China growth straining global auto shipping capacity: Liner CEO

Surging exports of Chinese vehicles are creating a shortage of specialized ocean-going car carriers, according to Wallenius Wilhelmsen Chief Executive Lasse Kristoffersen. Despite new pure car and truck carriers coming online, Kristoffersen stated that Wallenius Wilhelmsen's fleet departing Asia is fully booked, and the company had to prioritize customers due to demand exceeding available space.

Chinese vehicle exports surpassed 1 million units in both June and July, indicating an annualized pace exceeding 12 million vehicles, compared to less than 1 million prior to the Covid-19 pandemic. Kristoffersen emphasized that Chinese-made vehicles are now competitive in terms of technology, functionality, quality, design, and price.

The demand for alternative shipping methods, such as container shipping, has increased as car-carrier capacity is unavailable. Fleet growth may lag demand, with the PCTC orderbook representing only about 20% to 21% of the existing global fleet, but shipyard capacity is largely committed through 2029. Tight market conditions have led to a sharp increase in China-linked spot and charter rates during the second quarter, with freight rates rising by approximately 80% and potentially doubling from their first-quarter lows.