Seaborne trade in finished vehicles, including high & heavy and used autos, continued to grow from 2016’s low, recording growth of 1% in 2018 to 22.8 million units, and this trend has continued into 2019. This is despite the first decline in global vehicle sales in a decade as US and Europe transactions peaked and a decline in China, now the world’s largest vehicle market, accelerated after years of double-digit growth.

“North-south and intra-regional trades continue to gain market share compared to hitherto dominant East-West routes, offering opportunities for triangulation,” said Tom Ossieur, Head of Car Carriers at Drewry. “However, matching supply and demand is becoming increasingly challenging for car carriers in the current climate of rising trade tensions and low forward traffic visibility.”

Continuing last year’s trend, owners and operators are holding off acquiring vessel capacity, as trade uncertainty and downward risks weigh on the market. Just four car carriers were ordered during the first half of 2019, mostly small ships for regional trades.

As fleet utilisation improves time charter rates are forecast to rise over the next five years. But profitability will lag on rising operating costs and higher bunker prices with the introduction of IMO mandated low sulphur fuel regulations in 2020.