Hyundai Glovis, the logistics affiliate of Hyundai Motor Group, began operating the Glovis Lander, the world’s largest pure car and truck carrier (PCTC) capable of loading more than 10,000 small cars, at the end of last month. It is the third 10,800 CEU (car equivalent unit) class PCTC deployed, following the Glovis Leader delivered at the end of Apr. and the Glovis Lighthouse, which began sailing in early Jun.

At present, the only 10,800 CEU-class car carriers in the world capable of transporting more than 10,000 cars are the three operated by Hyundai Glovis. All three ships were split-built by two shipyards under China State Shipbuilding Corporation (CSSC), the state-owned Chinese conglomerate (Guangzhou GSI and Shanghai SWS). A Korean shipping company from a shipbuilding powerhouse is using all three of the world’s largest car carriers made in China.

China’s solo lead in the car carrier market continues. As Korean shipbuilders focus on more profitable liquefied natural gas (LNG) carriers and have not actively pursued orders, and with Chinese shipyards waging aggressive price competition, they are ceding most of the market. Shipbuilding industry experts said that even if a market is less profitable, giving up the entire market should be avoided.

According to China’s Xinde Marine News and Clarksons Research of the U.K. on the 6th, it is estimated that around 20 car carriers were ordered from January through Jun. This year. Except for two vessels ordered by HD Hyundai Heavy Industries in Apr., all volumes reportedly went to Chinese shipyards.

Norway’s UECC in Mar. ordered two 3,000 CEU-class PCTCs from Nanjing Zhaoshangju Jinling Shipyard for short-sea routes within Europe. U.K.-based Zodiac Maritime in May ordered two 7,000 CEU-class LNG dual-fuel PCTCs from Yantai CIMC Raffles in China.

Zodiac Maritime, led by Israeli shipping magnate Eyal Ofer, currently has a PCTC fleet of 22 ships, more than half of which were built by Yantai CIMC Raffles. Salamm Lines, headquartered in Cyprus, last month ordered four 8,600 CEU-class PCTCs from Xiamen Shipbuilding Industry.

The car carrier market boomed with 60 to 90 ships ordered annually from 2022 to 2024. Even then, Chinese shipyards absorbed a large portion of the volume. According to a monthly report published in Feb. by AXSMarine, a French shipping and logistics data analytics company, of the 276 car carriers delivered or scheduled for delivery from 2023 to 2028, 219 (79.4%) were orders won by Chinese shipyards. Japan followed with 47 ships (17%). Korean shipyards have a minimal presence in the newbuild car carrier market.

As the large batch of orders began to be delivered in earnest, new orders for car carriers fell to about 30 ships last year. With roughly 20 ships ordered in the first half of this year and order growth slowing compared with the boom period, Chinese shipyards’ “cornering” of the market has deepened further.

With relatively ample order backlogs, domestic shipbuilders are filling limited construction slots with higher value-added and more profitable ship types such as LNG carriers and ultra-large container ships.

For example, the contract price per ship for the two LNG carriers ordered by HD Hyundai Heavy Industries in May was 371.9 billion won (about $250 million), about 87% more expensive than the per-ship contract price for the two PCTCs ordered in Apr. (199.2 billion won, about $134.46 million). LNG carriers are also known to have mid-teen profit margins, about double those of PCTCs, which are in the single digits.

Some also say China has seized the market by leveraging cost competitiveness because car carrier construction technology has been standardized. Compared with the prices for the same class of PCTCs ordered from Korean shipyards, Chinese shipyards’ order prices are said to be about 15% to 20% cheaper. Chinese shipyards have lowered unit costs by mass-building car carriers, where technical entry barriers are relatively low, and internalizing components.

Yang Jong-seo, a senior researcher at The Export-Import Bank of Korea’s Overseas Economic Research Institute, said, “Car carriers have simple structures, so the competition is about who can build them cheaper, and when price competition heats up, in a high-cost structure like Korea’s, competitiveness inevitably weakens.”

Experts also cite the rise in China-origin auto export volumes, led by electric vehicles, as a reason for Chinese shipyards’ dominance. Eom Kyung-a, an analyst at Shinyoung Securities, said, “The car carrier market is a specialized and limited transport market that trades a single item—cars—so it is difficult for countries without manufacturers exporting in large quantities to run this business,” adding, “Right now, the area where car cargo volumes are increasing significantly is China’s electric vehicles, so we can see that carrier construction is also taking place in China.”

Experts say domestic shipbuilders should not abandon this market entirely, even if car carriers do not generate significant revenue. Lee Eun-chang, a research fellow at the Korea Institute for Industrial Economics & Trade (KIET), said, “Car carriers are an important ship type in contingencies, so the current situation of excessive reliance on overseas sources is concerning,” adding, “If possible, Korea’s car carriers should be built at Korea’s shipyards, and policies are needed to subsidize the difference between overseas and domestic construction.”

The domestic shipbuilding industry has not completely given up on this market. It is seeking ways to raise future market share, including developing high-spec car carrier technologies. HD Hyundai Heavy Industries is developing an SMR-powered car carrier. Last month, HD Hyundai Heavy Industries received an approval in principle (AIP) from Lloyd’s Register (LR) for a concept design of a large car carrier applying molten salt reactor (MSR) technology, a type of SMR.

An HD Hyundai Heavy Industries official said, “An SMR-powered ship emits no carbon during operation, making it the ultimate eco-friendly vessel suited for the era of carbon neutrality.”

Source: ChosunBiz