China's status as the world's largest automobile exporter has been confirmed, and independent brand automakers have set sail one after another. A 10,000-ton giant vessel has ushered in the "Age of Great Navigations" for national cars going abroad.

In recent years, with the continuous improvement of domestic automotive industry technology and the gradual expansion of brand influence, China's automobile competitiveness in the international market has been continuously enhanced. Many domestic automakers have exported their products to many countries and regions. Among them, maritime transport, as the main mode of automobile export, has become the first choice for many automakers to go abroad due to its large transport capacity and adaptability to long-distance transport.

However, with the continuous growth of China's automobile exports, the demand for automobile roll-on/roll-off (RORO) vessels responsible for ocean transportation has begun to exceed supply, leading to longer and longer shipping schedules and higher and higher charter rates for RORO vessels.

According to public information, in the first half of 2024, the average daily charter rate for a 6,500-car capacity RORO vessel exceeded USD 100,000 (approximately RMB 720,000). Faced with long-term transportation that can last up to several weeks, international logistics companies estimate that the cost of maritime transportation alone for shipping a vehicle from China to Europe exceeds RMB 10,000, which is undoubtedly a significant expense for Chinese automakers with already slim profit margins.

High freight costs force automakers to build their own fleets

Longer shipping schedules may lead to delivery delays, affecting customer experience, while relatively higher freight costs further increase automakers' operating costs and reduce their competitiveness after export. To address this challenge, many automakers have taken matters into their own hands by building their own fleets.

Industry experts indicate that based on current charter rates, "self-owned shipping" can save over RMB 300 million per vessel annually. More importantly, self-owned fleets ensure stability in the automobile export supply chain, enhance logistics capabilities, and improve automakers' overall cost control in the export process. With excess capacity, automaker fleets can also undertake other automakers' ocean transport orders for profit, creating a new revenue stream.

After years of development, Anji Logistics, a subsidiary of SAIC Motor, has become the world's largest automobile logistics company and operates China's largest self-owned automaker fleet. It currently operates 32 various types of automobile vessels, including 11 river vessels, 9 domestic trade ocean vessels, and 12 foreign trade ocean vessels, serving seven international self-operated routes to Southeast Asia, Mexico, West South America, and Europe.

Among them, the second ocean-going automobile transport vessel (RORO vessel) commissioned by SAIC Motor and built by China State Shipbuilding Corporation (CSSC) was recently delivered and officially named the "SAIC Anji Jincheng." With a displacement of over 40,000 tons and a capacity of 7,600 vehicles, this "ocean giant" will sail to Europe alongside the "SAIC Anji Shencheng," which entered service earlier this year, to accelerate the overseas expansion of Chinese independent brands.

Notably, both the SAIC Anji Jincheng and SAIC Anji Shencheng innovatively adopt LNG dual-fuel clean energy, which not only reduces transportation costs but also decreases carbon emissions by approximately 30%, nitrogen oxide emissions by 30%, sulfur compound emissions by 99%, and PM particulate matter emissions by over 90% compared to conventional fuel oil automobile vessels.

SAIC Motor's continued breakthroughs in overseas business are the primary reason for its large-scale "shipping out" efforts. From January to June, SAIC Motor delivered 554,000 vehicles to overseas markets, an increase of 13.9% year-on-year, continuing to lead among Chinese automakers. In the European market, SAIC Motor's MG brand has surpassed Tesla in sales and entered the top 20 brands. Despite challenges such as the Red Sea crisis and EU anti-subsidy tariffs, SAIC Motor MG delivered over 120,000 vehicles to the European market in the first half of the year, with "seven out of every ten Chinese cars exported to Europe being MGs."

Similarly, in January this year, BYD's first ocean-going automobile RORO vessel, the "Explorer 1," was officially delivered and departed from Yantai, Shandong Province. It completed its maiden voyage to Europe in April.

After successfully returning from its maiden voyage, the Explorer 1 embarked on its second journey to Europe. According to vessel tracking tool Hifleet, the vessel departed from Xiaomo Port, Shenzhen, China, on July 9th, loaded with 2,132 new energy vehicles, and successfully arrived at the Port of Santander, Spain, in mid-August. Subsequently, the Explorer 1 will visit the United Kingdom, the Netherlands, and other European countries for vehicle loading and unloading operations.

Like the SAIC Anji Jincheng, the BYD Explorer 1 also adopts LNG dual-fuel clean energy. In a typical China-Europe round trip, using LNG as an alternative fuel can reduce carbon dioxide emissions by approximately 1,300 tons per voyage, equivalent to planting 500,000 trees, contributing positively to China's automotive industry's carbon neutrality goals.

To date, BYD has introduced seven new energy vehicle models to over 20 European countries. BYD Chairman and President Wang Chuanfu previously stated that the company is fully prepared to meet the growing demand in overseas markets. It is revealed that BYD plans to invest in seven more RORO vessels for operation within the next two years, continuing to deepen its presence in the European market.

Compared to SAIC Motor and BYD, Chery Group's "ocean-going plan" appears relatively low-key. Although Chery Automobile has exported to over 80 countries worldwide and has consistently led Chinese brand exports for several years, it has never publicly disclosed the specific number of vessels it owns. However, relevant reports indicate that Chery Automobile has already or plans to venture into the shipping industry through various means, including partnering with Wuhu Shipyard to build automobile transport vessels and establishing an international shipping company for automobile transport vessels with JAC Motor and Anhui Port and Shipping Group Co., Ltd.

Shipyard efforts to address the dilemma of automobile maritime transportation

The Automobile Journal understands that as of 2023, there were approximately 700 automobile RORO vessels worldwide, with most of the capacity controlled by American, European, Japanese, and Korean companies. Less than 10% of these vessels belong to Chinese shipowners, giving Chinese automakers limited influence in the field of automobile maritime transportation.

The good news is that in addition to automakers building their own fleets, China's shipping industry is also progressing. According to relevant research, due to the surge in Chinese automobile exports, Chinese shipowners now account for 21.1% of global orders for automobile transport vessels. Approximately 70% of these orders are expected to be delivered between 2024 and 2025.

Moreover, three Chinese state-owned enterprises have embarked on ambitious shipbuilding plans. China COSCO Shipping plans to add approximately 100 large bulk carriers, tankers, and multi-purpose general cargo vessels to its fleet. China Merchants Group plans to add a similar number of vessels, including LNG carriers. China Energy Investment Corporation's shipping subsidiary also plans significant fleet expansion, primarily with bulk carriers. With these additions, the shortage of shipping capacity is expected to ease further.

Notably, on July 10th, COSCO Shipping Specialized Carriers successfully named and launched its first 7,500-car capacity LNG dual-fuel automobile RORO vessel, the "Liaohekou," in Xiamen. The vessel will carry over 5,000 commercial vehicles from brands such as Beijing Automotive Group, Liuzhou Wuling Motors, BYD, and Chery on its European voyage. Meanwhile, its sister ship, the "Minjiangkou," will also depart for the Persian Gulf after loading over 4,800 vehicles in Shanghai.

Public information shows that since 2022, COSCO Shipping Specialized Carriers and its joint venture, Guangzhou Yuanhai Automobile Shipping Co., Ltd., have ordered 24 large, modern LNG dual-fuel automobile RORO vessels with capacities ranging from 7,000 to 8,600 cars. Five new vessels are scheduled for delivery and operation in the second half of this year, with 11 expected next year and six in 2026. By then, the company will operate a fleet of approximately 30 specialized automobile vessels with an annual transport capacity of 700,000 vehicles, contributing to the global expansion of "Made in China."

However, it is worth noting that despite resolving the maritime transportation challenge, domestic automakers still face numerous issues when going abroad. Operating a maritime fleet requires significant capital investment in vessel purchase, maintenance, and management, significantly increasing operating costs. Additionally, building a self-owned maritime fleet necessitates a comprehensive management system and experience. After addressing capacity issues, automakers must also contend with challenges related to talent, logistics, warehousing, and ports.

Furthermore, in July this year, the European Union began imposing provisional tariffs on electric vehicles made in China, while the U.S. Inflation Reduction Act prohibits tax incentives for electric vehicles produced outside North America. These policies and trade barriers undoubtedly introduce significant uncertainty into future Chinese automobile exports.

Meanwhile, local automakers in emerging markets, especially those in Europe with numerous internationally renowned brands, are also rapidly developing. Compared to these local automakers, who have a deeper understanding of local markets and easier access to policy support, Chinese automakers face formidable challenges when expanding overseas.

Therefore, after successfully entering international markets, Chinese automakers must still internationalize their technology, branding, and entire industry chain to solidify their positions in the global market. Note: This article was originally published in the "Automobile Industry Observer" section of the September 2024 issue of the "Automobile Journal." Please stay tuned.

Image: From the internet

Article: Automobile Journal

Typesetting: Automobile Journal