The wave of giant containership newbuildings is showing no sign of breaking, with Cosco Shipping Lines (CSL) looking for mega-max vessels.
Industry sources said the Chinese liner operator, a unit of state-controlled giant China Cosco Shipping, has approached domestic shipyards for a series of 21,000-teu newbuildings. The exact number is not clear.
The move deals a blow to the hopes of rival lines worried about overcapacity on the faltering Asia to North Europe trades, where ships of this size are normally deployed.
Testing the water
One shipbuilding player said CSL's enquiry is still at an initial stage and it will be some time before any deal is done.
It is believed that major shipbuilders, such as Hudong-Zhonghua Shipbuilding, Jiangnan Shipyard and Dalian Shipbuilding Industry Corp, are among those that have been approached, in addition to the Chinese shipping giant's own Cosco Shipping Heavy Industry.
“It is looking at scrubber-fitted and dual-fuel ships,” said a shipbuilding source.
Any order will keep CSL at the forefront of operators with one of the largest delivery schedules of big boxships.
The Chinese firm has 17 mega-max newbuildings of between 19,000 teu and 21,000 teu due to be delivered.
Four of the 21,237-teu ships are expected in the coming weeks, beginning with the delivery of the Cosco Shipping Galaxy (built 2019).
Record-breaking boxship
Last week, Cosco unit Shanghai Ship & Shipping Research Institute (SSSRI) revealed a design for what could be a record-breaking 25,000-teu boxship.
It is not known if CSL will use the design developed by SSSRI for its planned order, or opt for designs proposed by individual shipyards.
CSL officials did not reply to requests for comment.
One industry market source expressed surprise to hear of the company’s interest in building mega-max containerships, as the outlook for global trade is not encouraging.
If Cosco is to order the ships, it may further delay the recovery of the containership market
Boxship source
The prospective order comes when freight rates between Asia and North Europe are in free fall.
Rates on the trade have dropped by about one-third so far this year to $1,431 per 40-foot container, according to the World Container Index.
The average size of a vessel on the trade has doubled from 7,000 teu in 2007 to more than 15,000 teu, according to Alphaliner.
But the source added that existing containerships of over 20,000 teu have difficulties filling their cargo capacities and, as such, some liner players have deployed these vessels on other trade routes.
Recovery delay
“If Cosco is to order the ships, it may further delay the recovery of the containership market,” the boxship source said. “These big ships are meant for the Far East to Europe trade routes and are not flexible.”
Other carriers have reacted to the downturn in rates by deploying some of their largest vessels on lower volume trades.
“We have seen Maersk Line and Mediterranean Shipping Co deploying their first mega-max between Asia and the Mediterranean,” the containership source said.
CSL has announced that it will be deploying seven mega-max ships next month as part of an upgrade to one of the Asia-Middle East strings run by the Ocean Alliance, which includes Evergreen, CMA CGM, and Orient Overseas Container Line.
“If Cosco has the guaranteed volume of cargoes for these 21,000-teu newbuildings that it is enquiring to order, then this ship type will work for the company,” added the containership market source.
