Hapag-Lloyd Prepares for Panama Canal Trade

Hapag-Lloyd container ship

Published Apr 20, 2015 4:39 PM by The Maritime Executive

Ship container line Hapag-Lloyd has placed an order for five vessels as it looks to bolster trade in Latin America ahead of next year's planned expansion of the Panama Canal, the world's fourth biggest player said on Monday.

Workers are installing 22-storey lock gates to accommodate larger container ships through the canal, one of the world's busiest maritime routes, which plans to open on April 1 2016.

Hamburg-headquartered Hapag-Lloyd, which completed a merger with Chile's Compania Sud Americana de Vapores (CSAV) in December, said it had placed an order for five 10,500 TEU ships, scheduled for delivery between October 2016 and May 2017.

"They will be deployed primarily on South American routes. When the expanded Panama Canal opens next year, Hapag-Lloyd will therefore have the optimal fleet for this trade," it said in a statement.

Container ships transport consumer goods such as electronics and food in metal boxes, with a standard length of 20 feet (6 meters), known as TEU (20-foot equivalent units). Post-panamax container ships are up to 14,000 TEU.

The shipping industry has been battling overcapacity, linked to a glut of new vessels ordered during a boom period before the global financial crisis of 2007-2009, forcing operators to look for ways to overcome one of the worst slumps on record. Rival container lines have vied for growth in the lucrative Latin American market.

Hapag-Lloyd said since its merger, Latin America represented more than a third of its total transport volumes versus around 22 percent previously - with the group among the top four lines in the region.

The new order adds to a previous one made by CSAV in 2013 for seven 9,300 TEU ships to be used in the Latin America trade - with five of those already delivered and the remaining two to be delivered later this year, Hapag-Lloyd said, adding it had other vessels operating on this route.

As of December 2014, Hapag-Lloyd's global fleet comprised a total of 191 container ships.

Copyright Reuters 2015.