Chip Shortage to Ship Shortage: Chinese Car Makers Face Logistical Challenges

There was a time when the automotive industry was grappling with the global semiconductor chip shortage. Now, the industry is facing a new challenge: a shortage of ships.

China has recorded a significant increase in its electric vehicle (EV) exports. However, the country’s automakers are struggling to get their vehicles to overseas markets due to insufficient shipping capacity.

According to shipping services provider and consultancy Clarksons, the cost of shipping cars has reached an all-time high. China, well aware of the crucial role the car shipping supply chain plays in the global expansion of its automotive industry, has already made significant investments in car shipping.

However, China’s major EV companies are considering making their arrangements for car shipping due to the extended backlogs on shipbuilding orders.

In a conversation with the state-owned Securities Times, an executive from a Chinese shipyard said,

China’s transoceanic capacity and automobile export capacity are seriously mismatched. In this field, China’s ship-owner companies or logistics companies are still in their infancy.

Last month, Chinese EV giant BYD got its shipping vessel. The roll-on/roll-off vessel, Explorer 1, is capable of transporting up to 7,000 vehicles with lower carbon emissions than a typical car-shipping vessel.

The ongoing difficulty in automotive shipping can be partially attributed to the scrapping of numerous older vehicle carriers in 2020. According to the Financial Times, the number of “pure car and truck carriers” scrapped in 2020 was higher than any other year since 2016.

At the moment, Chinese EV manufacturers who are looking to export their products to Europe must pay extremely high rental prices for car carrier ships or wait for ships they’ve ordered to be built.

Chinese industry observers have labeled these specialty vessels as “money printing machines at sea.”