Winning big in the car carrier order boom! Chinese shipyard secures another 3 vessels, bringing the total to over 60.
2022-09-19 09:00
The rapid growth of China's automobile export market has made China's fleet of car carriers, Chinese ship owners, Chinese shipyards, and Chinese automobile exporters the focus of the shipping market. With CIMC Raffles securing another order for 3 LNG dual-fuel car carriers with 7,000 car spaces, Chinese shipyards have received more than 60 orders for car carriers since last year, surpassing Japan and South Korea's shipbuilding industries and becoming the biggest winner in this wave of car carrier orders. CIMC Raffles also ranks fourth globally with 12 car carrier orders, tying with Nanjing Jinling Shipyard, currently ranked first globally, another Chinese shipyard, becoming another "single-item champion" in the car carrier construction field.
According to TradeWinds, these three orders came from two European shipping companies. The construction contracts were signed last month, with a total value of $255 million (approximately RMB 1.775 billion), but the transaction has not been reported. Each new vessel will cost approximately $85 million, with a total price of $255 million. Delivery is scheduled for 2025. One new vessel was ordered by the Greek shipping company Atlas Maritime, while the identity of the other shipowner is unknown.
Clarkson's data shows that Atlas ordered a 7,000-car dual-fuel car carrier from CIMC Raffles in April this year, with delivery scheduled for September 2024. According to information on Atlas's official website, the company has increased its order quantity at CIMC Raffles to two vessels, with the newly ordered second vessel expected to be delivered in April 2025.
The car carrier ordered by Atlas is 199.90 meters long, 38 meters wide, has a design draft of 8.60 meters, a gross tonnage of 69,000 tons, a service speed of 19 knots, and is equipped with two 1,650 cubic meter C-type LNG fuel tanks, meeting NOx Tier III standards. The vessel is equipped with the most energy-efficient engine to minimize environmental impact, and its reinforced deck and internal ramp system can carry electric vehicles and heavy-lift/engineering cargo.
Atlas points out that the timing of these two new vessel orders is perfect in a rapidly tightening market, with strong demand drivers and limited capacity supply supporting an extremely optimistic market outlook.
Car carriers are a niche type of vessel in the many sub-segments of the shipping market, having experienced a decade of low growth and low freight rates. Due to market imbalances, surging demand, and port congestion, they rebounded from their bottom in August 2020 and have continued to rise since. In just two years, car carrier freight rates have risen steadily from a low of $10,000 per day in mid-2020, and by August this year, the daily charter rate for a one-year lease of a 6,500-car carrier has soared to a record high of $80,000, a 700% increase in freight rates.
On the other hand, new vessel orders have been quite limited in the past few years, and the market demand for new car carriers remains high. From the beginning of last year to the present, global independent ship owners and operating ship owners have launched a new round of new vessel investment. The number of new car carrier orders has reached 76, while only 20 new vessel orders were accumulated during 2016-2020. Clarkson's data shows that as of now, there are a total of 77 car carrier orders on hand, and all vessels under construction use LNG dual-fuel power.
Meanwhile, new car carrier prices continue to rise. As of September, the price of a 7,000-car carrier has risen to $91 million per vessel, a 33% increase from the beginning of 2021.
According to Clarkson's data, Chinese shipbuilders have received a total of 61 car carrier orders since last year, far exceeding Japanese shipbuilders (13 vessels) and South Korean shipbuilders (2 vessels). In terms of shipyards, CIMC Raffles ranks fourth globally in terms of car carrier orders on hand, with a total of 9 vessels. If the latest 3 vessels are added, its backlog will reach 12 vessels, tying with the top-ranked COSCO Shipping Heavy Industry Nanjing Jinling.
According to the latest news from TradeWinds, the Italian ship owner Grimaldi will order 10 9,000-car ammonia-fuel ready car carriers from COSCO Shipping Heavy Industry Nanjing Jinling Shipyard, worth $1 billion. If the order takes effect, Chinese shipbuilders' backlog of car carrier orders will exceed 70 vessels, undoubtedly making them the biggest winner in this wave of car carrier orders.
Data shows that there are currently about 700 car carriers worldwide, which is still insufficient to meet the rapidly growing market demand and increasingly stringent environmental regulations. Some car carrier operators believe that with the implementation of new energy efficiency regulations, it is necessary to vigorously promote the construction of green new vessels to meet demand. Previously, market analysis agencies stated that the global market needs to build another 200 LNG-powered car carriers to meet both emission requirements and growing market demand. In a spring forecast report this year, Clarkson predicted a demand for more than 300 new vessels in the next ten years and stated that the prediction model may be further adjusted under the background of increasingly stringent regulations.
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