High global charter shipping rates buoyed by record exports of electric vehicles (EVs) from China may not last, the head of the world’s larger autoliner said, amid geopolitical moves to limit Chinese automakers’ reach, according to Bloomberg.
“The car carrier industry has enjoyed exceptionally good times for a couple of years actually and we still are,” said Andreas Enger, the chief executive officer of Hoegh Autoliners. “It’s fair to say that our profit level is exceptional. But it’s also at a level that you can’t expect it to remain forever.”
A shortage of capacity following a shipbuilding lull during the pandemic pushed rates for the cross-global transport of cars to attractive highs, aiding shippers such as Oslo-listed Hoegh, which specialises in moving automobiles, mining equipment and other bulky cargo across the oceans.
According to Clarksons Research Services, a unit of the world’s largest shipbroker, the going rate for a vessel that can carry around 6,500 cars is about US$105,000 a day, near a peak of US$115,000 set earlier this year, which was the highest since at least 2000.
Provisional charges from European Union regulators, for example, subject SAIC to an additional 38 per cent fee, while BYD will pay an extra 17 per cent on existing 10 per cent customs duties. In the US, President Joe Biden has vowed to increase tariffs on Chinese EVs to 102.5 per cent this year, and Canada is considering following suit.
Tariffs that may limit exports and added capacity from competitors could put downward pressure on prices, meaning the current high shipping rates may not be sustainable. “Eventually you will see rates at half that level,” Enger said.
Hoegh estimates that the order backlog from China for car carrying ships is around 50 vessels, compared with a total global fleet of around 700.
Even carmakers themselves are getting in on the action. In January, the BYD Explorer No 1, capable of carrying 7,000 vehicles, set sail for Europe. The ship is managed by Zodiac Maritime and is being rented to BYD. BYD plans to add seven more vessels to its fleet in the next two years.
Enger’s visit to China – his fourth this year – coincides with the naming ceremony on Tuesday of a new China-built car carrier, one of a total of 12 that Hoegh has on order.
The so-called Aurora Class vessels will be the largest and most environmentally friendly car and truck carriers ever built, Hoegh says, capable of running on zero-carbon ammonia.