RoRo Shortage Hits Car Trade

While the Chinese automotive sector is experiencing double-digit growth, Chinese finished vehicle exporters are facing stiff competition and ongoing logistics challenges in getting their products to foreign markets because of a lack of RoRo ships, according to a report on http://www.cargonewsasia.com. Zhang Xiaoyu, vice-chairman of the China Machinery Industry Federation said that while the number of China's vehicle exports has increased sharply, many of these cars lay in transit at ports because shipping companies simply do not have enough vessels to transport them. According to China Custom's figures, the mainland exported a total of 340,000 cars in 2006 - double that exported in 2005. This represents a small part of China's total automobile output in 2006 of 7.28 million vehicles, leaving plenty of room for growth. Along with the increase in vehicle exports, the number of companies exporting cars increased to 1,175 in 2006, according to a local auto market researcher, of which 160 companies exported only one vehicle each and 650 companies exported less than 10 vehicles each. Many of these are companies which handle exports for China car makers such as Great Wall, Geely and Chery. An ongoing issue for Chinese finished vehicle exports is the shortage of roll-on/roll off (ro/ro) ship capacity. "Because of the lack of ro-ro ships, we mostly rely on Japanese and Korean ships, but they come just once a month," said Gu Jian Li, vice-general manager for overseas markets of Great Wall Automotive. "They give us limited space, so most times we have to use container vessels, which are likely to cause damage. Also, for a similar distance, Japanese and Korean companies are charged $40-$50 per cubic metre, while Chinese companies need to pay $60-$70." Companies such as Leif Hoegh Shipping (China), a joint venture, and Chinese shipping companies, Cosco and China Shipping are all increasing capacity - eight new ro/ro ships are due for delivery in 2007 - but not fast enough. (Source: http://www.cargonewsasia.com)