It’s pedal to the metal, as automakers embark on a road trip featuring double-digit growth for production and sales. But the real question is not how many vehicles are made, but how they are delivered. The world’s automakers are churning out vehicles at a record clip. The crash of 2009 is now clearly in the rearview mirror, and the industry is gearing up for a decade like no other. But the global auto industry that went into 2009 isn’t the one that emerged. Great changes have taken place as the industry re-engineered itself. Not surprisingly, the new and shiny car industry has shifted auto production to emerging countries like Thailand, Malaysia, India, Mexico and the new big kid on the block, China. In response the global vehicle carriers running their massive PCC/PCTC (Pure Car Carriers/Pure Car and Truck Carriers) have adjusted, and a host of new trade lanes mixing and matching vehicle loads has emerged. Emerging Patterns Nowhere is the change in business more apparent than with Japan’s vehicle exports. Back in 2008 before the crash, Japan exported 6.24 million vehicles. North America at 2.3 million units was the main destination with Europe at 1.56 million vehicles coming in a distant second. Fast forward to 2013 and North America imported around 1.88 million vehicles from Japan, less than in 2002. Europe has even fallen off farther at 617,000 vehicles. Overall Japan exported around 4.2 million vehicles in 2013, off nearly two million from the 2008 high and virtually the same number as in 2002. South Korean exports topped three million in 2013, a million units up from 2009. It is the shift to emerging countries that has really changed the vehicle export patterns. In 2006, the main emerging automakers exported less than 3 million cars globally. Last year they topped 5.2 million units. Thailand at just over one million vehicles and Mexico at over 2.4 million units accounted for most of the exports from emerging countries. However China has for the last two years exported over 900,000 vehicles and is poised to top a million vehicle exports this year. Mexico is an especially important player in the North American auto market. The Port of Veracruz is arguably the largest ro-ro port in North America handling nearly a million units a year. Around 70% of the total is exports for the US market, and the port is nearing capacity. Vehicle production in Mexico is expected to grow from 3 million to nearly 5 million by 2018, with nearly 80% of the total designated for export. Rail based exports are expected to rise from just under 1.7 million units to 2.8 million by 2018, while ocean moves would increase from approximately 830,000 units to 1.4 million. How to handle this project flow of vehicles is a quandary for the automakers. It’s questionable whether Mexico’s rail system will be able to handle the increased volumes. One solution being discussed is short sea ro-ro. The advantage of the short sea system is that a variety of entry points can be used ranging from the West Coast ro-ro ports like San Diego, LA and Long Beach, Richmond, Hueneme and Portland to eastern alternatives like Houston, Tampa and Jacksonville. While the short sea “solution” might provide some relief to choke points in the Mexican supply chain, the overall trend is towards larger more fuel-efficient vessels. The widening of the Panama Canal is leading more carriers to order Post-Panamax ro-ro vessels that will have capacity for around 8,000 car equivalent units (CEUs) compared to the current capacity limits of 6,500 CEU. Similar to their ultra large containership cousins, the UL-Ro-Ro vessels, while reaping the benefits of “economies of scale” are constrained by fewer ports of call (especially in Japan) and the issue of weak back-hauls. All these factors contribute to lower utilization rates which translates to a poorer return on investment and narrower margins. One trend that is helping balance the routings is the surprising surge in US vehicle exports. The Port of Charleston is the extreme case with the Spartanburg BMW plant using the port primarily for exports. Grays Harbor in Washington State is another example. The Pasha Group (who specialize in vehicle processing) picked the site specifically for vehicle export, mostly Chryslers in the Grays Harbor case. Baltimore is nearly 50-50 outbound-to-inbound as it is in Jacksonville. It is a growing trend. Recently, the Portsmouth Marine Terminal (PMT) in Virginia was brought back on-stream, albeit temporarily to handle the exports of Chrysler SUVs to China. Imports are still growing ahead of exports, but with so many foreign automakers shifting production for export to the US, backhauls are becoming a little less problematical than they were a decade ago when nearly everything was inbound and very little freight was available for export. Wheels Keep on Turning A report issued in May by the VDA (Verband der Autobilindustrie) in Germany says the wheels are still turning on the global auto boom. The three large automotive markets, US, Western Europe and China, all showed growth. The year-on-year auto sales in Western Europe were up 4%, while China was up 14% and the US 8%. The growth in the big three markets offset slumping sales in Japan and the emerging markets such as Russia, Brazil and South America in general. Depending on the source, 2014 is shaping up to be a record year for seaborne auto/truck moves, possibly cracking the 16-million unit barrier (over 20 million in total vehicles), and it doesn’t appear that the trend will slacken. Early forecasts for 2015 show an even greater volume of vehicle moves, even with some contraction in emerging markets. While the routes may be changing as production shifts away from traditional auto manufacturing sites, the overall trend for larger volumes of vehicles moved by ship is still rolling.