South Korea’s HMM Co. and Hyundai Glovis Co. are positioning themselves at the forefront of the global car shipping industry’s rapid expansion, driven by a significant surge in vehicle freight rates due to vessel shortages and a spike in Chinese automobile exports. HMM is re-entering the car shipping sector by ordering seven new vessels, a business it exited over two decades ago, while Hyundai Glovis, the world’s third-largest vehicle shipping company, plans to augment its fleet by over 25% by 2027.
The demand for car carriers has escalated, with the daily charter rate for a 6,500-CEU (car equivalent unit) pure car and truck carrier (PCTC) reaching $115,000 in January, up from $12,625 in 2021. This spike is attributed to a confluence of factors including stringent maritime emission standards and the burgeoning export of Chinese cars, which surged by 58% in 2023, positioning China as the world’s top automobile exporter.
The car carrier shortage is exacerbated by the scrapping of 49 low-efficiency vessels since 2019, in compliance with new International Maritime Organization (IMO) regulations. With the global fleet aging, the industry anticipates further supply constraints as many ships approach the end of their service life.
In response, global operators have commissioned 188 new ships, with Chinese shipyards securing over 70% of these orders. However, delivery delays are anticipated, complicating efforts to alleviate the vessel shortage. Amid these challenges, Hyundai Glovis seeks to diversify its revenue by chartering additional ships and expanding its service to include vehicles from manufacturers in the U.S. and Europe, in addition to those from Hyundai Motor Co. and Kia Corp.
