Maersk Orders Seven Container Vessels from COSCO

Maersk Line has signed a newbuilding order with COSCO Shipyard for seven 3,600 TEU container vessels. COSCO and Maersk are keeping the price confidential.

Two other shipbuilding companies—Yangzijiang Shipbuilding and Yangfan Group—were final bidders for the newbuildings, but COSCO won out by offering a higher price than the other two yards.

The building order is the first step in the investment program Maersk recently announced, which stated that over the next five years the company will invest $15 billion in new vessels, a retrofit program, containers and other equipment.

“I am very happy to announce this new order and the first in our investment program,” said Søren Toft, COO of Maersk Line. “Our strategy is to grow with the market and to do so we need new vessels for 2017. We expect to place additional orders during 2015.”

The deal is the first newbuilding order from Maersk since the triple-e series (18,340 TEU) in 2011, in which the company booked 30 vessels but only went through with the building of 20 after the decision not to take up a second round of options.

The vessels will be used for trade in Baltic and North Sea regions via Seago Line, Maersk’s container shipping line focused on short-sea services. The ships will be built to withstand sea ice and harsh winter weather and will replace a number of smaller vessels. They will sail on marine oil gas (MGO), making them compliant with SOx (Sulphur oxides) emission limits in the Emission Control Area (ECA) zone in Northern Europe.

The newbuilds will be 200 meters long, 35.2 meters in width, and have 10 meter drafts. The ships will be delivered from April through September of 2017, and the order includes an option for two additional vessels if declared within the next eight months.

This marks the first time that Maersk has placed a newbuilding order with COSCO. “I am very confident that COSCO Shipyard, with their solid shipbuilding experience and a good track record, will deliver high-quality and fuel-efficient vessels,” said Søren Toft.

The newbuild order is another good sign for the boxship sector, which has seen low activity in past years resulting in older vessels out of work or working for shorter periods of time for lower rates. However, the market has taken an upturn and has been further boosted by fewer speculative orders made by companies such as KG ventures (German limited partnerships), who are now in liquidation, and recent port congestion.

Panamax and post-panamax vessels have seen the most uptake compared to 2014 figures, with an estimate of only 36,300 TEU out of work in the 3,000-5,000 TEU vessel sector. This, coupled with the ever-increasing container newbuild orders such as Maersk’s, has raised the hopes for charter markets. Maersk hopes the order will add capacity in response to the recent growth of global shipping container demand as well as compensate for less-efficient charter tonnage.