shipping is expected to continue its recovery from the trough of 2016,
supported by improving utilisation. But increasing localisation and the threat
of trade wars will slow finished vehicle cargo growth, while carrier
operational efficiency will be challenged by the emergence of new trades and
ports of call, according to the Finished Vehicle Shipping Annual Review
and Forecast 2018/19 report published by global shipping consultancy
trade in finished vehicles has recovered strongly from a low in 2016, recording
growth of approaching 6 per cent in 2017 to 37.5 million ceu. Meanwhile, growth
in the specialist car carrier fleet has stagnated, forcing idle ships back into
employment, and is expected to remain so with the orderbook at an historic low.
This will support rising utilisation and stronger freight rates over the next
five years, but with vessels barely breaking even, this will not be sufficient
to encourage further investment in the sector, it said in a release.
improving utilisation and a record low orderbook, owners and operators are
holding off acquiring capacity, whether through ordering, sales and purchase or
chartered in tonnage, as trade uncertainty weighs on the market," said Mr
Tom Ossieur, Head of Car Carriers at Drewry.
car carriers were ordered during the first half of 2018 while chartering
activity remains focused on short-term contracts, the release said.
recovery in finished vehicle trade is being challenged by the threat of higher
auto trade tariffs, increasing localisation of production as well as a shift in
car sales growth from mature to more volatile emerging markets.
developments mean shorter shipping distances and more frequent and lengthier
port calls, often to less efficient terminals, which will lower vessel
operational efficiency. Meanwhile, higher bunker costs and the impending low
sulphur fuel regulations that come into force in 2020 will add to costs. These
are headwinds to the recovery in profitability of both owners and vessel
operators, the release observed.
car carrier efficiency has fallen by 39 per cent since 2007 as vessels sail at
slower speeds and spend more time in ports," said Mr Ossieur. "Drewry
does not foresee significant improvements forthcoming. Lower speeds, shorter
routes and trade lane imbalances are here to stay."
supply growth will provide support to the supply-demand balance, with car
carrier utilisation forecast to reach 86 per cent by 2022. But market uncertainty
and downside risks will continue to weigh on chartering activity, charter
periods and time charter rates.
focus on high and heavy as well as break-bulk and project cargo is providing
some relief, with operators ordering more flexible vessel designs in recent
years. But some are shunning fleet additions in favour of port and landside
logistics investments that offer better returns. The emergence of new ports has
boosted demand for transhipment and, as a result, vehicle port volumes
increased by over 8 per cent in 2017, the release added.