Car carrier and RoRo review

The large scale shift of finished cars to container shipping, due to roll-on/roll-off (Ro/Ro) capacity restraints may be faltering as the Red Sea diversions have sent Asia-Europe spot rates surging and increased transit times by 10-14 days.  

The disruption of the container shipping option that so many manufacturers have been relying on compounds the challenge for vehicle shippers as the global Ro/Ro fleet is also being diverted from the Red Sea to sail around southern Africa (with the transit and cost increases) to avoid Houthi militant attacks.

The Houthis seized the Japanese chartered Ro/Ro carrier Galaxy Leader in mid-November, and several other vehicle transporters have subsequently been threatened with hijack and missile strikes.

While some RoRo vessels had continued to transit the Suez Canal, under escort from their navies, they have all now made the decision to avoid the Red Sea entirely until maritime security has been restored.

Container spot prices may have risen for vehicle shipments from Asia, but the rate of increases have already slowed and are likely to become more attractive in the post-CNY lull.

Over the course of the year the size of the new container ship order delivery book is so significant that the massive increase in capacity could easily put downward pressure on rates, particularly as networks adjust to the Red Sea disruptions.

The share of container capacity on order versus capacity on the water was 26% as of December, which will be good news for those manufacturers that want to ship cars in containers cost-effectively.

Last year, the global car carrier fleet totalled 760 ships, with 77 vessels on order and roughly 70 due for delivery in 2024.

In total Ro/Ro carriers have new-build vessels on order equal to about 30% of the present fleet, with vessel deliveries scheduled to begin mainly after 2024, but they’ll primarily offset retired tonnage rather than expand fleet capacity.

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