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Seaspan Cancels Shipbuilding Order Over Unmet Contract Conditions

Mike Schuler
Total Views: 5786
September 15, 2022

Containership leasing company Seaspan Corporation has voided contracts for four LNG-powered containerships on order “due to certain conditions” not being fulfilled.

The shipbuilding order, which was subject to certain closing conditions, was announced in May and called for four 7,700 TEU capacity ships with dual-fuel liquefied natural gas capability.

The agreement was signed with an undisclosed major shipyard with deliveries planned in the third and fourth quarters of 2024. The newbuilds were also backed by long-term charters with an undisclosed liner customer commencing upon delivery.

Today’s announcement came with a warning of potential for legal action.

“Due to certain conditions in the contracts not being fulfilled by the counterparty, the contracts have become null and void. Seaspan has notified the relevant parties and has reserved its rights to claim against the counterparty in relation to the contracts,” Seaspan said in a press release.

Strong demand for newbuild containerships during the pandemic has left little wiggle room for global shipbuilders primarily in Asia, while labor issues and increasing costs for key materials have also added to challenges.

Industry publisher Tradewinds reports the shipbuilding order was signed with K Shipbuilding in South Korea and valued at $520 million, or $130 million per vessel.

Seaspan is a wholly-owned subsidiary of NYSE-listed Atlas Corporation.

As at June 30, 2022, Seaspan’s operating fleet consisted of 127 vessels with a total capacity of 1,156,630 TEU, and an additional 63 vessels under construction, increasing total fleet capacity to 1,919,630 TEU, on a fully delivered basis.

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