China continues its monopoly dominance in the market by registering 56 orders out of 58 global orders for car and truck carriers (PCTC) this year. Meanwhile, European shipping companies, which had previously outsourced work to South Korea and other countries, have recently placed large-scale orders in China.
Increase in car exports and high market demand
According to a report by Clarkson Research, in the first half of 2023, China exported 5,096,000 cars, marking a 65.3 percent increase compared to the same period last year. In June, car exports surpassed one million for the first time, reaching 1,037,000 cars. Given the increase in car exports, forecasts indicate that there are not enough ships to transport them, which has again increased the demand for PCTC.
Read more: Container shipping rates from Asia to the United States have increased
Ship shortage and increase in construction contracts
While demand for PCTC has increased, there is also a noticeable shortage of ships and a sharp rise in demand for second-hand vessels. In July, a CEU class PCTC ship with a capacity of 4,310 was sold for about 42 million dollars, three times its minimum price of around 14 million dollars. Additionally, due to the shortage of transport ships, Chinese automakers and shipping companies have signed new construction contracts with domestic shipyards.
BYD, one of the Chinese electric vehicle manufacturers, has ordered 10 PCTC class 9,200 ships from a Chinese shipyard this month. Furthermore, the Zhongnan shipping company in Hong Kong also ordered four PCTC ships from Jiangsu New Yangzi in July.
Foreign shipping companies are also continuing to expand their fleets. This year, European shipping companies have signed 33 construction contracts with Chinese shipyards, including 12 PCTC ships from the Italian company Grimaldi.
The concentration of PCTC orders from both Chinese and foreign shipowners in Chinese shipyards is not only due to strong price competition but also because PCTC does not require advanced technology, and demand is flowing towards places that can produce at lower costs. Additionally, the saturation of South Korean shipyards with large container ships and liquefied natural gas carriers (LNGC) is also a factor in the concentration of orders in China.
According to experts, China's policies in support of the domestic supply chain have also played a role in this matter. By supporting ship financing, China encourages domestic shipowners and automakers to place orders with Chinese shipyards.
Read more: Increase in maritime transport rates, especially from the Far East to the shores of the United States · Decrease in China's oil and gas demand outlook until 2026
