News / Charter rates for PCTCs falling as tariffs put brake on EVs

Car carrier Port of Antwerp & Zeebrugge. © Drewrawcliffe Dreamstime.com

Charter rates for pure car and truck carriers (PCTCs) are expected to halve from their 2023 peak of more than $110,000 a day to $50,000 this year, according to Veson Nautical’s valuation platform VesselsValue.

VesselsValue cites high newbuilding deliveries resulting from massive orders in 2022 and 2023, amid a potential downside to demand for Chinese electric vehicles (due to tariffs and the abolition of US EV subsidies).

PCTC demand picked up after Covid subsided in 2022, leading to demand for vehicles as more people returned to offices.

Clarksons’ Shipping Intelligence Network shows that 201 PCTCs are under construction, 56 of which are due to be completed this year to join the 830 in-service.

Any resumption of Red Sea transits will also hurt CEU-mile demand.

VesselsValue said its previous forecast of $65,000/day charter rates was based on the assumption that diversions round the Cape of Good Hope will continue this year, but the possibility of a full recovery of Red Sea routes is growing.

At the same time, Europe and the US have imposed heavy tariffs on imports of Chinese-made electric vehicles and US president Donald Trump is abolishing subsidies for EVs, which could all curb the growth of China’s exports.

In a market forecast following its 2024 results briefing, Norway’s Hoegh Autoliners said: “The geopolitical landscape is unpredictable, and uncertainty has increased over the last few weeks, with threats, and introduction, of new tariffs. Generally, any new tariffs will affect the overall market.”

VesselsValue said: “The (PCTC) market is correcting from the historical highs of the past four years. The rebalancing of supply and demand and the potential overcapacity in 2025-2026 may cause charter rates to fall below $50,000 per day.”

PCTC asset valuations are also trending downwards.

For example, Clarksons now values Wallenius Wilhelmsen Lines’ 2020-built 7,656-ceu PCTC Tannhauser at $89m, down from a peak of $100.5m in November 2023.

VesselsValue predicts that, with the decline in charter rates and the delivery of new ships, PCTC asset values may further depreciate, by 5%-10%, this year.