Booming Japanese Car production in Thailand boosts shipping companies fortunes

Thailand became Toyota’s third biggest global production hub last year due to Toyota’s success in selling Thai-made vehicles to Middle East and Latin American countries, is fueling a boom for international shipping companies.
Nippon Yusen K.K., the world’s biggest operator of the roll-on, roll-off ships and Toyota’s biggest customer, forecasts it will carry 3.45 million vehicles this year, the most in five years. Another shipping fleet Mitsui O.S.K. which ships for Nissan and Honda has also predicted record volume for cars.

Toyota currently has three factories in Thailand and other Japanese car manufacturers are investing heavily in Thailand, both Honda and Nissan plan to spend a combined $850 million to boost capacity in the country this year. All of them use the country as an export base for other developing countries, in contrast to China, where they produce purely for the domestic market with 750,000  vehicles  produced last year  in China by Toyota alone.

“Thailand is a flourishing market for shipping lines,” said Ryota Himeno, an analyst at Barclays Securities Japan Ltd. “Its ports have been upgraded. It’s also close to emerging economies in Asia.” Other international car companies including Ford and Hyundai also use low-cost vehicle production hubs in countries such as Thailand and India, boosting the need to ship vehicles to import markets such as Australia and New Zealand.

The global fleet of car-carrying vessels such as the so-called roll-on, roll-off ships, or RoRo, increased to 730 vessels as of this month, compared with 700 at the end of 2011, according to data compiled by Bloomberg. Nippon Yusen, also known as NYK, plans to increase its fleet of car carriers to 130 by March 2017, from 121 at the end of last March. In October, it ordered four new vessels, which are due to be completed by 2015. These vessels will be capable of transiting the Panama Canal when the third set of wider locks becomes operational. Each will be about 200 meters long, and capable of carrying 7,000 vehicles.

“NYK expects the worldwide demand for pure car and truck carrier transport to steadily expand,” the company said in an Oct. 15 statement. NYK’s ships call at Thailand as many as 150 times a year, spokesman Koji Sasaki said.
Thailand’s total vehicle output may rise 30 percent to 3 million units by the end of 2015, according to Macquarie Group Ltd. Toyota, which has three factories in the country, exported almost half of all the vehicles it built there last year.

“The biggest growth driver for Thailand’s automotive industry is the expansion of export capacity,” Macquarie analysts Chak Reungsinpinya and Clive Wiggins wrote in a report in December. “Thailand is now one of the fastest-growing global auto markets and production centers.” Thailand has fewer labor issues compared with China or India, said Koji Endo, an auto analyst at Advanced Research Japan, who referred to the Southeast Asian country as the region’s Detroit.

“Thailand’s emergence as a car-export nation is a big boost to Japanese shipping lines,” said Minoru Matsuno, president of Value Search Asset Management Co., a Tokyo-based investment advisory firm.

Source: The Japan Times

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