Sarah Wu and Brenda Goh
BEIJING/SHANGHAI (Reuters) – Chinese automakers and shippers are ordering a record number of car carriers to support a boom in electric vehicle exports, data showed, putting China on track to build the world’s fourth-largest fleet by 2028.
China currently has the eighth-largest fleet in the world, with 33 ships carrying cars, according to consultancy Veson Nautical. Japan has the world’s largest ship fleet with 283 ships, followed by Norway with 102, South Korea with 72 and the Isle of Man with 61.
However, Chinese companies have ordered 47 vessels, accounting for a quarter of all orders worldwide. Buyers include SAIC Motor, Chery Automobile and electric vehicle giant BYD (SZ:), as well as shippers such as COSCO and China Merchants on behalf of Chinese automakers.
“Once this armada is delivered to China, the share of the trucking fleet controlled by China will jump from the current 2.4% to 8.7%,” Veson analyst Andrea De Luca said. “We expect new trade routes to be opened up almost exclusively to Chinese OEMs (automakers).”
The jump in orders largely benefited Chinese shipyards, which received 82% of orders worldwide, the data showed.
Faced with fierce competition, frugal consumers and a sluggish economy, automakers have accelerated expansion into markets where their cars sell for higher prices than at home. Last year, China overtook Japan as the world’s largest car exporter.
BYD alone exported more than 240,000 vehicles in 2023, about 8% of its global sales, and plans to export up to 400,000 vehicles this year.
Foreign companies such as Tesla (NASDAQ:) and Volkswagen (ETR:) have also expanded production in China for export to take advantage of the country’s cost-effective supply chain.
Rising shipping costs and support from local governments have convinced automakers to buy the vessels themselves. By the end of 2023, the carrier’s daily rental rate for 6,500 vehicles had reached $115,000, more than seven times the 2019 average, according to consulting firm Clarkson.
But rising exports have prompted the US and EU to accuse China of trying to cope with excess industrial capacity by flooding its markets with cheap products.
The government has said the focus on capacity is misguided and that it underestimates innovation and overemphasizes the role of government support in driving economic growth.
The risk of overcapacity is also high in shipbuilding, said Xu Tianchen, senior economist at the Economist Intelligence Unit, with China usually the target of blame.
However, “there remain some niches where the market is probably not yet saturated, such as trucks,” Xu said.
US Treasury Secretary Janet Yellen raised concerns about excess capacity during a four-day trip to China. Meanwhile, Chinese Commerce Minister Wang Wentao is visiting Europe, where he is likely to discuss a European Commission investigation into whether Chinese-made electric cars benefit unfairly from subsidies.