Mitsui to lease four Seaspan vessels
Hong Kong-registered Seaspan Corp will pay HK$2.6 billion for four new container vessels in a groundbreaking deal that represents the New York-listed shipowner's first inroad into the closely held Japanese shipping industry.
Seaspan, which signed the deal on Tuesday night in Hong Kong, bought four 5,100 teu (20-foot equivalent units) vessels from South Korea's Hyundai Heavy Industries for an aggregate delivered cost of US$333.6 million.
Mitsui OSK Lines, Japan's largest container shipping line by capacity, agreed to lease the panamax-sized vessels on a 12-year charter at a daily rate which will see it pay almost US$506 million over the term of the contract.
'We are extremely excited to enter into our first charters with a Japanese liner major,' Seaspan chief executive Jerry Wang said.
'Mitsui is a wonderful addition to our portfolio of customers with their investment grade credit rating and excellent business reputation.'
Seaspan intended to diversify further, he said. 'We need to diversify into Japan. It is very important for us,' Mr Wang said at the contract signing. 'The expansion of our customer base will probably turn to the majors in Taiwan next; we are in discussions there. We need diversification on the charter side to reduce our risk profile.'
The company has established a name for itself putting similar deals together for state-owned firms China Shipping, rival China Ocean Shipping and the CP Ships group now owned by diversified German travel giant TUI.
The deal, signed a year to the day after Mr Wang raised US$750 million in the largest shipping initial public offering in North American history, also marked Seaspan's first order from Hyundai, the world's biggest shipbuilder.
'This is just the starting point,' Han Dae-youn, senior executive vice-president of Hyundai's shipbuilding division, said.
Seaspan has placed most of its orders for post-panamax vessels - those too big to transit the Panama Canal - with Hyundai's Korean rival Samsung over the past few years while turning to mainland yards for smaller ships.
China is expected to flood the industry with shipbuilding capacity before the next decade as massive yards in Shanghai and Guangzhou come on line.
Mr Han warned off expectations of lower vessel prices despite the expected increase in capacity.
He said Hyundai Heavy was expected to use 2.5 million tonnes of steel this year, for which it would pay US$400 more a tonne than in 2003.
Mitsui, which will take delivery of the vessels starting in 2009, is expected to put them to work moving cargo from Asia to the US east coast.
It will take delivery of as many as 28 new containerships in the next three years as it looks to grow its diversified fleet - from boxships to tankers and car carriers - to 900 vessels, according to Noboru Kitazawa, general manager of Mitsui's liner division.
'Our growth plans [for containerships] are driven by the need to keep pace with our competitors,' Mr Kitazawa said. 'If we don't, we will lose market share.'
Mr Wang said Seaspan, which had 37 vessels in its fleet or on order, intended to add 10 to 15 ships a year to its fleet with the ultimate target of owning about 7 per cent of the world's containership fleet, estimated last month by Citigroup at 10.55 million teu.