Moving the merchandise: the world's largest car-ship fleet adds more vessels to meet an ever-growing global demand

Automotive Industries, Oct, 2004

Despite the fact that vehicle exports are still 30 percent below 1985 peak levels, Japanese shipping companies have remained active--and profitable--as they have broadened their market base to include all of Asia and not just Japan.

NYK Line, the world's largest carrier, transported 2 million vehicles last year (2.3 million including cars consigned to other carriers). Close behind were Mitsui O.S.K. Lines and 'K' Line, both at 1.7 million. Since 2000, NYK has introduced 13 new vessels and is scheduled to launch another three by the end of 2005. All but one are designed to carry more than 5,000 standard cars like the Honda Accord and Toyota Corolla or 4,800 large SUVs like the Nissan Murano and Toyota Land Cruiser.

Second-ranked Mitsui has introduced 18 new vessels with another nine scheduled to come on stream in 2005 and 2006, while 'K' Line added eight to its fleet. 'K' Line, the first to introduce a dedicated car ship in 1970, plans to deploy another eight vessels through 2007. Average capacity: 4,500 standard cars.

With the additions, Japan's car-ship fleet, already the world's largest, will grow to more than 250 vessels. And NYK, Mitsui and 'K' Line will account for 90 percent of the total. Worldwide, their share stands at nearly 60 percent.

A key design requirement of the latest vessels is "flexibility." Thus, deck height has been raised from 1.6 meters to 1.9 meters (5 feet, 4 inches to 6 feet, 4 inches) to carry large SUVs and passenger vans, made necessary by the steady shift of bread-and-butter models like the Corolla, Accord and Nissan Micra to production facilities outside Japan.

To bring down operating costs, Mitsui adopted a new aerodynamic design on all ships deployed from 2003. The design, featuring a curved forward edge of the bow (see diagram), cuts annual fuel costs by an estimated 5 percent. Prior to the recent price surge, furl accounted for an estimated 30 percent of operating costs.

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Carriers also have been forced to reduce port calls in Japan to around five per sailing out of a total of 12 (see Table 1). A 'K' Line official says ships spend around one day in each port for a total of five days in Japan. On the destination side, most observers fed that it is difficult to cut port calls as they relate to regional distribution arrangements involving rail and trucking services. On the U.S. East Coast, for instance, there are four main receiving ports for Japanese cars (see Table 2). Reducing that number would result in transit delays and disrupted service patterns.

To illustrate: Mitsui, with more than 70 ships in its fleet, operates on nearly 30 trade routes including the U.S. East Coast to Mexico and South America and Southeast Asia to India, Africa and the Middle East. Against this backdrop, an estimated 9.2 million vehicles were transported by car ship last year including 700,000 used cars from Japan to New Zealand and the Persian Gulf. This year's target is 9.5 million.

With China expected to begin exporting cars in the next few years, the number likely is to increase. Thus, even if vehicle exports from Japan fall below current levels, as many fed is inevitable, the outlook is bright for shipping companies.

Table 1: JAPANESE LOADING PORTS

Chiba (Honda)
Fukuoka (used cars)
Kanda, Kyushu (Nissan)
Kobe (Daihatsu)
Hiroshima (Mazda)
Mizushima (Mitsubishi)
Nagoya (Toyota and Mitsubishi)
Nakanoseki (Mazda)
Ohmaezaki (Suzuki)
Toyohashi (Toyota)
Yokkaichi (Honda)
Yokohama (Nissan, Isuzu, Toyota and
Honda)

Table 2: EAST COAST PORTS

Jacksonville *
Charleston *
Norfolk
Baltimore *
Newark/New York *
Boston

* main ports of call

This article was provided exclusively to Automotive Industries by J*REPORTS, a new information service offering in-depth coverage of automotive technology based in Tokyo. For additional information about this and other studies and prices, contact JRepts@aol.com