China growth straining global auto shipping capacity: Liner CEO

“It used to be a cheap product. Now it is a preferred product,” Kristoffersen said, describing Chinese-made vehicles as increasingly competitive on technology, functionality, quality, design and price.

He said Oslo-based Wallenius Wilhelmsen (OTC: WILWY)) has found no indication that Chinese automakers are simply flooding overseas markets with unsold inventory. The carrier reviewed vehicle-registration data and activity at its own inland facilities and did not see evidence of mounting stockpiles, he said.

A large volume of Chinese vehicle exports is still moving outside the traditional roll-on/roll-off shipping market because car-carrier capacity is unavailable, Kristoffersen said. He estimated that 2 million to 4 million vehicles annually are being shipped in containers or through other alternatives, with the actual figure probably closer to the high end of that range.

That volume represents potential demand for PCTC operators if additional ships become available.

Fleet growth may lag demand

The PCTC orderbook stands at roughly 20% to 21% of the existing global fleet, but Kristoffersen said that headline figure overstates the immediate supply response. Shipyard capacity is largely committed through 2029, he said, meaning vessels ordered now generally would not be delivered until 2030 or later.

At the same time, the global fleet faces potential retirements as older vessels approach 30 years of age. Kristoffersen said fleet scrapping could offset deliveries in the latter part of the decade, potentially limiting net capacity growth.

The tight market drove a sharp increase in China-linked spot and charter rates during the second quarter. Kristoffersen said China spot freight rates and time-charter rates increased by about 80% during the quarter and had likely doubled from their first-quarter lows by the time of the earnings call.

For Wallenius Wilhelmsen, higher freight rates support revenue, while higher charter rates can raise operating costs. Kristoffersen said the company has relatively limited near-term exposure to charter-market increases.

Wallenius Wilhelmsen reported adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $361 million for the second quarter, down 7% from the prior quarter. The company attributed much of the decline to higher bunker-fuel costs, which it expects to recover over time through bunker-adjustment mechanisms in customer contracts.

The company maintained its forecast for about $1.6 billion in adjusted EBITDA for 2026 and announced a total first-half dividend of $258 million, including a $100 million extraordinary distribution.

Kristoffersen also said the company continues to avoid the Strait of Hormuz and has not resumed transits through the Bab el-Mandeb and Red Sea, reflecting ongoing security concerns in the region.

Why it matters: Wallenius Wilhelmsen’s view is that the car-carrier market will remain constrained not only by vessel availability, but by a fundamental shift in global auto trade.

Read more articles by Stuart Chirls here.

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