China’s booming auto exports have put significant strain on export capacity

n the first half of this year, China’s auto exports continued to surge, revealing a persistent mismatch between automobile supply and demand, resulting in short-term capacity constraints that need to be addressed.

Automobile exports have emerged as a significant highlight in the first half of China’s foreign trade data. According to the General Administration of Customs, China’s trade in goods reached a value of 20.1 trillion yuan during the first half of the year, representing a 2.1% increase. Meanwhile, data from the China Association of Automobile Manufacturers showed that China’s automobile exports reached 2.14 million units, an impressive growth of 75.7% during the same period.

The booming automobile exports have led to logistics and transportation challenges, particularly with constraints on export capacity. For instance, there have been difficulties in booking ro-ro ships and facing high freight costs. While container booking offers a relatively easier and cheaper option, it comes with complexities in boxing operations and potential cargo damage. Additionally, China-European liner transportation suffers from insufficient cabin space and higher costs.

The tight automobile export capacity is a result of both supply and demand factors. Over the past ten years, the automobile shipping capacity has remained relatively stable or even slightly decreased, while China’s automobile exports have experienced substantial growth in the last three years, driving up the demand for export capacity.

China’s auto exports have witnessed remarkable growth, achieving three consecutive years of substantial increase: surpassing South Korea in 2021 to become the world’s third-largest auto exporter, surpassing Germany in 2022 to become the second-largest, and in the first quarter of 2023, surpassing Japan to become the world’s largest auto exporter.

All categories of automobile exports, including passenger cars, commercial vehicles, and new energy vehicles, have experienced rapid growth. For instance, in the first half of the year, China’s passenger car exports increased by 88.4% year-on-year, while new energy vehicle exports grew 1.6 times.

However, the high-speed growth of new energy vehicle exports has also brought challenges, notably in automobile export transportation links. The shortage of automobile ro-ro ships has led to record-high daily rent prices. To cope with the situation, some companies have turned to container freighter transportation, which offers more availability and lower costs but requires complex crating operations to ensure cargo safety.

In conclusion, China’s booming auto exports have put significant strain on export capacity, and addressing the challenges of capacity constraints has become crucial. Exploring pragmatic solutions, such as optimizing existing transportation modes and strategically entering overseas markets, will be essential to sustain the growth and success of China’s automobile export industry.

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