A prominent trend in the Ro-Ro Vehicle Shipping market is the increasing demand for products that are environmentally sustainable and eco-friendly. Another significant observation in this market is the rising incorporation of technology to elevate both the quality and efficiency of products. State-of-the-art technologies such as artificial intelligence, machine learning, and blockchain are being harnessed to create innovative products that surpass conventional options in terms of both effectiveness and efficiency. (1)
During 2023, 12 Ro-Ros were joined the local fleet, increasing global automotive shipment capacity by 1.8%. Ongoing faith in the industry’s immediate to near-future growth can also be seen in the 46 Ro-Ros that are expected for delivery in 2024, and the 52 vessel deliveries in 2025.
The fact that container lines, especially automobile manufacturers, prefer to ship via containers only when the container freight rates decrease, has led them to think that the lines should also invest in RoRo ships while investing in their logistics infrastructure.
For example in 2023, With charter rates for pure car and truck carriers surging four-fold from pre-Covid-19 levels, Renault Korea started using 40-foot containers to ship more of its South Korea-made Arcana models to Europe. Renault Korea’s decision comes after the French car maker experimented with using containers to ship a handful of cars from Busan port early last year. It is unprecedented for a major car maker to ship mass-produced cars in containers, although it is common for used cars to be containerised. First, one car is loaded into a container in reverse, and a rack is installed on top of it to load the second car at an angle onto the ramp, with just a 30cm gap between the cars. The third car is then placed into the remaining space and the loading operation is finished. Each car is firmly fixed with wood and lashings, and the rails that utilise the empty space are also specially designed. (2)
Looking for alternative revenue streams, to counter the global decrease in container shipping demand, carriers have been looking at investing in the car and truck market. The container shipping sector, by contrast, is under pressure to respond to a huge injection of capacity introduced “in almost the blink of an eye”. Because of that capacity enterence, available space now is running ahead of demand, which is reducing vessel utilization and depressing freight rates.
It is remarkable that global FVL leader, CEVA Logistics says “As the automotive supply chain continues to stabilise from numerous shocks over the past several years, we have remained close to our customers to understand their challenges and growth opportunities. The decision to operate four deep-sea ro-ros is a clear example of our promise of responsive logistics,” The shipping professional knows that CMA CGM took over CEVA Logistics in 2019 to expand its land logistics services in a deal valued at about $1.7bn. (3)
It was now just a routine investment. Because almost one year ago, the LNG dual-fuel hybrid deep-sea vessels, at nearly 200 metres in length, will each have the capacity to transport 7,000 cars with almost 59,000 square metres of effective deck surface spread across 12 levels. They will allow CEVA to transport about 140,000 vehicles per year between global markets, particularly China and Europe. The ro-ro ships, which are being built by China Merchants Jinling Shipyard, will have hybrid power systems that include both LNG and electric battery capabilities. CEVA will have full commercial control over the ro-ro capacity and manage and operate the vessels under the lease agreement.
The car industry will be one of the biggest winners if Washington and Brussels strike a deal. Harmonizing U.S. and EU auto regulations will boost trans-Atlantic auto trade by at least 20 percent, according to a report by Caroline Freund of the U.S.-based Petersen Institute for International Economics forecasting. A free trade agreement between the EU and Canada, which is creeping toward ratification, already is impacting the nation’s auto sector and promises a lucrative payoff for the ro-ro and car carrier market.
Today, many of giant shipping lines, like Cosco Shipping, established automobile transport unit, Cosco Shipping Car Carrier, placed orders for four 7,000 ceu PCTCs, which join the 21 car carriers that they already have on order, while CMA CGM, is looking to charter four vessels and HMM is reportedly looking for opportunities to benefit from the booming car-carrying trade.
Geneva-based Mediterranean Shipping Company (MSC) launched a USD 700 M bid to take over Norway’s Gram Car Carriers, the world’s third largest PCTC tonnage provider.
MSC will make the bid through subsidiary SAS Shipping Agencies Services (SAS) and has already secured the recommendation of Gram’s board. Gram owns a fleet of 18 vessels ranging from 2000-7000 ceu.
The global car carrier market has become an attractive target for cash-rich container carriers following the surge in Chinese auto exports, which jumped 58% in 2023. CMA CGM also confirmed an investment in May 2023. The two carriers have taken opposing approaches however: in contrast to MSC, which has invested in a tonnage provider, CMA CGM has positioned itself at the other end of the spectrum, chartering tonnage from Eastern Pacific Shipping (EPS) which will be operated by subsidiary CEVA Logistics as written above. (4)
The one of the other reason could be risk of EV transportation within containers. As the automotive sector transitions to electric vehicles (EV) there have been growing concerns about the carriage of these vehicles with some high-profile accidents having been blamed on EVs, the connection of the outbreak of fires on board container vessels. Because the manufacturer / shipper should aware that the battery temperature of EVs can increase dramatically, above 60degs centigrade, and that the shipper accepts the liability for the carriage of an EV. Those concerns are shared by some in the shipping industry, with the threat considered very real to the well being of crews, firefighters, vessels and the environment.
Another strategic step is for container lines to have the RoRo or PCTC ships the exporters will need that the EVs cannot be transported in containers other than reefer units.
Therefore, we can understand that after a long recovery from the impacts of the COVID19 pandemic the RoRo Car Carrier sector recorded high freight rates and a surge in demand, that has continued through 2022 - 2023 and is now attracting new market entrants from the container shipping sector. Long-standing partnerships and volume agreements with the leading RoRo, PCTC and container shipping lines means we can offer the widest choice of services, routes and solutions for automotive, truck and knocked-down-vehicle movements. However, sales of new cars are now growing and will slowly return to the levels seen pre-covid. The RoRo sector is working over-time to keep up with shipping requests from the various car makers around the world, waiting time is long and transport cost is high for vehicles shipped by RoRo, and the light at the end of the tunnel is still very far away. The container sector saw what will probably be remembered as its glory days, in terms of revenue and profit during the peak Covid years, and as a result of that is now left with over-capacity and low transport rates. The coming years will also likely see big changes to the automotive industry as new actors are entering the global stage and traditional trade patterns are changing.
Wishing Calms Seas All the Mariners.
Sources:
(1) Global Trends in Market Research – May 2024
(2) The Loadstar / News / Renault Korea turns to containers to carry cars as PCTC rates soar
(3) Seatrade Maritime News
(4) Alphaliner 2024 - 18