A Chery Automobile Co Ltd vehicle being loaded on to the new MV COSCO Tengfei car carrier, which can hold up to 5,000 cars and trucks. [Photo / China Daily]

COSCO's second massive automobile transporter has begun operations

SHANGHAI - China's domestic carmakers now have a new option to ship their vehicles to overseas markets, after a cargo vessel capable of carrying 5,000 cars began operations.

The carrier will significantly cut shipping costs and reduce carmakers' heavy reliance on foreign logistics companies, according to senior executives of China Ocean Shipping (Group) Co (COSCO).

The MV COSCO Tengfei car carrier, which can hold up to 5,000 cars and trucks, departed from Shanghai's Waigaoqiao port in the Pudong New Area on Saturday. This is the second delivery by this type of vessel following a successful shipment by MV COSCO Shengshi in February.

Designed by the Shanghai Design Institute and manufactured at COSCO's Zhoushan shipyard south of Shanghai, COSCO Tengfei and COSCO Shengshi will deliver Chinese-made cars to South American countries and carry European cars on the return trip, Han Guomin, chief executive officer and director of COSCO Shipping Co Ltd, told China Daily.

The carrier, 182.8 meters in length, 32.2 meters in width and 14.95 meters in depth, has a deadweight tonnage (DWT) of 14,500. Equipped with three adjustable decks, it can hold cars of different heights.

According to Han, it will take COSCO Tengfei 28 days to reach its destination, Santos in Brazil. More than 4,400 cars made by Chery Automobile Co Ltd, Anhui Jianghuai Automobile Co Ltd (JAC), Sany Heavy Industry Co Ltd, and Lonking Holdings Ltd will be shipped in this journey.

Labor and material costs in the Chinese shipbuilding industry are lower than those in Japan, South Korea and European countries, where COSCO previously rented car carriers, so the shipping costs will fall once the company manages its own fleet, according to Han. "In the following years, China is entering a peak season of exporting cars, and the car carriers are built to serve such demand," said Han. Each of the two ships costs $53 million.

According to Xu Lirong, vice-president of COSCO Group, the company started to develop its own carriers after signing a 15-year car shipping strategic cooperation agreement with 17 domestic carmakers, including Chery, JAC and Chang'an in 2006.

"Even during the most difficult period of the global economic crisis, COSCO never gave up the development plan," said Xu.

Chinese car companies exported 72,100 units in May, a rise of 6.79 percent month-on-month and 53 percent year-on-year. That's a record high, according to figures released by the China Association of Automotive Manufacturers on June 9.

During the first five months of 2011, China exported 225,400 cars, an increase of 56.7 percent over the same period in 2010.

Among them, the top five brands are Chery with 55,200 units, Chang'an Auto with 35,100 units, JAC with 28,100, Great Wall Motor Co Ltd with 26,800, and Dongfeng Motor Group Co Ltd with 24,600.

Chinese cars are becoming more popular in many countries, and the new car carriers will secure delivery schedules and lower shipping costs. Meanwhile, the positive elements will lead to more solid cooperation with our foreign clients and more mature marketing strategies, said She Cairong, vice-general manager of JAC.

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According to JAC, South America has become the company's most important export destination, and currently accounts for more than half of the Anhui-based company's total export volume.

"There are two things every Brazilian man dreams of: One is football and the other is cars. They know cars well and have high quality demands. In this sense, Chinese cars can serve their demands well," JAC's She said.

As the world's biggest car market, China consumes the overwhelming majority of the cars made in the nation. "Only about 5 percent of the cars are exported to the Middle East, Southeast Asia, Africa and South America," said Xu Xiaofeng, an industrial analyst from Central China Securities.

However, cars made in China are also becoming popular in many developing economies and emerging nations, and this will provide good opportunities for both car carrier construction and domestic carmakers, added Xu.