Clarksons: 93 pct of car carrier newbuilds LNG capable, 23 pct ammonia/methanol ready

Car carrier newbuild ordering has increased significantly in 2021 and 2022 on record markets and the resumption of owners’ fleet renewal programmes, including efforts to support manufacturers to become ‘green through the supply chain’.

UECC’s PCTC Auto Advance under EcoTow by one of Svitzer’s tugs in the port of Southampton, UK. Photo: Svitzer

The market recovery is primarily driven by post-covid car trade rebound boosting vessel demand and charter rates.

A total of 48 vessels of 375,000 ceu were ordered in Jan-Oct 2022, already the firmest year since 2007. By the start of November, the orderbook stood at a more than 10-year high of 86 vessels of 641,000 ceu, data from Clarksons Shipbrokers shows.

As disclosed, some 93% of the newly ordered capacity will be LNG capable, and 23% ammonia/methanol ‘ready’ as owners seek fuel optionality. By November, the guideline newbuilding price for a c.7,000 ceu LNG dual-fuel ship stood at c.$91 million, Clarksons said.

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Extremely limited ordering in the late 2010s has led to very few deliveries in recent years, making the total fleet capacity essentially still in line with the levels from the start of 2018. At the beginning of November 2022, the fleet stood at 757 vessels of a combined 4.0 million ceu, up just 0.4% from the start of the year.

The car carrier fleet is currently projected to grow by 1.3% in 2023, with deliveries and demolition projected to be limited again, Clarksons estimates. Looking to 2024, the fleet growth stands at 6.1%, with deliveries picking up following a ‘wave’ of ordering in 2021/22, but demolition could also start to increase from recent lows.

Upcoming environmental regulations are likely to have a range of impacts on the car carrier sector, including slower speeds (+3% vs start-21 recently, but still 13% below 2008 levels), EST retrofitting (gaining traction; ESTs now fitted on >14% of fleet capacity) and potentially increased recycling.

It is estimated that c.80% of car carrier fleet capacity would theoretically be D or E rated under CII if still trading by 2026 without altering speeds or specifications and around .45% in 2023, the shipbroker noted.

Ownership in the car carrier sector is fairly consolidated vs other shipping sectors, with the top 10 owner groups owning 67% of fleet capacity. Major operator Wallenius Wilhelmsen is the largest owner group (0.53m ceu), followed by Ray Car Carriers (0.36m ceu), with Japanese operators NYK (0.34m ceu), MOL (0.31m ceu) and K-Line (0.28m ceu) completing the top 5. Operator owners own 61% of the fleet, vs 39% by charter owners (‘tonnage providers’).