- EU tariff hikes of up to 45.3% on Chinese-made EVs, effective November 2024, are pressuring the car carrier market.
- A 39% order book-to-fleet ratio is expected to drive an 11% net supply increase in 2025.
- Despite headwinds, stable demand from China and a shift of 1 million ‘cars in containers’ back to RORO modes in 2025-26 may prevent a drastic collapse in rates or asset values.
The car carrier market faces volatility in 2025, driven by EU tariff hikes on Chinese EVs, softening freight rates, and significant fleet expansion, though stable demand from China offers some resilience, reports AJOT.
EU Tariff Hikes Disrupt Market Sentiment
The EU’s November 2024 tariff hikes on Chinese EVs, up to 45.3%, target state subsidies and reduce global demand for China-made cars by approximately 10%.
This equates to a 2% global demand cut, creating significant headwinds for car carriers.
Softening Freight Rates Amid Slower Export Growth
Freight rates for light vehicles are softening as China’s export growth slows.
It is compounded by deliveries of large new buildings such as Höegh Autoliners’ 9,100 CEU Hoegh Aurora and COSCO’s planned fleet expansion of 30 PCTCs by 2026.
Fleet Expansion Risks Oversupply
An 11% net supply increase in 2025, coupled with a potential 6% boost from Red Sea transit normalization, could tilt the market into oversupply, prompting scrapping activity if rates fall drastically.
China’s Stable Demand as a Buffer
China’s robust domestic and export car market provides some stability.
1 million cars shifted from containers to RORO transport in 2025-26. It partially offsets market volatility and prevents a short-term rate collapse.
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Source: AJOT
