Tired of the continuing issues surrounding global logistics, two large Chinese automakers have gone to extreme lengths in order to ensure that their cars get shipped from their factories to other markets: they bought their own ships.
BYD, which now only makes electrified vehicles, ordered at least six ships in October. Each ship costs around USD 710 million, and is reportedly able to carry 7,700 cars. Meanwhile, SAIC Motor has ordered seven new carriers each able to hold 8,900 vehicles.
EV maker Nio and Chery Automobile are also eyeing to buy their own ships as well.
With the vessels in question not expected to come online for several years, it’s a bold bet that there would be a lasting global consumer demand for Chinese cars.
This year, China recently overtook Germany as the world’s second-largest auto exporter, sending almost 2.6 million vehicles abroad in the first 10 months of 2022, eclipsing 2021’s volumes. The Philippines is one of the biggest recipients of Chinese-made vehicles.
Despite the surge in auto exports, the number of car carriers globally has barely increased. This has resulted in the skyrocketing of shipping costs.
The Daily rates for vessels that can carry up to 6,500 cars (commonly known as roll-on/roll-off ships, or ro-ros) have surged to about USD 100,000 a day as of October, more than tenfold 2020 levels and the highest on record since at least 2000.
The shortage also means that some vessels—almost 30 years old—are still operating instead of being scrapped, raising the risk of accidents. Trying to extinguish any lithium-ion battery fires in electric vehicles that occur may also be harder.
BYD and SAIC are not the first automakers to run their own shipping fleets. Toyota owns shipping company Toyofuji Shipping, while Hyundai Motor has logistics group Hyundai Glovis Co.
However, it’s a telling sign of how far Chinese automakers’ export ambitions go. Just a few years ago, China was mainly selling cars to developing nations in Africa and the Middle East. But the rise in electric-vehicle production has boosted made-in-China cars, particularly in Europe, which is now the biggest market for Chinese auto exports.
China exported over 852,000 EVs in the first 10 months of this year, up from almost nothing a short while back.
Among Chinese brands, SAIC is the furthest along overseas. It sold 697,000 vehicles abroad in 2021—bolstered by the success of MG, the British brand it acquired—and is aiming for 800,000 this year. That is a way off from meeting its annual shipping capacity, which stands at around 10 million vehicles, but meanwhile SAIC’s ships can and do serve other carmakers too.
Source: Bloomberg.
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