News / Car-carriers succumb to Red Sea crisis, but must now risk Cape headwinds

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Car-carrier lines NYK, K-Line and MOL finally halted Red Sea transits last week, with the latter introducing a new emergency risk surcharge.

The Japanese compatriot carriers had been some of the major Red Sea holdouts, preferring to risk transiting the contested Bab Al-Mandeb Strait rather than going around the Cape.

Pure car and truck carriers (PCTCs) are infamously liable to capsize in strong winds, thanks to their low stability, high walls and susceptibility to the free surface effect (‘sloshing’), if even a small amount of seawater makes it onto their decks. So there is reason to believe their operators would shy away from the Cape of Good Hope’s treacherous headwinds, preferring to risk being attacked by Houthi militants.

Now, elongated Cape transits by the Japanese lines will add to the capacity crunch hitting the industry. Throughout last year, The Loadstar reported on the squeeze in PCTC availability, with shippers, in some cases, resorting to shipping cars in containers to get them to market.

The car carrier companies have placed a large number of newbuild orders, but most of these vessels will not be delivered before 2025.

The main reason for this is a surge in car exports from China. In the past decade, their global share has doubled, to more than 20%. The maiden voyage of the 7,000 ceu BYD Explorer No 1 this week – the first of seven newbuilds destined for BYD’s fleet over the next two years – marks the decision by the Chinese carmaker to sidestep the shortage in capacity by securing its own.

Constructed by China’s CIMC Raffles shipyard and chartered by BYD, the LNG dual-fuel BYD Explorer No I is owned by Japan’s Taihei Kaiun and operated by London-based Zodiac Maritime.

But if this were not enough, China, which already boasts unrivalled dominance in lithium battery manufacturing, is re-tooling its economy for mass-production of domestic-branded electric cars, too. As well as building for western carmakers like BMW, Tesla and Ford, and Japan’s Honda, Toyota and Mazda, China has eight state-owned and four privately owned car brands, of which BYD is one.

BYD has weathered the PCTC capacity shortage to export almost 250,000 electric and hybrid vehicles, representing a year-on-year growth of 334.2%.

Meanwhile, it transpires Maersk lost out on $33m by selling its last 20m shares in Höegh Autoliners at the end of November, netting around $160m. Since then, Höegh’s share price has surged past the $8.34 mark, to reach $9.95 this month.