The record car carrier market is showing no sign of hitting the brakes, and rates may even surge to $150,000 per day, according to one analyst. Daniel Nash​​, head of vehicle carriers and ro-ros at VessesValue, said the sector went into overdrive in mid-August after Nissan extended a $100,000 per day rate on Eastern Pacific Shipping’s 6,178-teu Lake Geneva (built 2015) just four weeks into the one-year deal. The analyst said this was a “record-breaking fixture setting a higher high in a raging bull market, paralyzed by short pure car truck carrier (PCTC) supply following years of underinvestment.” The “stunning” rate is 174% higher than January deals and up a staggering 488% compared to December 2019, Nash added.

Brokers are now reporting that another modern panamax unit is about to be fixed out at $120,000 per day. “If concluded, [this] forces us to consider the possibilities of a $150,000 per day fixture in this current cycle, which is mind-boggling,” Nash said. “It’s optimistic but by no means insurmountable, looking at the net fleet position and forward trading environment, supported by slower steaming and reoccurring port congestion,” he added. Nash expects to see average rates of $125,000 in 2023.

He believes giant Oslo-listed owner Wallenius Wilhelmsen is using this bull cycle to steer the market away from spot contracts, establishing higher contract freight rates to boost returns to shareholders. “Short supply is firmly priced in for another 12 months, possibly 24, barring no major shocks such as a global war,” Nash said. “In a nutshell, we are witnessing the biggest bull run in the history of the sector, which is showing no obvious signs of easing,” he argued.

PCTC supply became seriously squeezed in September as ships faced heavy delays at major ports in North-west Europe, most notably Bremerhaven in Germany, Nash noted. One ship took 11 days to complete cargo operations there, and another 10 days. Wallenius Wilhelmsen then took drastic action by informing clients that all liner bookings for October and November voyages from Europe to the Far East, North America, Oceania, and Middle East would be “temporarily” stopped until further notice. The company cited congestion and increasing cargo demands, leaving no storage space for deliveries. Nash called this a “dramatic move which surprised the market.”

He also explained it was perhaps partly strategic to protect capacity for original equipment manufacturer (OEM) accounts in a tightening market, whilst simultaneously kicking off less interesting spot export cargoes. Ship supply will also be hit next year by the new IMO emission regulations, which will force owners into slower steaming. VesselsValue estimates a 5% to 10% capacity cut because of this. On the demand side, car maker Tesla is ready to scale shipments from its Gigafactory Shanghai to global destinations in 2023. And seller VinFast in Vietnam is courting PCTC operators to call in the country regularly, after six stores were opened in California.

Everything in this article can equally apply to dry bulk shipping where we have been hurt by slower demand from China. Khalid