Automakers Storing Cars On Unused Cargo Ships

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Old Feb 5, 2009, 5:58pm   #1
Joined Feb 2008
Automakers Storing Cars On Unused Cargo Ships

FT.com / Companies / Automobiles - Out-of-work ships used as storage for unsold cars

Out-of-work ships used as storage for unsold cars

By Robert Wright in London

Published: February 4 2009 02:00 | Last updated: February 4 2009 02:00

Car manufacturers are increasingly using ships to store excess vehicles because ports' parking areas have become overwhelmed by the build-up of unsold vehicles.

The move is a rare positive development for operators of the world's fleet of 640 car carriers, which face sharp falls in traffic. At the same time, 70 new ships, mostly larger than their predecessors, are due for delivery this year alone.

Operators have been forced to slow ships down to absorb spare capacity and conserve fuel. Many are also simplifying distribution networks.

Some ports have run out of storage space as recently imported cars or vehicles awaiting export sit unsold following the sudden fall in demand.

Specialist car terminals' vast parking spaces are often the only point in supply chains with sufficient storage space for large numbers of cars.

One specialist car-carrier shipbroker said the number of under-employed car carriers was helping manufacturers to find vessels for storage.

Wallenius Wilhelmsen, the Scandinavian joint venture that operates the world's largest car-carrier fleet, confirmed that one of its vessels, the Morning Glory, had been chartered to store up to 2,500 Toyota cars in the port of Malmö, southern Sweden.

Another large operator, Oslo-based Höegh Autoliners, said it was working on a number of inquiries from manufacturers.

Other operators are known to be considering or to have taken on storage work.

Until the third quarter of last year, no operator would have had the capacity to spare ships for such work.

While there are no exact figures yet for the scale of the downturn, demand is known to have dropped off sharply since September.

The downturn is particularly affecting the operators of smaller ships that are used to ferry cars from main hub ports to smaller ports.

Operators are increasingly calling directly at smaller ports, thus avoiding the need to trans-ship on to smaller vessels.

The slump in car demand is encouraging operators for the first time in many years to compete harder for business moving large construction equipment, new trains and other large loads they had neglected because vessels were so full of cars.

Carl-Johan Hagman, chief executive of Höegh Autoliners, said that the past five to six years had seen unprecedented growth for the sector, which had now come to an end. "For the first time for many years now, our sales force has got to get out and bring the cargo into the ships," Mr Hagman said.
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