Hyundai to build world's largest container ships

The mystery buyer of the 9,600-teu vessels is likely to be an Asian carrier

South Korea's Hyundai Heavy Industries, the world's largest shipbuilder, will next month sign a contract to construct the world's largest container ships, putting the industry on the verge of the 10,000-teu (20ft equivalent unit) barrier, according to sources close to the shipyard.

The order, for up to five 9,600-teu ships, is expected within three weeks and, while the buyer remains a secret, Asian carriers are odds-on favourites to put the behemoths into service.

'We cannot divulge the identity of the shipowner for obvious reasons, but we expect the order to be placed shortly,' a source said.

If confirmed, the orders will be the first to eclipse the 9,000-teu capacity barrier and will come just six months since the industry broached the 8,000-teu threshold. More than 30 contracts have been placed for the latter category since the barrier was broken.

The ships ordered by the as yet unnamed owner are almost 15 per cent larger than the four 8,400-teu ships ordered by German shipowner and financier Norddeutsche Vermogen earlier this month from Korea's other big name in shipbuilding, Daewoo Heavy Industries & Machinery.

Charters for at least two of those ships are expected to be placed shortly with Hapag-Lloyd, although neither the shipowner nor the charterer will confirm this.

While the identity of the shipowner ordering the 9,600-teu vessels remains a mystery, speculation is rife that an Asian line is involved through agreements with German ship financiers.

The Hyundai shipyard source said: 'Up to five ships, which could include two options, are planned', indicating the vessels might be heading for the transpacific trades.

Hyundai in the first quarter made a marked turnaround on last year's fortunes, contracting 37 ships worth US$1.8 billion.

Of the 37 ships, 16 were container ships and the first-quarter order book was well over seven times what it signed in the corresponding period last year.

Orient Overseas Container Lines (OOCL) has been mentioned as a possible lessor, as has China Shipping Container Lines (CSCL) through its closely associated Seaspan International business in Vancouver.

However, a top OOCL source in Hong Kong yesterday denied the involvement of the carrier, which has mainly relied on Samsung Heavy Industries for its most recent post-Panamax newbuilding programme.

The Hong Kong-based carrier will have taken delivery of eight 8,000-teu vessels by early 2005. The first of these, OOCL Shenzhen, has already been deployed on a Grand Alliance loop serving the trades between Asia and Europe. Hapag-Lloyd, Germany's biggest box carrier, is also a member line within the Grand Alliance.

CSCL will, by 2005, take five 8,000-teu vessels on charter from a subsidiary of Seaspan, ships also being built by Samsung.

CSCL is increasing its capacity on the trade lanes between Asia and Europe and Asia and America's west coast, and within the next year will return charters on up to 10 medium-sized vessels.

Last year, CSCL, together with the French line, CMA-CGM, postponed a plan to order ships of about 9,000 teu capacity because of depressed market conditions, particularly on the transpacific trades.

The lines had planned to order up to five ships between them in a move that would have surpassed the capacity of existing orders by 12 to 15 per cent.

Other lines, such as Mediterranean Shipping Co (MSC) and Evergreen Marine, already have newbuilding programmes underway. These are also through German financiers, including Conti Reederei and Norddeutsche Vermogen.

Hyundai Heavy's newbuilding order book in the 8,000-teu range has mainly come from German companies, Conti Reederei and Erck Rickmers, and all the vessels have been backed up with long-term charters.

Munich-based Conti Reederei last week took delivery of its 17th post-Panamaxvessel, thus named for their inability to transit the narrow Panama canal, bringing its fleet to 65 ships, with 18 Korean-built ships - 13 of them more than 8,000 teu - still to come. The owner's latest big Asian-built container ship, Conti Madrid, has just been delivered by Hanjin Heavy Industries in Pusan. The vessel went straight into eight-year charter, with Hanjin Shipping on its service between China and Europe.

About 60 Conti ships are boxships, offering almost 200,000 teu. China Ocean Shipping, CMA-CGM, MSC and Hanjin Shipping are all playing some part in those agreements.

Samsung has a number of options open for ships in the 7,500 to 8,000-teu capacity range. According to shipyard sources at Samsung, the builder has blueprints for ships in excess of 9,000, but has yet to receive commitments from shipowners.

Paul Richardson's e-mail address is prnewsservice@btclick.com