Trump tariffs loom large for ro/ro business

Big Ships Keep Ro/Ro Rolling

The Port of Baltimore recently announced it set several new records in March, including the best March on record for cars and light trucks, at 59,052 vehicles, and the most roll-on/roll-off farm and construction machinery cargo tons since June 2012, at 96,535. Growing ro/ro numbers like that have been facilitated by investments in recent years in much larger vessels on the part of ro/ro carriers—much like their container counterparts.

The largest Pure Car and Truck Carrier (PCTC) ship in the world is the Höegh Target, with a capacity of 8,500 CEUs (car equivalent unit). The Wallenius Wilhelmsen Logistics’ HERO (High Efficiency Ro/Ro) class vessels boast a capacity of around 8,000 CEU. Both were built to exploit the possibilities of the expanded Panama Canal, which opened in 2016.

Much as container carriers have begun to deploy mega-ships that the new locks can accommodate, so have vehicle and equipment carriers followed suit. But, just as some have questioned whether container lines should have invested in oversized ships, the wisdom of the ro/ro carriers will also be questioned in the event of a slowdown in the vehicle trades—especially in the era of the Trump tariff.

Vessel size is not the only resemblance between the container and ro/ro businesses these days. Both fleets suffer from an overcapacity that has led to downward pressure on rates, and that has turned up the heat on competition. In today’s environment, container carriers are competing not only with each other but with bulk and breakbulk carriers as well. Many ro/ro carriers, too, are competing for a diversity of cargo, including breakbulk and lift-on/lift off (lo/lo) shipments.

“Larger vessels figure into the equation the same way they do for container carriers,” said Frank Camp, director of non-containerized sales at the Port of Jacksonville. “They are trying to lower the cost per unit so the carriers are going as big as they can. If they are sailing ships with more capacity they can potentially deliver more cargo.”

“In the breakbulk market, ro/ro competes with container vessels, heavy lift, and multi-purpose vessel types,” added Simon White, head of trade management ocean operations at Wallenius Wilhelmsen Logistics, “all of which are experiencing their own issues related to overcapacity. WWL has invested heavily across its entire fleet to be able to provide extended capabilities for breakbulk cargo.”