Car Carrier Bull Market Seems to Be Fading

(Bloomberg) —

Since the pandemic, earnings for ships that move cars across the oceans have soared to record levels, fueled by booming global trade in vehicles. The rally is starting to fade. 

Rates for freighters able to haul about 6,500 vehicles fell below $100,000 a day for the first time since September 2022 last month, according to Clarkson Research Services Ltd, a unit of the world’s largest shipbroker. 

The post-pandemic boom had been spurred by a surge in global vehicle trade after the Covid 19, with the number of cars being transported across the world’s oceans set to hit a record this year. However the pace of that growth has slowed in 2024, and sky-high earnings mean that a burgeoning orderbook of new vessels has emerged, denting the outlook for rates. 

“Our base case outlook suggests further easing in fundamentals with fleet growth in 2025-2026 set to outpace demand,” Clarkson analyst David Whittaker wrote in a note. 

Clarkson expects the car-carrying fleet to grow in size by about 12% next year, whereas demand for the vessels is only likely to expand by 1%,. There are also risks from EU tariffs on Chinese electric vehicles and continued disruption to merchant shipping through the Red Sea. 

© 2024 Bloomberg L.P.

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