Global car-carrier fleet has grown 40% yet still falls short
The Wall Street Journal reported that China’s auto factories are producing so many vehicles for export that the global shipping industry cannot keep up, with specialized car carriers booked out years ahead and charter rates climbing sharply.
Specialized roll-on/roll-off vessels — known as ro-ro ships — that transport vehicles are booked out years in advance as Chinese automakers seek to move cars to Europe, Australia, and Latin America, the Journal’s Paul Berger wrote in the WSJ Logistics Report. Charter rates for those ships have risen 65% this year on the surging demand, the Logistics Report said.
The capacity crunch has pushed some automakers to a workaround: squeezing vehicles into standard shipping containers rather than waiting for dedicated car carriers. “You’ve got China moving from being insignificant to being the world’s largest vehicle exporter in only a five-year period,” Andreas Enger, chief executive of Norwegian car carrier Höegh Autoliners, told the Journal.
The scale of the shift shows in the export numbers. China exported just under 600,000 cars and vans in 2019, according to Mobility Global. This year, forecasters project China could ship up to 10 million vehicles — a more than sixteenfold increase in five years.
Chinese automakers are flooding foreign markets because of fierce competition among more than 100 domestic brands, overproduction, and a sluggish domestic economy, the Journal reported. The pressure to find buyers abroad has collided with finite global shipping capacity.
Carriers have responded with a record buying spree in recent years, expanding the global car-carrier fleet by an estimated 40%, the Logistics Report said. That expansion has not been enough to absorb China’s demand.
In a separate logistics story reported by the Journal’s Patrick Thomas, Tyson Foods announced it is closing its Joslin, Illinois, beef plant, which employs more than 2,000 people and can slaughter about 3,000 cattle a day, according to an internal company memo reviewed by the Journal. Tyson also plans to sell its Pasco, Washington, facility, capable of slaughtering about 2,000 cattle a day, and to shut a large beef packaging facility in Utah. The moves mark Tyson’s latest pullback from a beef business the Wall Street Journal described as beleaguered.
Earlier this year Tyson closed its Lexington, Nebraska, beef plant — one of the industry’s largest — and halved production at a Texas facility, before announcing it will ramp the Texas plant back up, the Journal reported.
The same Logistics Report tracked federal tariff refunds flowing to U.S. companies after the U.S. Supreme Court threw out a cornerstone of President Trump’s tariff policy early this year. The refunds, collected under the International Emergency Economic Powers Act and now sent to the Treasury for disbursement, are moving through the system in significant volumes.
Over 40 S&P 500 companies have reported roughly $9.6 billion in refunds in the past quarter or so, including at least $2.1 billion already received, according to the Journal’s Theo Francis and Celia Bernhardt.
U.S. Customs and Border Protection had received just over 252,000 refund applications as of July 31 for tariffs the Supreme Court declared unlawful, the report said. The customs agency has accepted $128.7 billion in refunds for processing, an agency official told a federal court last week.
The shipping squeeze extends beyond autos. The average spot rate to ship a 40-foot container from Shanghai to New York rose 10% in the week ended Aug. 13 from the previous week, according to Drewry’s World Container Index cited by the Journal.