The demise of the car carrier market may be exaggerated.
At least, it is if you listen to Hesnes Shipping.
Speaking at Wallenius Wilhelmsen’s capital markets day on Wednesday, the shipbroker’s market analyst, Espen Wessel, said that despite the sizeable number of ships hitting the water in the coming years, the market would stay strong until 2029.
The sector will need 70 ships to keep up with demand growth, plus a further 60 to cope with China’s skyrocketing automotive exports, and then 70 more as vessels enter their late twenties and become scrapping candidates.
These numbers compare with 193 ships in the orderbook, which Wessel said is “in balance”.
He identified various “hiccups” facing the sector, such as attacks on shipping in the Red Sea, efforts to stop the invasion of “stink bugs” into Australia via ships, Panama Canal draught restrictions and port congestion.
“We have a lot of things that are pushing efficiency down. Environmental [regulations] are coming, reducing the speed,” he said. “There are a lot of things that will help us.”
The 193 car carriers in the orderbook make up 27% of the existing global fleet.
But many of those ships are getting bigger. Hoegh Autoliners’ most recent series of ships top 9,000 cbm and Wallenius Wilhelmsen announced that four of its 12-ship newbuilding series will be able to carry 11,700 cbm, pushing capacity additions to 36% of the fleet.
This has led some observers to argue that the market will slow down after nearly two years of six-figure dayrates for 6,500-ceu vessels as assessed by Clarksons.
But Wessel and Hesnes Shipping believe the market will be well supported for the rest of the decade.
As of now, they estimate 108% utilisation, with the additional capacity coming from mostly Chinese-built cars loaded into containers or lashed onto the decks of bulkers.
That number will fall to 95% by 2028 but never slip below that figure while ticking up closer towards 100% as 2030 nears.
According to the broker’s figures, the last time utilisation was about 95% was around 2021 and 2022, when rates shot up from an annual average of $25,583 per day to $72,167 per day, Clarksons data shows.
Those 6,500-ceu ships have been earning $105,000 per day since May, down from $115,000 per day earned consistently since October 2023.
“We are not concerned about the future,” Wessel said. “But we think all the players need to have some discipline on what they order with delivery at a special time.
“And you analysts should not be shocked if the time charter rates are going down a little bit.”
