The BYD Shenzhen does not look real yet it is and is 20 football fields big transporting 9200 vehicles over 14 floors.
Have you ever wondered how the cars on our roads ever get here because I have and when I lived in Durban I only saw the local car ferry from East London in the Port of Durban. Imported cars account for roughly 65% of all cars on South African roads with India as the main importer followed by China. I enjoy researching these types of posts as you learn so much on how companies overcome various hurdles to market.
China has been slowly climbing the market share ranks globally (excluding US) and you would think this would be a logistical nightmare booking shipping slots for automobile manufacturers. The vehicles are not transported in containers and are more specifically booked in roll in roll off vessels similar to the passenger ferries. Some auto companies do use containers, but the costs are seriously expensive and you should be using the roll on roll off car carriers. I think I presumed all cars came from shipping containers and is not the case.
Not the fastest ship around with a maximum speed of 21 mph and has to avoid rough weather because this is literally like one big sail.
The biggest hurdle the Chinese automakers found was the deliver process as it was all based on the availability of these specialized vessels. During Covid many of the Chinese inventory was stuck at port waiting to be collected that created huge bottlenecks and delays to market.
The costs rose during the peak of Covid from around $10K chartering per day per vessel to $110K per day. This does not include fuel and is the pure booking of the vessel. At the peak 1 vehicle was costing around $1400 for delivery to Europe. Using their own shipping service these costs are now estimated to be between $400 and $500 per vehicle saving the company on todays costs around $1300 or $10.3 million per shipment.
What the Chinese car giants did next was unprecedented as they cancelled shipping orders. At that particular time the car transporting vessels were owned and dominated by the Japanese and South Koreans. These shipping companies were loyal to serving their existing clients and the Chinese even though having booked long in advance often waited and had ships cancel on them at the last moment.
The solution was to build their own roll on roll off ships with Chinese ship builders and this is exactly what they did. The cost of one of these vessels is cheaper than a container vessel and is around $90-$110 million. A vessel will have between 8 and 14 decks that can carry anywhere between 5000 and 9200 vehicles per trip.
BYD was the first to put together a fleet which now stands at 12 vessels strong which more importantly helps with growing their overseas expansion plans. SAIC who I have never heard of who has partnerships with Audi, Volkswagen and General Motors has a fleet of 14 vessels and accounts for 25% of all Chinese car exports.
Not only has this benefitted a cheaper export price per vehicle, but they can also transport other competitor Chinese vehicles turning a good profit whilst reducing their own cost per vehicle even more. In the last year two years alone over 190 new roll on roll off ships have been built moving the total number globally from 760-950 vessels. Before Covid this figure was around 300 vessels so in the last 6 years has risen by over 300%. Chinese automakers now own roughly 10% of the global vessels ranking them 4th overall and can at least guarantee a route to market.
Toyota owns 20 vessels for exports supplying Asia, Europe, US and Oceana plus another 6 vessels for local supply in Japan. They also have 3rd parties delivering vehicles on their behalf. Hyundai use a logistics company under their Hyundai umbrella of companies that controls 130 vessels for exports.
The Chinese auto exports have risen from 1 million cars annually to over 7 million and one can clearly see the need to control your own shipping. Not only are these auto makers saving on delivery costs but can plan and strategize their own market share growth.