The car carrier sector has often been regarded as one of the industry’s good long-term bets. With healthy historical trade growth and a cargo likely to remain at the heart of consumer demand, projections have generally pointed towards the need for future investment. Here we examine the key trends; the latest edition of Car Carrier Trade & Transport, freshly available on Shipping Intelligence Network, provides the detail.
The Slow Road
Global seaborne car trade volumes grew by 179% between 1996 and 2008 (a robust 9% p.a. on average), while car carrier capacity expanded by 128%. However, in 2009 trade slumped dramatically (shrinking by 35% in the one year) and following a partial recovery of the lost volumes in 2010, trade growth since then has been more muted. This year it looks as if seaborne car trade will have risen by 3% (to 21.4 million units), well below the historical average, with the total still below the 2008 level. Full year imports to the EU are projected to be down 5% on 2012, and imports to North America up by just 3%.
So is the outlook still positive? Well, broadly yes. The growth expected from car buyers in the developing world has been coming through. Since 2008, shipments to developing economies in Asia (led by China) have increased by 70% and imports to Brazil and Argentina combined have grown by 53%. Between 2002 and 2013, car imports to regions outside the traditional major importers in North America and the EU have grown by 179%, whilst North American and EU imports in 2013 are at levels close to 2002 volumes. In 2013, non-North America/EU imports are expected to constitute 65% of sea-borne volumes compared to 39% in 2002 (see graph). With billions of consumers in developing countries keen to become car owners this trend looks set to bolster trade in the future.
Going The Distance
Equally significant is the fact that new centres of car production are emerging, helping diversify the route matrix. Shipments from out-side the EU, North America, Japan and Korea have grown by 13% since 2008, with Indian exports, for example, more than doubling in that time. In some cases the new producers are also further away from consumers, adding clear upside to ‘car-mile’ demand.
So, despite a subdued market today, there’s still a good story for car carriers. Demand fundamentals look robust, and even western world demand will also see some upside as the developed economies gradually move out of recession. In today’s fuel price environment, consumers there are likely to be keen to upgrade to more fuel efficient models. Car carrier capacity on order remains limited to 13% of the fleet, so if trade picks up then things could get quite tight fairly quickly, and investment will be needed to provide seaborne transportation for the cars of the future. Looking ahead, if you need a lift, try asking someone with a car, or maybe a car carrier! Have a nice day.