Hyundai Glovis sees car carrier shortage persisting, targets profitability recovery in Q3

Hyundai Glovis said the supply shortage in the pure car and truck carrier (PCTC) market will persist for now, as a surge in Chinese vehicle exports and the three-to-five-year lead time for new vessel deliveries make a supply glut unlikely despite market concerns.

Speaking on a second-quarter earnings conference call Thursday, the company said that while new PCTC supply would increase, scrapping demand meant oversupply was not a current concern. "Even if new vessels are ordered today, delivery takes three to five years," the company said. "With Chinese auto exports rising by nearly 70 percent, the capacity shortage will continue for now."

Hyundai Glovis also outlined a strategy to expand cooperation with Chinese automakers using its PCTC fleet as a foundation. As Chinese manufacturers accelerate overseas expansion into Europe and South America through knocked-down (KD) assembly operations, the company said it plans to actively capture the resulting logistics demand.

"European and Japanese carriers handle only maritime vehicle transport, but Hyundai Glovis can leverage its PCTC fleet to offer comprehensive logistics services," the company said. "As Chinese manufacturers enter Europe and South America, we are pursuing expanded cooperation covering KD parts logistics and overseas production logistics."

The company also presented a strategy to expand high-value cargo to improve profitability. Hyundai Glovis said buses, construction equipment, rail vehicles, defense equipment and energy storage systems (ESS) belong to the high-and-heavy cargo category, which commands the highest freight rates per cubic meter (CBM). "Current capacity constraints make it difficult to expand contracts indiscriminately, but we will steadily grow our high-margin cargo in step with fleet expansion," the company said.

The company said fleet expansion is proceeding as planned. Including two vessels delivered in the first half of this year, Hyundai Glovis plans to secure six ultra-large 10,000-CEU car carriers by year-end and expand its operating fleet to more than 110 vessels on a 6,500-CEU equivalent basis by the end of the year. In 2027, it expects to take delivery of nine additional vessels of 10,000 CEU or larger, bringing the fleet to around 120 ships by the end of next year.

The company doubled down on its view that the second-quarter earnings shortfall was driven more by oil prices than by any erosion in business competitiveness. "There is a lag between rising fuel costs and their reflection in freight rates," it said. "Profitability will recover from the third quarter as costs are passed through to rates." The company added that, without the oil price impact, second-quarter operating profit could have exceeded 550 billion won.

Hyundai Glovis Chief Executive Lee Gyu-bok said the mid-to-long-term growth strategy through 2030 presented at last year's investor day is on track. "Strengthening competitiveness through PCTC fleet expansion and growing our non-affiliate customer base are the core priorities," Lee said. He added that revenue growth from KD operations, non-affiliate logistics and non-affiliate PCTC business represents sustainable growth rather than one-off gains, and expressed confidence that improving global logistics conditions would provide an additional tailwind in the second half.

Meanwhile, Hyundai Glovis posted second-quarter sales of 8.71 trillion won ($6.27 billion), a record high on a quarterly basis. Operating profit fell 8.1 percent from a year earlier to 495 billion won, weighed down by higher fuel costs from rising oil prices. The company said the decline reflects a temporary lag in cost pass-through and forecast a profitability recovery in the second half.