OOCL orders more container ships
Orient Overseas Container Line will expand its fleet with four more 13,000 teu (20-foot equivalent unit) container ships that will be deployed on routes between Asia and Europe.
Parent company Orient Overseas (International) Ltd has agreed to splash out US$544 million on the ships from South Korean shipbuilder Samsung Heavy Industries.
The latest deal, confirmed yesterday, came nearly seven weeks after OOIL said it ordered six similar sized vessels for US$816 million from the same shipbuilder.
About 70 per cent of the cost of the vessels will be financed by bank loans while the remainder will come from the company's internal resources.
The 10 ships will be the biggest in the OOCL fleet when they are delivered in 2013 and 2014.
The new order means OOCL will be able to operate all 10 vessels on a single service. This will make capacity planning and scheduling easier.
With just the six ships in the initial order, OOCL would not have had sufficient owned capacity to operate a weekly schedule on a 70-day round trip calling at ports in Asia and Europe using similar sized tonnage. As a result it would have had to charter vessels of about 13,000 teu or its own smaller tonnage of about 8,000 to 9,000 teu, which could have caused a capacity crunch on some legs of the voyage.
The Asia-Europe route is OOCL's third-largest trade lane in terms of revenue and container volumes behind transpacific and intra-Asia services.
The company has been affected by increased competition from rival box lines and sluggish economic conditions in Europe. This resulted in marginal revenue growth in the first quarter of this year despite an 8.3 per cent increase in container volumes to 196,174 teu.
While the container shipping market remains competitive, analysts have forecast a potential shortage of shipping capacity from next year.
The latest order for four ships takes OOCL's total vessel order backlog to 17 ships, including seven 8,888 teu boxships on order at Hudong-Zhonghua Shipbuilding (Group).
The shipping company had eight vessels on order at the Shanghai-based shipbuilder at a total cost of US$724 million, but the first in the series, OOCL Beijing, was delivered at the end of last month.
The new ship has been deployed on a service between Asia and the Middle East.
The company has about 85 vessels in its combined fleet of owned and chartered ships.
OOCL says the 10 new ships will make planning and scheduling easier
The numbers of ships, owned and chartered, OOCL has in its fleet: 85