China Cosco Holdings buys 5 container ships for US$618m

China Cosco Holdings has finalised the order of five container ships worth US$618 million at a state-owned shipyard, the company said in a filing to the stock exchange.

The latest transaction is part of China Cosco’s plan to renew its fleet, taking advantage of Beijing’s cash rebate scheme for demolishing ageing vessels and the relatively low cost to build modern, fuel-efficient vessels. The new ships have a capacity of 14,500 twenty-foot equivalent (teu) unit.

The company has ordered 35 vessels since late last year, including 30 dry bulk carriers and five 9,400 teu container ships.

China Cosco said it plans to finance the latest orders, to be built by Shanghai Jiangnan-Changxing Shipbuilding Company, with internal resources and bank borrowings. The ships will be delivered between 2017 to 2018.

The order follows a similar one last week by Japan’s Kawasaki Kisen Kaisha, or K Line, for five 13,870 teu container ships. Both K Line and China Cosco, through its subsidiary Cosco Container Lines, are members of the CKYHE alliance that co-operates on east-west trade lanes. The three other partners are Yang Ming Marine Transport and Evergreen Marine of Taiwan, and Hanjin Shipping of South Korea.

Vessels with a 13,000 teu to14,000 teu capacity are popular among major shipping lines as they suit both Asia-Europe trades and Asia-US trades after the Panama Canal’s expansion is completed next year.