Coscon bolsters Panama Canal fleet with eight new ships

PUBLISHED : Wednesday, 28 June, 2006, 12:00am
UPDATED : Wednesday, 28 June, 2006, 12:00am

Cosco Container Lines (Coscon), China's leading shipping company, has placed a US$517 million order for eight Panamax vessels to strengthen its Far East-to-American east coast service.

It said the first two carriers would be delivered by June 2009 at the latest, with the other six following within a year. All the ships have capacity of 5,100 20-ft equivalent units (teu), the largest for Panamax vessels, so named because of their ability to navigate the Panama Canal.

Coscon said it expected demand on the Far East-to-America east coast route to outstrip supply in the long run.

It said the ships could also operate on other routes, such as China to Australia and Far East to South America and South Africa.

Analysts said the company had received a slight price discount from China State Shipbuilding and its subsidiary Jiangnan Shipyard.

'Building a vessel on the mainland is less expensive than in Japan or Korea, with a 5 per cent price difference in general,' said Yang Ling, manager of investor relations for parent Cosco Holdings.

Coscon's average price per vessel will be US$64.6 million. In a report, the ship broker Clarkson said that the average price of a new 4,600-teu vessel was around US$69 million last month.

Clarkson said 35 container ships, totalling 127,840 teu, were ordered in May, the most capacity in any month since June last year, suggesting a recovery in shipbuilding was gathering momentum.

Coscon said 70 per cent of its purchase would be funded via bank loans, 20 per cent with proceeds from its 2005 listing and 10 per cent from internal resources.

Shares in Cosco Holdings closed unchanged at $3.725 yesterday.