Car Carriers Rebound on Auto Industry Recovery

Car Carriers Rebound on Auto Industry Recovery

The rise in the global auto trade is lifting the car carrier industry out of the global recession with far less damage than other shipping sectors have experienced, according Drewry’s Car Carriers report.

Global trade in motor vehicles will increase by about 3-4 percent per year over the next 15 years, while the small number of orders for car carriers will enable the sector to avoid the kind of double-dip that other sectors are experiencing, the report says.

The 2008-2009 downturn hurt the car-carrying lines, as capacity utilization of their fleets fell significantly. Operators are now less likely to charter tonnage for long periods, instead placing an emphasis on full employment of owned tonnage.

With limited numbers of new vessels coming into service, increased demand is easier to meet and an excess of new capacity is not going to blight operators, if the economy were to retrench.
Growth of the trade could be curtailed to some extent by the shift towards regionalized production, but at the same time it will benefit the seaborne trade in containerized vehicle parts, according to the report.

The threat to auto trade may not materialize in the near future as the report estimates that Japan, the leading contributor to global seaborne vehicle trade, will have strong growth in 2012-15, with European trade returning to its 2007 levels by 2015. South Korea, the second largest seaborne vehicle trader, will experience an average increase of at least 4.5 percent for the next 10 years.

Even though auto production is shifting towards the Far East, the eastbound trades, formerly a ballast leg for car carriers after importing cars from Asia, are now benefitting from the rise in Chinese demand for European luxury cars.

Contact Peter T. Leach at pleach@joc.com.