and so we all know that containers are being used primarily for global trade, for pretty much almost all goods that are being consumed by us here in the US, and so the challenges at the time were that all the containers were pretty much distributed around the world. Ports got closed, shipping routes got disrupted, and so what happened at the time was that there was just simply not enough containers in the world, number one because of disruptions, but also, secondly, because everybody stayed home and started ordering goods instead of spending their money on services, and so online ordering increased and online shopping increased substantially. So ultimately, that just meant not enough containers in the world. Prices increased dramatically for containers, both on the primary market, so at the factory level, but also on the secondary market for end customers, so very hard to buy a container, and if you found it, it was very, very expensive. That meant that all the shipping lines ordered more and more containers in the years 21, 22 from the factories directly, creating an almost oversupply, and so once COVID was over, we had too many containers, and so all that supply basically meant prices decreased substantially over 50% for containers again, both on the primary market and the secondary market, and availability was great everywhere.
Speaker 2:And so, you know, last few years have been a fantastic time to buy containers, especially, you know, 2023, 2024. And now what we're seeing is, you know, the market has stabilized a little bit more. We're seeing, you know, not COVID-like challenges in the world, but we see things like, you know, the Panama Canal drought. We see the Red Sea crisis disrupting trade, we see an increased economic strength of China, so they want their containers back, and so all of those things ultimately mean that for 2025, we predict that container supply will be restrained again, so supply will diminish, it will be harder, and we also see a price increase happening. It's hard to predict how much it is and how long this will go on, but we predict for the next 12 to 24 months we'll see increasing prices.
Speaker 1:Do you anticipate any change in container availability or pricing due to the shifting political winds in the US and around the world? I know 2024 was a big year, administrations coming and going and trade relationships changing. Do you see that as a factor at all going forward?
Speaker 2:going forward. It's very hard to predict right now, because the new administration has promised to implement tariffs also on China, mexico, canada. We don't yet know if those tariffs will actually be implemented and to what extent and how that will affect global trade. I think what I would say is that we do believe that the new administration really focuses on deregulation, and so I think this will benefit modular building companies, and especially container building companies, substantially, because I think things like ADUs and other temporary buildings or even backyard offices, things that required lots of permits before, I believe, sooner rather than later, those kind of restrictions will actually ease up a lot, and I think that's what we should be focusing on and what the Modular Building Institute, I think, should be looking forward to, is making it easier to build, making construction easier, getting easier permits, and that's what we're looking forward to.
Speaker 2:Overall and I had mentioned this with the macroeconomic challenges, like the Red Sea crisis, I think these have the biggest impact, more maybe than the new administration, and I think those kind of challenges won't change anytime soon. They will always pop up. I think that's also why it becomes increasingly important for anyone that buys containers in the United States, and especially your partners at the Institute to make sure they have a resilient supply chain to circumvent any possible disruptions, and so I think that's what we're trying to help with as well, and making sure, no matter how big the challenges are, no matter what the disruptions look like on a macroeconomic basis, we can always provide containers, because we see the market trends, we look ahead, we work directly with shipping lines, not with local traders.
Speaker 1:We work directly with factories and we can plan for those things. I know that we've talked about the global state of the market and I certainly encourage anyone who has not read your white paper to do so. I thought it was fascinating. For those who haven't had time or may not be able to make the time, what were some of the most notable findings in that report? Did anything surprise you when you were doing your research for it?
Speaker 2:I think, generally we saw huge demand for container buildings. I think the number is something like 4.4 million online searches in the first half of this year specifically for container buildings on Google. We were surprised by, I think, the scale of that number, to be honest, and we see that those trends continue to increase. I think we also saw that more and more different use cases for containers are popping up. So, of course, you know you have container housing, you have container offices. We see more and more, you know, leisure spaces, garden leisure spaces, um, you know, garden offices, outdoor gyms, um, we see more and more use cases, you know, by by large organizations. So, for example, retailers that use containers for you know, as micro fulfillment centers for their stock.
Speaker 2:We see, um, container pools, even things like that, um and um, yeah, I think container pools, even things like that, and yeah, I think the breadth of different use cases that we see is something that I was amazed by and maybe on the more challenging side, some of the data we saw is that over half of the businesses that source containers to build a house with or to construct a container building continue to talk to three or more different companies at any time, and especially at the moment when they already need the container, and so that just means to me. The market is so fragmented on the container supply side. It's still very, very challenging for a lot of your partners and container builders to find the right suppliers, the suppliers that they can trust, the suppliers that have the supply available, the suppliers that provide fair prices, and that's also, I think, what we were a bit surprised about.
Speaker 1:For those who are building container buildings now and NBI has several members that do that and do it very, very well, building all kinds of buildings, as you mentioned Are there any other insights you can share from your side of the industry, specifically for these builders going into 2025?
Speaker 2:I mean. So I think I think generally, the fundamental benefits of building with containers are financial savings, speed to completion and improved environmental outcomes, and is also something that we discussed in our report, I think. So resilient supply chain is obviously key. I think it's in everybody's interest to build as quickly as possible with quality containers. I think we also always need to remember that there are big differences even between different factories in China that manufacture containers, so you want to make sure you work with the right partners. You don't wanna source a low grade container for somebody to live in, and so I think, yeah, resilient supply chain is the most important aspect, and then, of course, speed. It's also what we've seen 50% cheaper to build with containers on average than with other materials. And I think you know finding a partner that can get the containers to you fast can get you new containers, but also old containers, and we see you know a lot of use cases, especially on the retail side.
Speaker 1:You mentioned the grading of containers low grade versus high grade. Certainly I'm sure most builders want high grade containers. For those who are getting into the market or who are unfamiliar, is there a way to go about ranking or valuing these different grades of containers? How does one do that homework?
Speaker 2:So I think obviously the biggest question for a builder is you know, how old should the container be that you build with? That's number one. And, again, huge differences between a container that comes, you know, directly from the factory pretty much, whereas a container that's five years old, 10 years old, 15 years old. So I think number one is you know, ask how old the container is, to make sure. Ask how old the container is, to make sure.
Speaker 2:Number two I think it will be extremely difficult, working with local traders, to get any information on the quality grade of the container or at which factory it was produced. This is something that you can only really find out if you source the containers at the factory directly, right, if you build the containers or you work with the shipping lines directly. So this is something that we can help with. Or you know, of course, you know you can always, I think, go to the yard and inspect the container, but it will, I think you know, for someone who doesn't come from the industry, be extremely difficult. So this is just one of the big challenges. You know why this industry is so introspective for customers and something that we want to address.
Speaker 1:Where do you see the container construction market going in the next three to five years? You mentioned the hope for deregulation. That would be great for everybody, but how do you see that sort of going with everything that's going on now, and in what sectors do you anticipate the most growth?
Speaker 2:So we continue to see strong demand for container houses. So I think number one, we're seeing container construction becoming more and more mainstream. Container construction becoming more and more mainstream. The partners that I visited over the last month built everything from ADUs to houses to offices. I think pretty much everybody had their order books full. If I talk to them now, then we see feedback that new customers would have to wait a few months before they can fulfill the orders, and that's not because the construction of the container takes so long, it's because the order book is full.
Speaker 2:We love that. We want to help our partners grow, make sure they have access to the right containers at all times, and that's our job. Right, and I think that's one part. The other part is, especially 2025, 2026, I think also a huge demand for retailers. We see retailers moving away from using big warehouse space that is extremely costly, where they still have to ship their goods from the warehouse to their shop. We see more and more of them using small storage areas behind their stores, micro-fulfillment centers and things like that, and so I think, in summary, continued demand on the consumer side, increasing demand on the business side, both across containers that are not modified and containers that are modified in them.
Speaker 1:What is the process for working with BoxHub you mentioned at the top? You wanted to be the sort of the Amazon marketplace for containers. You work with consumers directly and with businesses. What is that process for working with BoxHub and what should your potential customers expect from you?
Speaker 2:So if you are a consumer, you want to buy one container, two containers, feel free to give us a call or simply just go on our website. It's the process, you know, takes a few minutes. All the information that you need is there. Pricing is online. You can simply put in your zip code, check out just like you would on Amazon. You then get an email and an online account where you can choose your delivery dates and then the container will show up on your preferred delivery date. As simple as that.
Speaker 2:For companies that want to source more containers and more containers more regularly, we have account managers that help you with every step in the process. Case that you need, they will help you plan in advance. If you know that your order book looks, you know, very full in March, then you know we will plan with you in advance sourcing containers at the right time. We can source containers, you know, in current or we can build containers in whatever color you want, for example, at the factory level, um, because it takes a little bit longer, but we can do that, um, and so you know, just give us a call, uh, visit our website, you know, fill out a form and you will get, kind of a container expert from our team that will work with you directly.
Speaker 1:So what's? What's next for Boxhub Um we expect to continue to grow.
Speaker 2:We're operating nationwide in the US right now, also very, very important, right. So you know we have a lot of customers that have multiple sites across the country, either construction companies themselves, the construction sites or any other type of business. So we are nationwide. At some point next year, I believe, we will expand geographically. Looking at europe next, and then you know we also more and more sell container accessories. We focus more on selling reefer units or refrigerated containers, selling reefer units or refrigerated containers, specialty units, which means open sides, open top containers, things like that, and so our plan is to geographically expand one and then secondly expand our product range.
Speaker 1:Well, this has been a fascinating dive for me into the container construction market. I really appreciate your time, Max. I'm very much looking forward to seeing what the future holds for BoxHub and the whole container building sector. So thanks again for your time. I really appreciate it.
Speaker 2:John, thank you so much. It was a real pleasure to be on.
Speaker 1:My name is John McMullen and this has been another episode of Inside Modular, the podcast of commercial modular construction. Until next time.