Car carrier tonnage growing to meet demand

Globalization of the car manufacturing industry is increasing demand for sea transport, according to Thor Jørgen Guttormsen, CEO of Höegh Autoliners, which carried some 1.6 million car equivalent units (CEU) in 2006.

“To meet customer demands for added capacity and flexibility, Höegh Autoliners has embarked upon an extensive expansion and renewal program, with 20 PCTC new buildings being delivered in the period 2003-2008, representing a total investment of about US$ 1.1 billion,” he says. The current fleet includes 34 owned PCTCs with capacity ranging from 2300 to 6500 cars and two 800 car capacity feeder ships for short-sea operations. In January this year, Höegh Autoliners and A.P. Moller – Maersk through its subsidiary Maersk Shipping Singapore agreed to jointly operate their fleets of about 67 vessels globally under the name Höegh Autoliners.

Automotive Industries (AI) asked Tore Roysheim, senior vice president – strategy at Höegh Autoliners about the new generation of PCTCs capable of carrying over 6000 CEUs.

Roysheim: Our new generation Horizon Class car carriers being built in Vietnam is a further evolution of our core fleet Pure Car Truck Carrier design. By adding one car deck, to total 13, the carrying capacity is increased 15 percent and thus unit cost and the impact on the environment per transported unit are reduced. By ordering these vessels from Vinashin in Vietnam we have an additional supplier of car carriers for the future. Also the commercial terms were attractive and we were able to introduce many new features in the upgraded design.

AI: How big is the global car carrier market?

Roysheim: The car carrier market is growing as a consequence of growth in the global car production. The total global car production and sales of passenger cars and light commercial vehicles has grown to 61 million units in 2006, and is estimated to grow to 90 million units by 2015, representing a compounded annual growth rate of three to four per cent. Historically about 15 percent of the production volume is transported deep sea.

AI: Will supply keep up with the demand?

Roysheim: Demand is growing at a higher rate that expected only a few years ago. In the short term demand is higher than supply, but with the number of new buildings currently on order we would not be surprised to see an oversupply of tonnage, say around 2010. The current order book amounts to about 35 per cent of the existing fleet and the world fleet is estimated to grow 10 to 12 per cent annually in 2007 to 2009.

AI: Will more car carriers tie up with competitors?

Roysheim: The car carrier market is already serviced by a league of large global Ro/Ro operators. In addition it is a handful of tonnage providers who charter out car carriers to the major operators. A.P.Moller РMaersk was in this segment (Ro/Ro) a tonnage provider and not a competitor to H̦egh Autoliners. I think it is more likely to see such co-operation or consolidation between operators and tonnage providers than between the established operators.

AI: What are some of the important drivers that are shaping the future role of deep sea car carriers?

Roysheim: The trend is that car makers to a larger extent are planning to leverage their global production capacity to source the global car market with the best possible products at the lowest possible cost. For deep sea carriers this trend will increase the demand for transportation capacity as well as geographical reach. To our new car customers we are more and more considered as an integrated part of the manufacturer’s global distribution system. This level of interaction is changing our role from being a service supplier to becoming a true collaborator and partner to the car industry.