South Korean shipowners Eukor Car Carriers, Hyundai Glovis and HMM are set to build or acquire more pure car and truck carriers (PCTCs) to transport domestic vehicle exports.
Last week, the Korea Shipowners’ Association signed a memorandum of understanding with the Korea Auto Industries Cooperative Association to provide shipping capacity for car-makers Hyundai, Ssangyong, Renault Korea and GM Korea, which pledged to provide stable export volumes.
Vice-minister of oceans and fisheries Song Sang-keun said: “While the domestic automobile industry is experiencing a lot of difficulties in exporting, due to a shortage of ships and rising charter rates, we welcome the efforts of both industries for mutually beneficial cooperation.”
Xeneta’s chief analyst, Peter Sand, noted how car-makers in South Korea were relying on compatriot shipowners. He said: “More and more nationalism is finding its way into trade policies, protectionism and national security. It’s not nice, but a sign of times.”
In 2023, South Korea, like many vehicle-producing nations, saw automobile exports surge as the Covid-19 pandemic eased. Ministry of Trade, Industry and Energy statistics showed vehicle exports hit an all-time high of 2.31 million last year, with outbound sales of $54.1bn.
Meanwhile, PCTC charter rates are believed to have tripled since 2019, with under-investment in PCTC newbuildings during the pandemic in 2020 and 2021, when movement restrictions weakened car demand and sent many older PCTCs to scrapyards.
Last year, 90 PCTCs were ordered, nearly tripling the 38 booked in 2021, due to the acute shortage of PCTC vessels, especially in China, whose automobile industry is taking off and car-makers such as SAIC have established in-house shipping companies to handle transport.
Last month, South Korea’s flagship container line, HMM, reportedly entered the vehicle transport segment when it ordered three 8,600 car-unit PCTCs at Guangzhou Shipyard International, for long-term charter to Glovis, Hyundai’s shipping arm.