Hyundai Glovis to raise car shipping rates amid vehicle carrier shortage

Hyundai Glovis Co., the logistics unit of South Korea’s Hyundai Motor Group, plans to raise vehicle shipping rates considering the sharp rise in fees it must pay to borrow vehicle transport carriers amid a shortage of such ships.

At a recent meeting between the Hyundai Glovis chief executive and analysts, the company said it would raise seaborne freight rates for global automakers as early as October. It didn’t disclose the exact size of the planned fare increases, citing confidentiality agreements with its clients.

Freight rates for the company’s pure car and truck carriers (PCTCs) operating from Korea to overseas destinations will also be hiked from Jan. 1 next year, company officials said.

In addition to new shipping contracts, Hyundai Glovis plans to raise shipping rates applied to existing long-term contracts.

The company handles vehicles made by Hyundai Motor Group’s two automaking units – Hyundai Motor Co. and Kia Corp. – for overseas shipments.

Hyundai Glovis also counts Volkswagen AG and other global carmakers among its clients.

SOARING VESSEL BORROWING COSTS

According to market tracker Clarksons Research, the daily rental fee for a 6,500-CEU vehicle transport vessel averaged $110,000 in the second quarter, nearly double the $59,167 price seen in the year-earlier period.

CEU, which stands for car equivalent unit, is used to measure the capacity of vehicles or car carriers. A CEU is generally based on the dimensions of a 1966 Toyota Corona RT43, which is 4125 mm x 1550 mm x 1400 mm.

Despite the overall slowdown in the global shipping industry, demand for PCTC ships has grown due to cross-border electric vehicle transportation.

Following the COVID-19 pandemic, car exports have quickly returned to normal, resulting in a substantial increase in maritime traffic, which caused a shortage of PCTC vessels, industry officials said.

The planned hike in PCTC shipping costs is expected to improve Hyundai Glovis’ profitability, officials said.

TO EXPAND FLEET OF SHIPS

To meet rising demand, the company plans to expand its fleet of ships.

Last month, industry sources said Hyundai Glovis, which currently operates 72 PCTCs, will borrow at least 10 more such ships over the next two years.

It will put six PCTC ships into operation next year and is in talks to lease four more by the end of 2025, sources said.

The ships Hyundai Glovis plans to secure can carry up to 80,000 vehicles per vessel. All of those ships are eco-friendly vessels, run by an LNG dual-fuel engine, they said.

Separately, the company plans to place orders with shipbuilders to build more PCTC vessels.

Write to Hyung-Kyu Kim and Sungsu Bae at khk@hankyung.com

In-Soo Nam edited this article.