Chinese electric vehicle (EV) manufacturers and shipping companies are witnessing an exceptional surge in demand for car-carrying vessels, attributed to the country’s booming EV exports, Reuters reported.
This surge is pushing China towards having the world’s fourth-largest fleet of car carriers by 2028, according to data from shipping consultancy Veson Nautical.
Presently, China ranks eighth globally in terms of its fleet size, with 33 car-carrying ships.
However, with 47 ships on order, constituting a quarter of global orders, China’s fleet expansion is set to change the industry.
Specific buyers include major automakers like SAIC Motor, Chery Automobile, and EV giant BYD, along with shippers such as COSCO and China Merchants, acting on behalf of Chinese automakers.
Analysts predict a huge increase in China’s controlled car carrier fleet, jumping from the current 2.4 per cent to 8.7 per cent upon delivery of the ordered vessels.
Reuters cited Andrea de Luca, an analyst at Veson, who said that the establishment of new trade routes primarily catering to Chinese automakers could e anticipated.
According to her, a major part of these orders have been channelled to Chinese shipyards, securing 82 per cent of global orders, as Chinese companies capitalise on the burgeoning export market for EVs.
The increase in demand for car-carrying ships mirrors China’s growing prominence as a key player in the global automotive export market.
Last year, China surpassed Japan as the world’s largest auto exporter, with manufacturers like BYD contributing to this achievement.
BYD alone exported over 240,000 vehicles in 2023, accounting for approximately 8 per cent of its global sales, with plans to push exports to 400,000 units this year.
Additionally, foreign automakers like Tesla and Volkswagen have also increased their production in China, leveraging its cost-effective supply chain for exports.
Despite the thriving market conditions for car carriers, there have been concerns surrounding the possible consequences of an increase in China’s exports.
Both the US and the European Union have called China out for flooding their markets with competitively priced products, citing unfair trade practices.
These concerns have been complicated by increasing shipping costs and accusations of China’s attempts to address excess industrial capacity through export expansion.
However, Chinese officials have strongly refuted claims of overcapacity, downplaying the role of state support in driving growth.
While regarding potential market saturation and trade imbalances loom large, experts like senior economist Xu Tianchen from the Economist Intelligence Unit noted specific opportunities where the demand may not have peaked, including car cargo ships.
Against this backdrop, discussions surrounding trade practices and market dynamics might intensify, with the US Treasury Secretary Janet Yellen and China’s Minister of Commerce Wang Wentao in talks to address the issues at hand.
(With inputs from Reuters)
