Wallenius Wilhelmsen profits from shortage of car-carriers

Scandinavian automotive logistics and shipping line, Wallenius Wilhelmsen ASA, saw profits climb by 22% for the full year 2023. Although other parts of the business performed satisfactorily, the core car-carrying shipping operation boomed. Wallenius Wilhelmsen said that this was due to the fact that the market for car carriers “remains tight and there is still more volumes than tonnage capacity and all vessels are fully utilized”. Rates continue to fluctuate from quarter-to-quarter but have remained at a high level all year as demand is greater than supply. 

It is not just China that is generating this demand. Exports from Japan were 9.9% higher in the fourth quarter year-on-year and for the full year South Korean volumes were up 17.7%. However, the growth of Chinese exports and in particular electric vehicles, is the key event that has increased ‘car equivalent units per mile’ which in-turn has driven-up demand for car-carriers. In volume terms Chinese automotive exports were up 17.7% year-on-year in the fourth quarter of 2023. 

The high prices in the market are sustained by the modest level of expansion in the fleet of car-carrier vessels.  Quoting the ship-broker Clarkson’s, Wallenius Wilhelmsen said that just seven large car-carriers were delivered in the fourth quarter of 2023 out of a total fleet of 767. However, the order-book has ballooned in recent months to 192 vessels, representing “approximately 37% of the global fleet in capacity terms” with these ships due to be delivered between the second-half of 2024 and 2028. What may be worse for the existing car-carrier providers, many of the new vessels are to be delivered to what used to be called ‘industrial carriers’ which are subsidiaries of Chinese car manufacturers. One of the first Chinese automotive producers to start its own services is BYD, which commenced sailings between China and Europe in January using a new car-carrying ship to move 5,000 of its own electric vehicles.

Logic suggests that the high freight-rates in the car-carrier market will not be sustained in the face of a wave of new ships. However, in reality it is unclear what impact the new-ships being delivered to the ‘industrial carrier’ operations of the Chinese electric vehicle manufacturers will have on the general market.

Author: Thomas Cullen

Source: Ti 

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