We spoke last week to the management of one of the regions biggest ‘roll on roll off’ (RoRo) shipping companies to find out how many brand new vehicles are sitting in transit somewhere out there.
It is surprising (well looking at the current circumstances then not really) to find out that that there are more than 6,000 brand new vehicles sitting at Westports (of which some 1,800 units are sitting under shade in a bonded warehouse and the rest out in the open) and some 3,000 brand new vehicles are sitting in Northport. These stranded new vehicles include premium German cars and a number of soon to be launched Japanese SUV’s and MPV’s.
Now, all these ten of thousands of brand new vehicles have to pay daily parking rates of various rates to the Port authorities and the longer these vehicles sit idle the higher the restart cost will be for them. Let us explain. When a brand new car is parked for a period of time, the car battery (hybrid, petrol or diesel all included) will have to be replaced. If the car is parked for months, the tyres might need to be replaced due to flat-spots.
These warehoused vehicles will need to be refurbished and the costs will have to be borne by the individual car manufacturers. This adds to their costs and reduces their profit margins at a time when car buyers will be haggling for more discounts.
This is not all. There are also two fully laden roll on roll off ships sitting out at sea with about 2,000 new vehicles off the ports in Singapore and Thailand with brand new vehicles bound for Malaysia. With Malaysia under full lockdown, both ships cannot dock in Malaysia to unload their new vehicles and so these vehicles continue to sit on the RoRo ship with the crew waiting for lockdown to end. Meanwhile the cost per day to the shipping lines is a hefty USD12,500 per day (RM54,423) per ship and this cost cannot be transferred back to the car brands or the government of Malaysia.
The shipping lines will have to absorb this cost. Please note that we are talking to just one automotive shipping company. There are a few others in Malaysia handling motorcycles, trucks, bus chassis, completely knocked down parts for car assembly plants in Pekan, Juru, Johor and Selangor.
On the ground in Malaysia, the trucks and trailers that are used to move vehicles to various showrooms around the country are also parked and waiting. Drivers salaries are still running, installments on the trucks are still running and parking charges are also still running.
The automotive business from a different perspective shared with you to better understand the implications on the global and Malaysian auto industry in coming months.
Good news just in at the time of publishing, all ships will be allowed to dock and unload their cargo in Malaysia starting this morning as the many vehicles that have been sitting at the port warehousing can now be moved by trucks to the many various car brand showrooms and stockyards nationwide.
