Declining box trades more attractive to car industry

Capacity and congestion in the car carrier sector have driven some manufacturers to move cars in containers rather than delay exports until space becomes available.

Soaring freight rates, congestion and a lack of roro capacity have seen delays of up to three months or more in the shipment of cars as sky-high demand adds to the sector’s problems.

The cost of moving cars in containers is on par with roro because although the freight is cheaper the cost of loading and unloading containers is greater.

Although the costs are similar from one sector to the other, most roro companies only operate monthly services to key markets, whereas container services are weekly, offering a more frequent and larger capacity.

Shipping lines can also benefit from the movement of finished cars in a period when the freight levels have diminished.

Blue Alpha Capital analyst’s report showed a 12.9% decline in August volumes at the 10 largest US ports, following on from import volume falls of 31.6%, 21.6%, 20.1%, 18.9% and 12.9%, in March, April, May, June and July respectively.

Overall trade volumes on the Pacific eastbound had declined 20% while the Asia to Europe trade had fared a little better at -7% in the year to date, according to Container Trade Statistics.

Along with the falling demand on the two major trades has been a significant decline in rates which has made the sector far more attractive to automotive traders.

Even so, as the automotive sector transitions to electric vehicles (EV), there have been growing concerns about the carriage of these vehicles with some high-profile accidents having been blamed on EVs, the connection of the outbreak of fires on board roro vessels, such as the Freemantle Highway.

CMA CGM had a policy of shipping EVs in reefer containers, a policy that has now been reversed according to the senior manager for cargo security and safety at CMA CGM.

“Now we say it is the responsibility of the shipper to decide whether to put an EV into a dry or reefer container,” noted CMA CGM.

He went on to explain that the policy was originally used to try and control the temperature inside the container, but now CMA CGM has put the responsibility for that decision, whether to store an EV in a dry or refer box on the shipper.

“We ask shippers to sign a letter that shows that they are aware that the battery temperature of EVs can increase dramatically, above 60degs centigrade, and that the shipper accepts the liability for the carriage of an EV,” said CMA CGM

The French ocean carrier is particularly concerned about older EVs, cars with batteries older than seven years old will not be accepted for carriage, but older vehicles with a certificate showing that the battery pack is less than seven years old will be handled.

Source: Container News

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