Vehicle Shipping - RoRo & Containerization Irregularities of 2023
Updated: Nov 23, 2023
As we prepared a series of posts exploring the various market dynamics at work in the RoRo and Container Shipping industries driving cost and capacity developments, we came across various tidbits and interesting developments which indisputably illustrates the fluctuating situation in the world of Vehicle shipping arising from alterations both in RoRo and in containerization. These developments and events are not directly connected to our work at Kar-Tainer, but it never the less shows how much the status quo in global vehicle transportation has been shaken up over the past year, and we wanted to highlight three topics we found interesting:
Read on for these tidbits or check out this previous post where we did a market comparison between the RoRo market and Container market based on current price and capacity level, while also attempting to make some predictions for futue developments.
OEM’s Chartering Own RoRo Vessels
Over the past year we have experienced an increase in OEM’s chartering their own RoRo vessels instead of utilizing the services provided by the conventional RoRo players on the open market. The new EV carmaker from Vietnam, Vinfast, took out a charter for the 4,900 CEU vessel Silver Queen in the end of 2022 to ship their cars from Vietnam to Canada and the US.
Several Chinese OEM’s are also chartering own vessels. SAIC through their subsidiary Anji Shipping are the leaders in that segment, especially through a new JV with COSCO Shipping, however this venture follows a similar setup as the Korean and Japanese RoRo operators, where the main investors are often OEM’s themselves. Other prominent car makers in China chartering own vessels are BYD with 8 vessels being delivered in the next couple of years, Chery Automobile and JAC Automobile also have 3 vessels to be delivered over the course of 2024/25. Volkswagen Group who has been chartering a pair of RoRo vessels already since 2006 will have another 2 vessels delivered in H2 of 2023, it is unclear if these will replace the old ones or be added to a larger fleet of 4 vessels. Another recent OEM taking such steps is Ford who have signed a 3-year leasing agreement for the Grand Quest, a RoRo vessel with space to carry 2,600 vehicles. The ship will mainly be used to deliver Ford vehicles from Thailand to Australia and New Zealand.
These developments certainly come as an affect from the ongoing capacity issues in the RoRo sector which has left OEMs struggling with increased price, and in some cases even facing problems getting their vehicles shipped at all. We wrote about the capacity issues in this previous blog post investigating the capacity situation in the RoRo and container markets. With an increase in vessels operated by and for specific OEMs, it is reasonable to believe that operating efficiency will fall and the OEM in question will favor utilizing this capacity before looking at alternative solutions.
Alternative Containerization Solutions
COSCO Shipping have since the end of 2022/start of 2023 been operating a containerization solution EX China slightly related to cars in containers. It does however not use standard shipping containers to load cars, but rather a designated flat-rack which can be used to load up to 3 cars per rack, before being stacked on top of each other 3 in the height on the ground, and supposedly up to 8 in the stack when loaded inside of a ocean going vessel.
There are/have been two different version of this system out: One seen on the right side above, which has the same footprint as a shipping container and where vehicles are loaded in an angled position. The other a longer version built to be loaded into the hold of standard dry bulk carriers of which COSCO has a huge fleet of. Out of the two systems, the last one which gets loaded in bulk vessels are the one currently in most frequent use, and the only one observed handling Chinese exports to Europe.
Chinese RoRo Growth
As mentioned above, Chinese exports have grown significantly over the past year, and China is now the largest car exporter in the world. How much significance this carries can be discussed, as where China exported 3.32 million cars in 2022, Toyota alone sold 10.48 cars, VW 8.26 million, Hyundai 6.85 million, and Stellantis and GM both around 6 million, in global markets in the same year. These OEMs are all present with manufacturing plants and sales networks all over the globe, Chinese OEM’s on the other hand are mainly building in China for export to global markets. The advent of Chinese car exports does seem to have had the side-effect to kick-start the Chinese RoRo industry as well, and we are now experience several new Chinese entrants on the global RoRo market. These are a mix of established domestic RoRo operators going international, new joint ventures being created among existing Chinese shipping and logistics companies, and Chinese OEMs themselves stepping into the role as an operator to ensure their cars reach markets outside of China. Below chart shows the new DWT capacity added by Chinese registered RoRo operators and ship-owners with expressed intent to charter to Chinese operators over the course of the next 4 years.
Two key takeaways from this is the amount of new added capacity going into OEM-operated solutions, as well as the potential creation of a new major global player in the RoRo sector:
BYD, Chery, and JAC are all taking deliveries of RoRo vessels which will be operated more or less exclusively for the OEMs themselves. This was explored further in the section above where it is also underlined that other OEMs around the world are doing the same, however, the scale seems to be much larger among Chinese OEMs than elsewhere. Unless good capacity-sharing agreements, or similar, is established, it is fair to assume that this OEM dedicated RoRo capacity will mainly be utilized for China exports, before the vessels are returned somewhat empty back to origin.
When looking at major RoRo players earlier on in this report, Anji Shipping and COSCO was mentioned as major Chinese players (though relatively small on a global scale). If we look at the RoRo order-book for 2023-27 we find that COSCO took delivery of 3 new ships in 2023, Anji will receive 9 from 2024-26, and Guangzhou Yuanhai Automobile Shipping which is a joint venture between the two companies will receive 17 vessels in the same period, putting Guangzhou Yuanhai's total fleet at 21 ships. Though these are three different companies, the affiliation between the three could turn into potential cooperation. Combined they will operate a little bit less than 60 RoRo vessels in the near future, and though around a third of these are short-sea vessels used for domestic car transport in China, they will on a global scale be at least comparable to established players like Hoegh Autoliners or Grimaldi.
Below graph shows new capacity on the order-book which is either ordered directly by Chinese operators, or which will likely be chartered by Chinese operators.
From this we see that at its peak in 2025 as much as 38% of all new RoRo capacity being added to the global fleet might be controlled by Chinese operators. We can in other words easily establish that new global players are entering the RoRo market, and this will have affect on competition and route design in the years to come.
In Review
This concludes our delve into the current affairs of the RoRo and container markets and how the developments there will affect global vehicle shipping in the foreseeable future. For us alternative solutions to RoRo for shipping cars around the world are in high demand at the time being. This is leading to a lot of adventerous efforts to find cost-effective and flexible solutions, some which might create advantages for the shipper, others which will be best forgotten. At Kar-Tainer we strive to provide professional solutions for loading and transporting cars in containers, and we have over our 30 years in this industry developed equipment solutions which allows for highly efficient loading operations which matches loading speed of RoRo ships, while at the same time offering a superb safety and quality setup compared to any other method for shipping vehicles available on the market.
If you want to learn more of the Kar-Tainer Vehicle Containerization solutions and how we can help optimize your car transports, get in touch with your closest Kar-Tainer representative or reach out to us through the website contact forms on www.kar-tainer.com