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Hyundai Glovis turns to China for contracts on impending U.S. tariffs on car carriers

Published: 07 May. 2025, 17:50 Updated: 07 May. 2025, 20:25

Export-bound cars are lined up at the East Pier of Hyundai Glovis’ Pyeongtaek International Terminal in Poseung-eup, Pyeongtaek, Gyeonggi, on March 31. [NEWS1]

Hyundai Glovis is ramping up efforts to secure long-term shipping contracts with Chinese automakers in response to a U.S. tariff set to take place in October that threatens to undercut its car carrier profitability.

Beginning Oct. 14, the Office of the United States Trade Representative will impose a port entry fee of $150 per car equivalent unit (CEU) on car carriers not built in the United States. For a typical 6,500 CEU vessel, that amounts to $975,000 per entry.

The global fleet of car carriers stood at 770 as of last year, according to Clarksons Research's maritime and shipping data.

Only one of the world’s carriers was built in the United States, highlighting the disproportionate burden forthcoming U.S. maritime policy changes will impose on foreign operators, the Financial Times (FT) reported Tuesday. With only one U.S.-built vessel in the mix, 769 ships will fall under the new tariff.

The FT estimated that of the 29 million vehicles transported globally last year, roughly 4.6 million were destined for the United States. That volume could translate into an additional $1.8 billion in annual fees for the car shipping industry.

Hyundai Glovis, which operates 97 car carriers — 35 owned and 62 chartered — is not immune to the impact. The company, along with Japanese players NYK Line, MOL and "K" Line and European operator Wallenius Wilhelmsen Ocean, holds a dominant share of the global car shipping market.

In the first quarter of this year, Hyundai Glovis reported 7.22 trillion won ($5.2 billion) in revenue, of which 1.01 trillion won came from its car carrier business, accounting for 13.9 percent.

Routes to and from the United States made up 34 percent of its car shipping volume in 2023. The company is the exclusive transporter of Hyundai Motor and Kia’s exports to the United States, and the new tariff is expected to weigh heavily on its margins.

The brand new BYD Shenzhen roll-on/roll-off ship, with 9,200 standard car slots, prepares for a maiden voyage to Brazil after being loaded with over 7,000 BYD electric cars in Taicang City, Jiangsu Province, China, on April 27. [EPA/YONHAP]

To offset potential losses, Hyundai Glovis is shifting its focus toward securing long-term contracts with other automakers, particularly those in China. During an earnings call on April 30, the company noted increased engagement with Chinese automakers like Zeekr and Li Auto.

“Chinese carmakers are expanding globally, as seen at the Shanghai Auto Show. We are in direct talks with several companies,” a Glovis official said. “Most contracts from Chinese companies are short-term, but we’re working toward signing deals lasting more than a year.”

Data from the China Passenger Car Association shows Chinese car exports rose 22.8 percent on year to 6.41 million units in 2024, driven mainly by demand in Europe, the Middle East and Southeast Asia. Hyundai Glovis aims to secure part of that shipping volume to mitigate losses from the U.S. tariffs.

A total of 16.5 percent of Hyundai Glovis’ car carrier operations originated in China during the first quarter of this year, up from 12 percent in last year’s fourth quarter.

Analysts attribute the increase in part to a memorandum of understanding signed with Chinese electric vehicle maker BYD in September 2024 to share vessel capacity.

Still, industry experts remain cautious. Hyundai Glovis needs long-term contracts to ensure stable returns, but many Chinese automakers rely on spot contracts and short-term bidding to meet fluctuating logistics needs.

“Chinese automakers are likely to prioritize domestic shipping firms as part of their industrial policy,” said Kwon Yong-joo, a professor of automotive transportation design at Kookmin University. “That means Glovis may find it difficult to significantly expand its share of the Chinese market.”

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
KIM HYO-SEONG [[email protected]]