Zhoushan Changhong International Shipbuilding Co has contracted South Korea's Doosan to build five main engines to kick start a revival of Changhong's Ouhua Shipbuilding.
Chinese media report the contract signed last week covers main engines for two 1,700-teu, one 3,100-teu and two 5,300-teu containerships that were left unfinished at the time of Ouhua's bankruptcy.
A total of eight ships were left unbuilt: three 1,700-teu ships for Nord Reederei, one of Ouhua's biggest clients over the years; two 3,100-dwt ships for Arkas Denizcilik; two 5,300-teu ships for Zodiac; and a vessel for Dutch owner Spliethoff.
Tough sell
Chinese industry sources believe the restarted ships will be a tough sell as the Zhoushan Islands-based yard's boxship products were always more popular with European tonnage suppliers than with Asian shipowners or liner companies.
TradeWinds reported in August that Changhong, with the encouragement of local authorities, had paid CNY 958m ($136m) for bankrupt Ouhua in order to support the local economy.
The deal included equipment, land and the unfinished ships when the yard ceased operations in May 2018.
I think they can definitely sell those ships. Their purchase price for the yard was very low, so they will sell because they can price them cheap enough for German or Greek investors
Source in China
According to Chinese maritime news provider Eworldship, the Changhong deal will enable Ouhua to continue with its core staff in place for the sake of continuity.
Track record
Before its collapse, Ouhua had a track record as a builder of containerships up to 5,400 teu, multipurpose (MPP) vessels and bulkers up to kamsarmax size.
"I think they can definitely sell those ships. Their purchase price for the yard was very low, so they will sell because they can price them cheap enough for German or Greek investors," said a Chinese source familiar with the yard.
"You can say that Ouhua always had a good reputation, but if you look at their history, you see that they had no customers from Asia. The buyers were well known names, but Asian liner operators stayed away because the fuel consumption was not so good."
Ouhua's customers did include owners that traded their own ships, such as Swire's China Navigation, the source said. But he pointed out that China Navigation brought its own design for its MPP vessels.
Future prospects
The same source was pessimistic about the future prospects for a small containership specialist focused on European tonnage suppliers in a market where small-ship trades are dominated by big liner players, except in Asia.
"Only Asia has internal trade growth, and so only Asia still has independent small and medium containership lines," said the source. "And Japan, South Korea, Taiwan have all looked for more efficient ships."
Representatives of Ouhua and Changhong could not immediately be reached for comment.
