Greek Shipowner Goes All In, Places $1.2 Billion Containership Newbuild Order

Edith Maersk, a 13,500 TEU containership, image: Maersk Line

In their Q1 report, Maersk Line reported a 9 percent decline in freight rates along with a 31 percent increase in bunker rates.  This added up to a billion dollar negative change in profit year on year.  Singapore-based NOL Group reported similar data with a quarter billion dollar loss in Q1 2012.  You might think ship owners and banks might be extraordinarily cautious about pushing ahead with new orders for container ships, but you would be incorrect in thinking that.

Hyundai Heavy Industries announced today a seemingly ridiculous USD $1.2 billion newbuild order for ten 13,800 TEU containerships for a Greek ship owner.  Once built, these ships will then be chartered out to Evergreen Marine.

Measuring 368 m in length, 51 m in width, and 29.9 m in depth, these ships are scheduled to be delivered from the second half of 2013 to the second half of 2014 and will use 10% less fuel compared to existing similar class containerships.

Perhaps the following graph might help explain the rationale behind this.  These big containerships would most definitely be used on long-haul voyages such as between Europe and China and there’s been a rather meteoric resurgence in 40-foot container freight rates lately on the Asia-Europe trade route.

Since LNG carriers, Drillships and semi-submersible drilling rigs have been the bright spot of the global shipbuilding market recently, Hyundai Heavy’s winning of this order was likely an unexpected and welcome surprise.  An official at Hyundai Heavy said, “These orders are noteworthy considering the current sluggish shipbuilding market. With the extensive know-how and technology we have accumulated by building more than 500 containerships over the last 40 years, we will continue to build ships tailored to the needs of our clients and the market.”

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