Mediterranean Shipping Co (MSC) is seeking to convert about 40 conventionally fuelled containership newbuildings on order in China to run on LNG — at a potential cost of more than $1bn.

Shipbuilding sources said the liner giant wants to upgrade 10 ultra-large boxships and close to 30 neo-panamaxes that are due for delivery between the end of 2022 and 2024. The conversion targets include owned vessels of 16,000 teu and chartered units of 15,000 teu and 24,000 teu.

One shipbuilding expert estimated that MSC will need to pay an extra $35m per ship for the 24,000-teu vessels, and between $20m and $25m each for the neo-panamaxes, taking the total to around $1bn.

Yards involved reportedly include China State Shipbuilding Corp (CSSC)-controlled Hudong-Zhonghua Shipbuilding, Jiangnan Shipyard, Dalian Shipbuilding Industry Co, Guangzhou Shipyard International and privately owned Yangzijiang Shipbuilding.

MSC and shipyard officials declined to comment.

But one source said some yards could potentially decline the request and others face technical challenges.

Shipbuilding’s bull run means yards have sold most of their newbuilding berths and will have difficulty adjusting production lines to accommodate the changes, according to one player in the sector.

“Shipyards that are delivering the newbuildings by the end of 2022 will probably turn down MSC’s requests due to the early delivery dates,” the source said, adding that shipbuilders such as Yangzijiang, which has never delivered 24,000-teu ultra-large containerships before, will find it a challenge to convert the newbuildings to run on LNG as well as conventional fuel.

Major challenges

A shipyard executive said constructing a dual-fuel ship would require more time than a conventionally fuelled vessel, estimating that it could take an additional three months.

MSC employed former Maersk executive Soren Toft as CEO last year. Photo: Maersk

One shipbuilding technical manager added that upgrading a standard containership newbuilding would require major changes to the design and specifications, involving an engine upgrade, plus changes to cargo containment and fuel supply systems.

The Swiss-based group has arguably left it late in making decisions about how to decarbonise its fleet in the near term, compared with competitors such as CMA CGM, which aims to have 32 of its vessels powered by LNG next year.

Hapag-Lloyd is also looking to bring in LNG fuelling, claiming it is currently the only viable alternative available that will allow it to start reducing emissions. Engines and bunkering facilities to burn greener fuels are still to be developed and are not likely to be ready for a few years.

AP Moller-Maersk — MSC’s partner in the 2M Alliance — has also moved decisively to decarbonise, even if it has said it will leapfrog LNG and develop vessels able to burn greener fuels such as methanol and ammonia.

MSC will need to be able to provide cleaner-fuelled vessels for shared services with Maersk as bigger shippers seek to make their supply chains more sustainable.

Last year, MSC employed former Maersk executive Soren Toft as chief executive. He pioneered the use of low-carbon fuels at the Danish giant.

Meanwhile, MSC struck a long-term charter deal this week with Eastern Pacific Shipping for 11 LNG-fuelled, 15,300-teu containership newbuildings that will be delivered in 2022 and 2023.

A spokesman said that with the decarbonisation pathway still unclear and no new fuels available globally at scale to deploy across its fleet of 570 ships, the charter would help it improve its CO2 emissions performance while keeping options open.