A shortage of car-moving ships has pushed up shipping prices to record levels and limited the flow of electric vehicle exports from China to Europe, says an article published on financial times website.
Summary
- There is a shortage of car-carrying ships, disrupting the flow of electric vehicle (EV) exports from China to Europe and leading to record-high shipping prices.
- The issue stems from the scrapping of older vessels in 2020 and a delay in replacing them, as car factories worldwide faced disruptions due to the pandemic.
- Despite a faster-than-expected return of worldwide auto demand, the shipping industry is struggling to meet the surge in demand for vehicle exports.
- The number of ships in use is still approximately 10% lower than pre-Covid-19 levels.
- According to shipping agent Clarksons, the number of cars shipped across oceans is anticipated to have risen by 17% in 2023, reaching a record high of 23.4 million.
- European car imports experienced the most substantial increase, soaring by 40% in 2023.
- China, projected to ship 4.3 million vehicles during the year, has significantly increased its exports compared to less than 1 million in 2020.
Shipping Challenges And Record Prices
A shortage of car-carrying ships is disrupting the flow of electric vehicle (EV) exports from China to Europe, leading to record-high shipping prices. The issue stems from the scrapping of older vessels in 2020, coupled with a delay in replacing them, as car factories worldwide faced disruptions due to the pandemic.
Global Automotive Shipping Landscape
Despite a faster-than-expected return of worldwide auto demand, the shipping industry is struggling to meet the surge in demand for vehicle exports. The number of ships in use is still approximately 10% lower than pre-Covid-19 levels. The combination of resumed car production and a significant push in Chinese exports has intensified the challenges in the automotive shipping sector.
Rising Trends In Vehicle Shipments
According to shipping agent Clarksons, the number of cars shipped across oceans is anticipated to have risen by 17% in 2023, reaching a record high of 23.4 million. European car imports experienced the most substantial increase, soaring by 40% in 2023. China, projected to ship 4.3 million vehicles during the year, has significantly increased its exports compared to less than 1 million in 2020. Japan and Korea remain the other major exporters.
Impact On Shipping Costs
The shortage of shipping vessels has resulted in daily charter prices reaching $115,000, a 10% increase from 2022 and seven times higher than 2019 prices. The industry is now in a phase of catching up, with a scarcity of new ship constructions entering the market. Despite 80 new ship orders placed in 2023, these vessels take about three years to complete.
Challenges For Chinese EV Brands In Europe
Chinese brands selling EVs in Europe are particularly affected by the shipping shortages. Overcapacity in domestic factories has prompted Chinese automakers to increase exports, relying heavily on sea freight. Analysts note that Chinese carmakers, especially those without European production plants, face significant exposure to sea freight challenges. The shortage has impacted the market share growth of Chinese-branded vehicles in Europe, affecting EV sales between September and October.
Long-Term Solutions And Future Outlook
While many Chinese companies plan to build local European factories, these initiatives will not begin producing vehicles until later in the decade. The perfect storm caused by the pandemic, which led to the scrapping of older vessels, has created a significant hurdle for auto companies relying on these ships.
Despite record orders for new vessels, they are not expected to come online for at least another two years, exacerbating the shipping challenges as vehicle demand returns faster than anticipated.
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Source: Financial Times
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