Car carrier owner Wallenius Wilhelmsen has scooped a big new transport deal in South Korea.

The Oslo-listed company said the multi-year $290m agreement has been reached with the country’s leading construction machinery company.

The shipowner has not named the client, but big names in the sector include Hyundai Construction Equipment Co and Doosan Infracore.

The firm period of the shipping contract is three years, plus a two-year extension option.

The value is based on expected volumes over the first three years.

The contract began this month, with rates in line with current market levels, Wallenius Wilhelmsen said.

“This multi-year contract further strengthens our partnership with one of our key customers in the high and heavy segment, extending predictability not only for us but also for the customer,” added Pia Synnerman, the company’s chief customer officer.

The deal includes the Norwegian group’s reduced carbon freight service, through which ships use a B30 biofuel blend to cut Scope 3 supply chain emissions by between 20% and 25% for charterers.

Synnerman said: “We are witnessing a transformation in customers’ sense of urgency regarding the need to decarbonise their supply chains. Customers are partnering up with us and are increasingly committed to securing more sustainable solutions, such as biofuel.”

Fearnley Securities said the shipowner is renewing two-thirds of its contract volumes for 2023 and 2024, with average deals lasting three years.

Terms improving

The investment bank said improving contract terms through volume commitments are adding to earnings visibility, as more than 90% of its business is contracted.

Fearnley remains confident about strong profit in the coming years.

Analysts Oystein Vaagen and Fredrik Dybwad said the next highly significant contract renewal is the Hyundai/Kia deal in the second half of 2024.

In December, the company said it was rerouting all its vessels planned for Red Sea transit to avoid the region due to the worsening security situation.

Its ships will reroute via the Cape of Good Hope.