Chinese automakers splurge on huge carriers to meet overseas demand, ro-ro-rolling their cars abroad

Chinese automakers splurge on huge carriers to meet overseas demand, ro-ro-rolling their cars abroad

South China Morning Post — 2023-12-06

Maritime and Ports

China has christened and launched its largest ship for transporting cars around the world – a massive carrier expected to help Chinese automakers keep pace with a pedal-to-the-metal rise in the country’s new export machine: the auto sector.

The Jiuyang Blossom, made in Croatia and purchased from a Norwegian company for US$63 million, departed from Shanghai on Monday. The so-called Ro-Ro ship, short for “roll-on/roll-off”, carries wheeled cargo that can easily be rolled on and off the vessel.

It’s a 55,775-tonne pure car carrier, with 13 decks totalling 60,000 square metres (645,834 square feet), and is the largest Ro-Ro ship ever operated by a Chinese company. The vessel is designed to haul more than 7,000 vehicles to far-flung destinations, according to a press release by Beijing-based Changjiu Logistics, the ship’s new operator.

“This car carrier represents our confidence that global vehicle logistics are increasingly geared towards China … The question is how to tap the buoyant demand,” said Bo Shijiu, president of Changjiu Logistics.

China’s vehicle exports have skyrocketed, edging past Japan and Germany within just two years, which is about how long it typically takes to design and construct a modern ro-ro ship.

China exported 3.92 m vehicles in the first 10 months of this year, a year-on-year rise of 59.7%, according to figures from the China Association of Automobile Manufacturers. And market research firm Canalys expects the annual total to cross the 5m mark.

EVs now account for about 40% of all outbound deliveries, as China leads the charge in the electrification of the global auto sector.

But despite being the world’s largest shipbuilder by deliveries, China is struggling to keep up with demand.

The first home-grown Ro-Ro ship of comparable carrying capacity will not be put to sea until after 2024, and additional capacity will only slowly be added in 2025, China News Service reported

“Japanese and Korean operators serving their compatriot carmakers are still at the helm of existing global shipping capacity, with a combined share of 70% in 2022,” Citic Securities analyst Hu Shimin said in a recent note.

“New capacity that is in the pipeline – mostly from China in 2024 and beyond – may still fall short of the capacity expected to be lost to obsolescence and the decommissioning of old vessels across the globe,” added Hu, who specialises in the transport industry.

As a result, the scramble for available vessels has pitted Chinese auto exporters against each other in a price war, pushing the daily rental costs of ro-ro ships to US$110,000 in September, almost double the moving average from a year prior, according to global maritime consultancy Clarksons.

Some Chinese automakers have also sought alternative means, such as retrofitting or repurposing container ships, despite the impact on loading efficiency compared with ro-ro ships that are specially designed for loading cars.

Chinese auto giants are also splashing out cash for ships of their own.

In October 2022, BYD, the world’s largest EV maker, struck deals worth 5 bn yuan (US$700 m) with a shipbuilder in the eastern province of Shandong for six car carriers that will each hold 7,700 cars.

The Chinese EV king’s first ship, the Explorer 1, wrapped up a week-long series of trial cruises in waters off the provincial coast last month, when work also started on BYD’s first LNG-powered Ro-Ro ship at a China State Shipbuilding Corp’s (CSSC) shipyard in Guangzhou, Guangdong province.

SAIC Motor, which exported more than a million vehicles in 2022, also has controlling stakes in two maritime firms with a fleet of 22 ships. In August, it announced a partnership with the CSSC’s Jiangnan Shipyard to co-design, build and operate bespoke ro-ro ships capable of carrying 9,000 cars, by 2026.