TWO of China’s biggest automakers are so determined to ensure their cars make it from factories on the mainland to anyone who wants to drive them they’ve bought their own ships.

BYD Co., which only makes electric and hybrid cars, is going the extra length to avoid any last mile supply chain snarls, ordering at least six ships in October, each with the capacity to carry 7,700 cars, for 5 billion yuan (US$710 million).

SAIC Motor Corp., which already operates the world’s fifth-largest shipping fleet via transport arm SAIC Anji Logistics Co., has a tender out for seven new carriers that can each hold 8,900 vehicles.

Representatives for SAIC Motor and BYD declined to comment.

With the vessels in question not expected to come online for several years yet, it’s a bold bet on lasting global consumer demand for Chinese cars. China recently overtook Germany as the world’s second-largest auto exporter, sending almost 2.6 million vehicles abroad in the first 10 months of 2022, eclipsing 2021’s volumes.

Even October’s unexpected drop in demand for Chinese goods didn’t derail that upward trajectory with car and chassis exports growing 60% from a year earlier to 352,000 units in the period, or a record high of US$7.1 billion.

But while auto exports have surged, “the number of car carriers globally has barely increased,” said Xing Yue, the head of Clarksons Research Services in Shanghai, a unit of the world’s largest ship broker.

Shipping costs have skyrocketed and there’s now “lots of investment pouring into building new ships for vehicle transport because of this demand-supply mismatch.”

The lack of vessels is stretching an auto supply chain already worn thin by a scarcity of semiconductors, pandemic-related labor shortages and months of port congestion.

Daily rates for vessels that can carry up to 6,500 cars (commonly known as roll-on/roll-off ships, or ro-ros) have surged to about US$100,000 a day as of October, more than tenfold 2020 levels and the highest on record since at least 2000, according to Clarksons.

With all the last leg supply chain disruptions, it makes sense for Chinese automakers to strike out on their own, according to Tobias Bartz, chairman and chief executive officer of Rhenus Logistics. Ships have become “such a scarcity,” he said on the sidelines of a conference in Singapore last month.

The shortage has meant that some vessels almost 30 years’ old are still operating instead of being scrapped, raising the risk of accidents. Trying to extinguish any lithium-ion battery fires that occur may also be harder. (SD-Agencies)