China’s EV export growth is driving a surge in demand for new car carriers

BEIJING/SHANGHAI – Chinese automakers and shippers are ordering a record number of car ships to support a boom in EV exports, data shows. China on track to have the fourth largest fleet in the world by 2028.

China currently has the eighth largest fleet in the world with 33 car carriers, according to data from shipping consultancy Veson Nautical. Japan has the largest in the world with 283 ships, followed by Norway’s 102, South Korea’s 72 and Isle of Man’s 61.

But Chinese companies have 47 ships on order, accounting for a quarter of all orders worldwide. Buyers include SAIC Motor, Chery Automobile and EV giant BYD, as well as shippers such as COSCO and China Merchants on behalf of Chinese automakers.

“After this armada was delivered to China, the Chinese checked car carrier The fleet will increase from the current 2.4% to 8.7%,” said Veson analyst Andrea de Luca. “We expect new trade routes to emerge almost exclusively for Chinese OEMs (car manufacturers).”

The increase in orders mainly benefited Chinese shipyards, which received 82% of orders worldwide, according to the data.

With fierce competition, price-conscious consumers and a sluggish economy, automakers have stepped up their expansion into markets where their vehicles command higher prices than domestically. Last year, China overtook Japan as the largest car exporter.

BYD alone exported more than 240,000 cars in 2023, about 8% of global sales, and plans to export up to 400,000 cars this year.

Foreign colleagues such as Tesla And Volkswagen have also expanded production in China for export to take advantage of the country’s cost-effective supply chain.

Rising shipping costs and support from local governments have convinced automakers to buy ships themselves. By the end of 2023, the daily rate for chartering a carrier with 6,500 vehicles was $115,000, more than seven times the 2019 average, data from shipping consultancy Clarkson shows.

But the rise in exports has prompted the US and EU to accuse China of trying to tackle excess industrial capacity by flooding their markets with low-priced products.

The government said the focus on capacity is misleading and underestimates innovation and overestimates the role of state aid in boosting growth.

The risk of overcapacity is also high in shipbuilding, says senior economist Xu Tianchen of the Economist Intelligence Unit, with China usually the target of finger-pointing.

“However, there are still some niches where the market is probably not yet saturated, such as car freighters,” said Xu.

US Treasury Secretary Janet Yellen raised concerns about overcapacity during a four-day trip to China. Meanwhile, Chinese Commerce Minister Wang Wentao is visiting Europe, where he is likely to discuss a European Commission investigation into whether Chinese-made electric cars are unfairly benefiting from subsidies.

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