Transport train is scarce, Chinese electric car company “plays big” spending billions of dollars to buy its own train

In the context of the current shortage of transport ships, the electric car giants are spending heavily to own their own ships, dominating the supply chain.

Transport ships are scarce, Chinese electric car companies "play big" to spend billions of dollars buying their own ships - how does VinFast transport? - Photo 1.Transport ships are scarce, Chinese electric car companies "play big" to spend billions of dollars buying their own ships - how does VinFast transport? - Photo 1.

Illustration

New bottleneck of the supply chain

Chinese electric car maker BYD is taking a step further to avoid any bottlenecks in the supply chain by ordering at least six trains in October. Each is capable of carrying 7,700 electric cars for 5 billion yuan ($710 million).

SAIC Motor Corp, the state-owned company that also operates the world’s fifth-largest freighter fleet through its shipping arm SAIC Anji Logistics, has bid for seven new new freighters and each can accommodate 8,900 vehicles.

This is a bold bet on the long-term demand of global consumers for Chinese cars. China recently surpassed Germany to become the world’s second-largest auto exporter, exporting nearly 2.6 million vehicles abroad in the first 10 months of 2022, far exceeding 2021’s volume. Even demand The unexpected drop in demand for Chinese goods in October also did not derail the upward trajectory for auto and chassis exports as it increased 60% year-on-year to 352,000 units, equivalent to a record high of 7.1 billion USD.

Transport ships are scarce, Chinese electric car companies "play big" to spend billions of dollars buying their own ships - how does VinFast transport? - Photo 2.Transport ships are scarce, Chinese electric car companies "play big" to spend billions of dollars buying their own ships - how does VinFast transport? - Photo 2.

The growth rate of electric vehicles does not match the growth rate of train services. Graphics: Bloomberg

Xing Yue, head of Clarksons Research Services in Shanghai, a unit of the world’s largest shipping brokerage, said while auto exports have been strong, so has the number of auto carriers globally has barely increased. Shipping costs have skyrocketed and now a lot of investment is pouring into building new ships to transport vehicles because of this supply-demand mismatch.

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Daily rates for ships carrying a capacity of 6,500 cars (commonly known as roll-on/roll-off trains) have risen to about $100,000 a day since, according to Clarksons, a freight-tracking company. October, more than 10 times the 2020 level and the highest recorded since 2000.

According to Tobias Bartz, President and CEO of Rhenus Logistics, with all the eventual disruptions to the supply chain, it makes perfect sense for Chinese automakers to defend themselves. This shortfall has resulted in some vessels being nearly 30 years old but still in service rather than being scrapped increasing the risk of accidents.

The race to own a transport ship

Chinese automakers are not alone in their desire to have more cargo planes. Tesla, which uses Anji Logistics’ car carriers, also had problems transporting vehicles from its factories.

Not enough boats, not enough trains, not enough car carriers to deliver cars last quarter resulted in the company’s revenue falling below expectations.

“Like it or not, we really had to make sure that the deliveries for the quarter went smoothly,” said CEO Elon Musk.

This latest bottom line may be new, but BYD and SAIC are not the first automakers to operate their own fleet of carriers. Toyota owns the shipping company Toyofuji Shipping while South Korea’s Hyundai owns the logistics group Hyundai Glovis Co.

Among Chinese brands, SAIC is the one that goes the farthest abroad. It has sold 697,000 vehicles overseas in 2021 – aided by the success of MG Motor – the British brand it has acquired and is aiming to sell 800,000 units this year. Therefore, transportation capacity is a very important factor.

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In Vietnam, electric car company VinFast on November 25 also marked a historic milestone when exporting the first shipment of 999 cars to the US. This is the first time that Vietnamese electric car products manufactured by Vietnamese people have officially entered the global automobile market. This is the first batch of cars exported to the international market among 65,000 orders for VinFast VF 8 and VF 9 electric cars globally to serve customers in the US. Next, the VinFast VF 8 will continue to conquer the next markets such as Canada and Europe. 999 VinFast VF 8 smart electric cars for the US market were exported on November 25.

The ship carrying VinFast’s shipments is not owned by this company. VinFast chartered the ship Silver Queen, with the flag of Panama, to carry the car. According to research, this ship is about 183 meters long, has a capacity of more than 11,000 tons, can carry up to about 4,500 cars at a time. On the current hull, there is a VinFast logo painted. Expectedly, 20 days after departing from Hai Phong port, the shipment will arrive at California port (USA) and hand over to the first international customer by the end of December 2022.

Source Bloomberg

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