Vessel operators are bringingin more capacity for maritime finished vehicle shipments

Ocean vehicle carrier rates and asset values are declining as more vessel capacity becomes available and disruption to shipping in the Red Sea comes to an end, according to maritime valuation and data provider VesselsValue.

However, regional fluctuations in production and sales, along with disruption through trade conflict means the shipping is not yet clear of choppy waters.

Rates have been high in recent years as post-Covid carrier capacity struggled to keep up with demand. Available ro-ro capacity significantly tightened as global production numbers recovered ahead of new vessel builds and exports from China began to surge. Since Covid, vessel operators and ports have also had to deal with volatile vehicle assembly caused by the production shortages of critical parts, including semiconductors.

Conflict in Gaza from October 2023 and the subsequent Houthi attacks on vessels in the Red Sea meant operators were rerouting Asia-Europe trade around the Cape of Good Hope and adding anything up to two weeks to delivery times, further shrinking available capacity. OEMs, such as Ford, also took to tying up available capacity with direct charters.

Now, however, it appears output from the shipbuilding yards in Asia is meeting demand. VesselsValue reports that supply is now rebalancing in line with demand growth for maritime finished vehicle transport and there could even be an oversupply of car carrier capacity in 2025/2026. Maritime analyst Andrea De Luca also said that sub $50,000 day rates are now being pencilled in, $15,000 below what was forecast in VesselsValue’s 6,500 CEU Time-Charter Index last year, which accounted for continued diversions around the Cape.

The Association of European Vehicle Logistics (ECG) notes a more even balance between supply and demand in the maritime car carrier sector, driven by increased newbuild deliveries and the market, with members in maritime transport reporting improvements in the availability of capacity.

However, the situation remains complex, according to ECG’s executive director, Frank Schnelle. “The production and sale of vehicles play a crucial role in market demand, and fluctuations in these areas can significantly impact demand for transport capacity,” he said. He added that once the Red Sea is completely open again, that would a further impact, also on short sea operations in the Mediterranean and Baltic but he said uncertainties related to tariffs and potential trade conflicts could further complicate the situation again. Import fees on parts and finished vehicles and the threat of port service fees in the US are one good example of how the situation remains volatile.

Vessel launches 
There have been regular announcements about new bigger (and cleaner) PCTC vessels being booked and delivered. Höegh Autoliners took delivery of its fourth multi-fuel Aurora-class vessel in January. The Höegh Sunlight is capable of carrying more than 9,000 CEUs. Ceva Logistics (part of CMA CGM) is also chartering a newly delivered 7,000 CEU dual fuel LNG vessel from Eastern Pacific Shipping.

United European Car Carriers (UECC) has also added another 7,000 CEU capacity, dual fuel LNG vessel to its fleet, bringing the number of owned and chartered PCTCs to 15, including five dual and multi-fuel LNG vessels. The move helps meet strict regulations on emissions that are now in effect in European waters.

Chinese carmakers have also been directly buying vessels, such as BYD, which took delivery in January of the BYD Hefei, a dual fuel LNG vessel with capacity to carry 7,000 CEUs. Anhui Hangrui International Ro-Ro Transportation (AICC) also put its newest dual fuel LNG vessel on a maiden voyage to the Mediterranean last month. AICC is a joint venture formed by the Anhui Port and Shipping Group and Chinese carmakers Chery and the JAC.

The latest outlook changes perspective from VesselsValue’s end of year report published in December 2024, in which it said there was sufficient demand for deep ocean ro-ro services from China to maintain above average rates and asset values, adding that there were also around 1m cars in containers shipping from China that would likely switch back to ro-ro in 205/2026 “providing an unexpected boost for demand”.