ECG — 2025-03-31
News from ECG
Part 1: PCTC vessels in abundance amid shifting demand
Unusual occurrences be it changes in routings for vessels, sudden new trade embargos, pandemics, tariffs and new untapped markets all cause a shift in demand –some imply an increase in demand while others a decline. On an annual basis new volatile, uncertain, complex and ambiguous scenarios emerge. The term VUCA, once used sparingly is now commonplace.
So, for those involved in the movement of new finished vehicles, the scenario is not easy to plan for.
In 2020 approximately 30 pure car & truck carrier (PCTC) vessels were scrapped. Sent to the shipyards. Demolished. The world grappled with the effects of a major pandemic which crippled demand for new cars.
But by mid-2022 there was a capacity crisis.
Orders to bring cars from factories to markets were flooding in. But there was a dearth of transport. A shortage of PCTC capacity. This resulted in time charter rates soaring. But also the orderbook suddenly seeing a surge.
By late 2023 the new PCTC vessels began being delivered. A total of 14 new PCTCs entered the market, bringing an additional 90,000 CEUs of capacity, according to data supplier Esgian.
In 2024 a further 49 PCTCs were delivered, with additional capacity of 340,000 CEUs.
And, in 2025, a further 55 PCTC vessels are planned to be delivered while, in 2026, VesselsValue forecast a further 70 PCTCs!
Time charter rates are forecast to fall, VesselsValue state. “Based on a resupplied market and increased newbuilds hitting the water supporting an oversupply scenario by 2026,” says Andrea De Luca of Vessels Value.
But it is not that simple.
In 2022 and 2023 the Grimaldi Group ordered 17 new PCTCs, of which 3 will be delivered this year, with the remainder in 2026 and 2027. It’s not just the China to Europe trade that needs servicing.
“The Grimaldi Group recently extended its network to many new countries such as Australia, New Zealand, Japan, China, Taiwan, Korea, Persian Gulf countries and Red Sea ones. The target of the Group is to consolidate its presence in all the geographical areas which today encompass all the Continents and Seas,” explains Filippo Rizzi Ariani, Commercial Manager, Grimaldi Group.
The plan is to gain new markets, to enter new routes and to be able to ship more volume than anyone else.
United European Car Carriers (UECC) has 2 new vessels on order for delivery in 2028. For Jørgen Lindgaard, Head of Business Planning & Sustainability at UECC, the routes and use of the vessels will not be decided till later.
“Depends on the market situation closer to delivery. Since delivery time is a lot longer now than what has historically been the case this cannot necessarily be planned in detail 4 years in advance,” says Lindgaard. “It is a bit too far into the future to say - we have X number of scenarios planned. Depending on overall volume, what happens with Russia etc.”
The world is not easy to forecast, but being prepared for new scenarios allows for quick adaptation.
Neptune Lines has 4 vessels on order, to be delivered in 2026 and 2027. Nikos Paterakis, COO of Neptune Lines, says “The new vessels will primarily serve as an expansion of our fleet to accommodate the increasing transport activity.” But flexibility to adapt to shifting demand remains key. “They are scheduled to be assigned to existing routes with some optimization. However, there is still flexibility for adjustments or the possibility of exploring new routes, depending on operational needs and market conditions at that time,” adds Paterakis.
Suardiaz Lines has 2 new PCTCs on order. Marcos Duato, Managing Director, says: “The current plan is to deploy the vessels in the existing routes that Suardiaz operates, but until then markets could evolve and the final decision will be made in due course.”
Indeed, evolving markets. This has tempted players from China to enter in a big way.
“At Cosco Shipping Car Carriers Co., we have ordered total 24 PCTC new buildings,” says Vincent Xu, Managing Director of Cosco Shipping Specialized Carriers (Europe). “As of today, 8 of the 24 have been delivered. Remaining orders are expected to be delivered in 2025 and 2026.”
And OEMs from China are the latest to enter the car carrying trade on the high seas. BYD - the Build Your Dreams automaker - received its first fully owned PCTC vessel on 7 January 2025, with its second following a week later on 15 January. BYD tested the waters with its lease of the BYD Explorer 1 from Zodiac Maritime last year, and now has more on order.
Chery Automotive, the largest volume car exporter from China with over 1.14 million cars exported in 2024, has entered the game too. In fact it bought the shipyard together with fellow OEM JAC. AICC Hangrui was delivered on 16 January 2025, their first new build, with 2 more PCTC vessels to be launched by March this year.
And it was this new Chery vessel that in February decided to test the waters in the Red Sea.
Meanwhile Japanese players are not sitting idle, neither are the South Koreans. Mitsui O.S.K Lines ordered 11 new PCTCs between 2021 and 2023, of which 4 have been delivered. K-Line ordered 6, of which 4 have been delivered. Nippon Yusen Kaisha (NYK) ordered 20 in 2021 of which 3 have been delivered.
And Hyundai Glovis of South Korea has 13 ordered, of which 4 have already arrived.
So we can see that being prepared to conquer trade routes across the high seas, to adapt to new demands and, indeed, to comply with new emissions regulations, has seen a surge in new build orderbooks, with deliveries of new PCTC vessels almost a weekly occurrence.
Part 2: The Red Sea Conundrum
Is the massive disruption caused by avoiding the dangers of the Red Sea route and Suez canal about to be resolved? For now maybe not.
Chery’s AICC Huanghu carried 4,300 cars and trucks from brands such as Chery, JAC and SANY to markets in Saudi Arabia, Turkey, Italy and Spain. While this sounds like a normal delivery of vehicles, the route passed through the Suez Canal on 13 February prompting a frenzy of reports stating that the canal was once again open for business, in the true sense. In fact, the Suez Canal Authority announced that by the end of March more larger vessels are expected to pass through with ‘full resumption’ by mid-year.
But all this is contingent on truce. And for those involved in the shipment of new cars using PCTCs the risks are high.
“The situation in the Red Sea remains complex due to ongoing geopolitical tensions, which makes it difficult to predict the exact trajectory of operations,” says Nikos Paterakis, COO of Neptune Lines.
“Given the ongoing uncertainty in the Red Sea crisis, we anticipate car carriers may wait until security conditions improve and other vessel types resume transits,” Esgian stated when asked for a comment on the situation. Indeed Esgian shows that some PCTC players are venturing into the Red Sea waters.
In the first two months of 2025, Italian operator Grimaldi Lines made 9 voyages while South Korean operator SamJoo Maritime made 8 voyages through the Suez Canal.
So what is the draw in going through a danger zone?
Data from VesselsValue shows that using the Suez Canal for a PCTC journey from Shanghai to Rotterdam amounts to 10,000 nautical miles which, with an average speed of 16.5 knots, takes about 25.5 days. Meanwhile, going round the Cape of Good Hope to avoid the war zone takes 34 days over a distance of 13,500 nautical miles.
So, what are the consequences for switching back to use the Suez Canal?
“The consequences are multiple, for ports in the Med area but also in the North of Europe and for the market in general, as less vessels would be needed to maintain the same frequency if voyages are shortened from Asia to Europe,” says Marcos Duato, Managing Director of Suardiaz Lines.
Dan Nash of VesselsValue is being kept busy. “We are following the Red Sea situation closely, providing consultancy to clients each quarter on the likely impact to the market balance and freight rates looking forward 3 to 4 years.”
ECG Members can access the full report here.