The first half of 2025 marked a significant turning point for the car carrier market, which is now normalizing after a period of exceptionally high rates and values. While not yet fully aligned with historical averages, the market is on a trajectory toward a soft landing, influenced by a decrease in demand, an increase in vessel supply, and broader economic challenges.
Time Charter Rates Decline Amid Increased Supply
Time charter rates for standard vessels saw a sharp correction in the first half of 2025. This was largely due to a flood of new vessels entering the market and a drop in confidence caused by new U.S. tariffs and slow Asian exports. Global capacity grew by 5% with the delivery of new Large Car Truck Carriers (LCTCs), mostly from China. This supply surge outpaced a more modest 4% growth in light vehicle exports from Asia.
As a result, the VesselsValue 1-Year 6,500 CEU Time Charter Index plummeted by 44% by June, effectively ending the record-setting rate environment that had been in place since the pandemic. Despite this overall slowdown, some owners still secured strong deals, such as a three-year charter for the Lake Fuxian at $38,000 per day and the Paganella at $27,000 per day. These exceptions suggest a market that is stabilizing rather than collapsing.
Quiet Sales and a Peak in New Orders
The sales and purchase (S&P) market was notably quiet, with only nine deals concluded in the first half of 2025—a 50% decrease from previous years. Despite this, some strategic, long-term investments were still made, like Seaspan Corporation’s purchase of the Caelum Ace and Angelite Ace for over $105 million each. These transactions indicate that serious buyers remain in the market. Simultaneously, asset values have begun to fall. A standard 10-year-old 6,500 CEU vessel is now valued at $83.4 million, and a 4,000 CEU vessel at $63.7 million—both down about 11% since the start of the year.
This softening of values reflects the cooling market. Additionally, the new ordering cycle appears to have peaked, with no new car carrier orders placed in the first half of 2025. This marks a significant shift from the average of 30 ships ordered per half-year from 2022 to 2024, as owners respond to more moderate freight markets. China remains the dominant player in the shipbuilding industry, accounting for 83% of all new orders.
Outlook for a Gradual Correction
The market’s future suggests a gradual correction toward a more balanced state. A return to Red Sea shipping routes is not expected before 2027, and the current restraint in new orders and S&P activity supports the view that the market is heading toward a more sustainable long-term balance.
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Source: AJOT
