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The expected increase in the number of car transport ships will flood ports with vehicles and worsen terminal congestion, said the head of the industry’s largest shipping company.
Lasse Kristoffersen, chief executive of Wallenius Wilhelmsen, made the comments in an interview after the Financial Times reported that many European car import terminals had turned into crowded “parking lots” following a sharp increase in vehicle exports from China.
The situation would have been made even more difficult if there had been enough capacity to deliver all the vehicles that manufacturers wanted, he said. “We are not able to lift all the volumes that our customers want.”
Auto transport capacity has been stagnant over the past decade, but the number of vehicles moved rose 17 percent last year compared to the previous year, filling nearly all available vessels.
In response, operators have ordered 198 new ships, scheduled to arrive by the end of 2027, according to maritime consultancy MSI. These deliveries will increase capacity by 42 percent.
Kristoffersen said it was unlikely that terminal operators would increase port capacity at the same pace and that this would worsen congestion at the ports. “We believe the next big bottleneck will be terminals and distribution.”
His comments come the week MSC, the world’s largest container shipping company, announced its first major investment in the car transport sector, with a NKr7.64 billion ($693 million) cash offer for Gram Car Carriers Oslo-listed owners of 18 car transporters rented to other operators.
Meanwhile, Wallenius Wilhelmsen is trying to avoid overload by investing in its own terminals. There are two in China and one each in Australia, South Korea, the United Kingdom, Belgium and Germany. On April 25, the company signed a 20-year lease for a new auto terminal in Brunswick, Georgia, bringing its total to three in the United States.
Auto transport companies operate a total of 776 vessels for cars, trucks and other roll-on-roll-off cargo such as agricultural equipment. Wallenius Wilhelmsen operates 128 of the distinctive, box-shaped ships.
The problems at the ports were exacerbated by changes in car manufacturers’ distribution systems, Kristoffersen said. Many new manufacturers do not have traditional dealer networks, he emphasized. Some – including Polestar, an electric vehicle brand owned by Volvo Cars – have put Wallenius Wilhelmsen in charge of sales, he said.
“When we receive a Polestar at our terminal in Belgium, we are the ones who check the car and prepare it for delivery to a customer,” said Kristoffersen.
This trend has contributed to an increasing number of vehicles at ports, some of which are being prepared there for delivery to customers, he added.
Kristoffersen also noted that the industry is feeling the impact of the volatile geopolitical environment.
Since late last year, many car transport companies have been forced to reroute trips between Asia and Europe to a longer route around the Cape of Good Hope to avoid terrorist attacks by Houthi fighters in the Red Sea. Since many journeys were extended as a result, the diversions reduced the number of vehicles delivered this year.
“The Red Sea situation occurred – 5 percent of our capacity disappeared overnight,” Kristoffersen said.
He also expressed concern about the risks of sailing through the Strait of Hormuz after Iran’s Revolutionary Guards hijacked the large container ship MSC Aries on April 13. Ships must pass through the strait to reach Gulf ports such as Dubai.
These ports have become busier in recent months as Saudi Arabia’s main port, Jeddah on the Red Sea, becomes more difficult to serve.
“Whatever happens off Yemen and in the Strait of Hormuz is a major challenge to our ability to deliver,” Kristoffersen said.