Höegh Autoliners, like other car-carrier operators, has had an enjoyable few years of booming demand met with scant capacity, leading to a flurry of newbuild ordering.
But with considerable exposure to the US export market, and an orderbook of advanced ammonia-fuelled newbuilds on the way from Chinese yards, Höegh could now be facing a rapid reversal of fortunes.
US car exports form a high proportion of Höegh’s business, CEO Andreas Enger admitted, but he was keen to reassure the industry that the changes would be manageable.
“We have about 2,500 port calls a year,” he explained. “A little more than 200 of those are in the US, so less than 10%. So it’s a significant, but not a dominating part of our business.”
On top of the week’s tariff chaos, the US Trade Representative (USTR) is expected to bring in punitive port call fees for Chinese-built ships, in a move that could increase costs yet further – around 25% according to Xeneta estimates. Recently, Xeneta senior shipping analyst Emily Stausbøll also advised to expect Covid-like levels of disruption as ocean carriers reshuffled services and cut down their number of port calls.
Should the USTR measures go through, elements of Höegh’s fleet will be eligible to call in the US; but none of the line’s larger, more technologically-advanced, ammonia-fuelled vessels from China.
“We could serve the American market without using Chinese vessels,” Mr Enger said. “They would get less cost-effective, less fuel-efficient, less environmentally friendly and older vessels, but cargo-wise we could do it.”
Like many, Mr Enger does not believe the tariffs will be permanent.
“I can’t imagine that Trump’s objective is to destroy the US economy,” he said, reiterating his faith that carve-outs, pass-throughs and other exceptions will be agreed over the next few months.
“It depends a lot on whether this is a process of negotiation, where those that are willing to support Trump in investing in building up manufacturing get the opportunity to continue to stay in business and do just that. If you assume that this is a crazy kind of thing, totally disconnected from reality, that it’s intended to destroy the world, then it will obviously be bad. I’m leaning towards the former.
“If it ends up being executed at that level with those rates and with no adjustments and no fine print, it’s quite damaging. But you don’t need me to say that — every economist in the world is saying that.”
