OOCL mulls order for giant container ships

PUBLISHED : Tuesday, 07 December, 2010, 12:00am
UPDATED : Tuesday, 07 December, 2010, 12:00am

Orient Overseas Container Line, the Tung-family-controlled shipping company, could order massive container ships that would be almost 50 per cent bigger than any ship in its fleet, a senior executive confirmed yesterday.

Such a move would reflect the expected long-term growth in demand in Europe for Asian exports.

Stephen Ng Siu-kow, OOCL director of corporate planning, indicated that the carrier was looking to bolster its fleet.

Ng said: 'We are looking at 8,000 teu (20-foot equivalent units) and up to 13,000 teu, but we have not made any decisions on placing orders for these vessels yet.

'We have a team of experts who are constantly exploring opportunities and regularly meet shipyards and other vendors to review new technologies, discuss industry issues, as well as explore possible new buildings.'

The largest vessels now sailing in the OOCL fleet are 16 ships capable of carrying 8,063 teu that were ordered at the Samsung Heavy Industries shipyard in South Korea at a total cost of US$1 billion. The last in the series, OOCL Luxembourg, was christened last April.

The container line also has six 8,888 teu box-ships that were ordered from Shanghai's Hudong-Zhonghua Shipbuilding (Group) in 2007 at an overall price of US$723 million. Ng said these ships would be delivered between 2011 and 2013.

The current price of a 13,000 teu container ship ordered from a South Korean shipyard is about US$125 million.

The ships can only be deployed on Asia-Europe services because ports in the United States have restrictions on the size of vessels that can use the terminals. Similarly, while container volumes on intra-Asian trade routes are growing, operationally 8,000-13,000 teu is too large for the trade.

Analysts at Macquarie Research and Goldman Sachs are forecasting a shortage of container ship capacity in 2012 as the construction and delivery of vessels lags the expected growth in container volumes.

Commenting on the market outlook, Ng said economic uncertainty in Europe would continue to have an adverse impact on Asian companies because the depreciation of the euro against Asian currencies made exports more expensive.

But he added: 'We are cautiously optimistic that there will be growth of 5-6 per cent in trade volumes' on Asia-Europe next year compared with this year. This would 'imply that our trade volumes will be more or less back to the levels of 2008'.

Out of all the markets, Ng indicated there were brighter opportunities on intra-Asian trades. He said container volumes have grown significantly this year due to the impact of free trade agreements between China and Asean countries.

'Next year we will focus on the lucrative intra-Asia routes and add services or capacity where necessary,' Ng said. 'We expect 2011 demand will continue to grow but at a slightly slower pace, due to the slowing down of GDP and monetary tightening in Asia, especially in China.'