Israeli-based shipping line ZIM Integrated Shipping Services (NYSE: ZIM) has signed a ten-year sales and purchase agreement with Shell for the supply of LNG fuel for ten LNG-powered newbuild containerships operating between Asia and the U.S. East Coast.
The agreement, signed with Shell NA LNG, LLC, is valued at more than $1 billion.
The ten ships will have capacity of 15,000 TEU and are expected to enter service in 2023-2024. They will be operated on ZIM’s flagship ZIM Container Service Pacific (ZCP) connecting China and South Korea with the U.S. East Coast and Caribbean. Shell may also cover other trades where the LNG-powered ships could be deployed.
ZIM operates an “asset light” fleet that is almost entirely chartered-in. The 15 ships will be chartered from Seaspan Corporation, a wholly-owned subsidiary of NYSE-listed Atlas Corporation (ATCO), which recently received an offer to take the company private. The ships are under construction at South Korea’s Samsung Heavy Industries.
ZIM said the emissions savings from using LNG will be about 20% less GHG emissions compared to conventional vessels.
“With the addition of significant LNG-powered capacity to our fleet, beginning in 2023, we have positioned ZIM as a leader in carbon intensity reduction among global liners,” said Eli Glickman, ZIM President & CEO. “We are pleased to execute this long-term supply agreement with Shell to secure LNG at competitive terms and look forward to partnering with a global industry leader such as Shell as we take an important step to ensure our fuel sourcing is well planned and of the highest quality. Our growing LNG-powered fleet will enable ZIM to be more carbon and cost efficient, while improving our competitive position, particularly on the strategic Asia to USEC trade, and allowing customers to reduce their carbon footprint.”
“We would like to congratulate ZIM for introducing the world’s first LNG fueled Very Large Container Ship (VLCS) fleet to operate on the Asia-North America shipping route. We are delighted to collaborate with them on their impressive efforts to reduce emissions in their maritime supply chain,” said Steve Hill, Executive Vice President, Energy Marketing at Shell. “Decarbonization of the shipping industry must begin today, and LNG is a lower emission fuel choice currently available in meaningful volumes, and via liquefied biomethane and liquified e-methane, offers a credible pathway to net zero GHG emissions.”
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