Liner operator Pacific International Lines (PIL) is said to have ended a seven-year order drought with a deal for up to four neo-panamax container ships at Chinese state-owned Jiangnan Shipyard worth about $640m.
And shipbuilding sources said the reborn Singaporean outfit is set to turn its attention to contracting midsize newbuildings once it completed the neo-panamax order.
PIL last ordered newbuildings in 2015, when it contracted Yangzijiang Shipbuilding to build 12 vessels of 11,900 teu at a cost of more than $100m per ship.
Shipbuilding sources said PIL has now ordered two firm LNG dual-fuelled vessels of 13,000 teu. The deal includes an option for two additional ships.
Jiangnan Shipyard officials were not available for comment. PIL declined to confirm the order, choosing not to discuss specific plans.
Shipbuilding sources said Singapore-listed Yangzijiang Shipbuilding — formerly PIL’s favoured yard — and China State Shipbuilding Corp’s Jiangnan Shipyard were the final two yards competing for the newbuildings.
“PIL did not pick its favourite shipyard Yangzijiang Shipbuilding but chose Jiangnan,” said one shipbuilding source. “This is the first time that it is working with the Shanghai-based shipyard.”
TradeWinds has learned that Yangzijiang offered a lower price than Jiangnan. However, Jiangnan could deliver the ships earlier.
Brokers said the LNG containment system that Yangzijiang proposed could have “caused the shipyard to lose out to Jiangnan”.
Yangzijiang offered type-B LNG tanks for LNG dual-fuelled vessels but PIL had been seeking GTT Mark III Flex membrane containment systems, which Jiangnan could offer.
Sources said PIL is paying almost $160m each for the ships, which will be fitted 14,000-cbm membrane-type LNG bunker tanks. It is slated to take delivery of the firm vessels at the end of 2024.
Brokers said PIL’s newbuilding programme will not end with the order of the 13,000-teu vessels. They said the company is keen to order a series of dual-fuelled 7,000-teu container ships.
“We understand it will start working on the midsize newbuildings once it completed the order of the neo-panamaxes,” said a broker.
PIL was established in 1967 and was privately owned by the Teo family until last year when the financially cash-strapped company underwent a major restructuring.
The restructure saw Heliconia Capital Management — a subsidiary of state-owned investment company Temasek — take a majority stake of the liner outfit by investing $600m.
Online database VesselsValue shows PIL sold 24 vessels in 2020 before Heliconia’s bailout. It sold nine ships last year, of which two were multipurpose vessels and one a supramax bulk carrier.
In December PIL reduced its debt by $1bn, by making an early payment to creditors that were subject to the scheme of arrangement which the company entered into as part of its restructuring in the first quarter of 2021.
PIL has said the repayment would leave it “a well-capitalised company with a solid financial structure and resilience to address and mitigate the cyclical nature of the industry going forward”.
Alphaliner ranks PIL as the 12th-largest liner company in the world, with container vessel capacity of 266,667 teu. It controls 83 vessels, of which 56 are owned and 27 are chartered.
