Taiwan’s Evergreen to spend up to US$1.6 billion on 10 supersized cargo ships, to be built in China and South Korea
- One of the world’s top 10 shipping lines announces dramatic expansion plans that may upset the market for shipping
- The new ships, with capacity of 23,000 TEUs will be among the world’s largest when completed
Taiwan-based shipping line Evergreen has announced plans to buy 10 of the biggest cargo vessels on the planet, which will be built at shipyards in South Korea and China.
The enormous order will cost Evergreen anywhere between US$1.4 billion and US$1.6 billion, according to estimates, and could see it move up a place in a league table ranking cargo lines by capacity. It is even likely to dash hopes in the industry that demand was finally catching up with an oversupply that has blighted the market for years, analysts said.
The first of the giant ships, which will have capacity of 23,000 twenty-foot equivalent units (TEUs), is likely to enter service in 12 to 18 months’ time, said Peter Sand, chief shipping analyst at BIMCO, the world’s largest shipping association.
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Evergreen declined to explain the move but it comes at a time shipping companies are increasingly shifting towards supersized vessels.
Han Ning, director of Drewry Maritime Advisors, said Evergreen’s relatively small and ageing fleet was in need of an upgrade.
Evergreen announced it had placed the orders on September 10, and the Hong Kong office confirmed the news on Thursday but declined to comment further. It represents an updated version of a previous plan announced just a month ago to build six ships and charter five.
Six of the waterborne behemoths will be built at Samsung Heavy Industries shipyard in Korea, two will be built at the Jiangnan Shipyard and two at Hudong-Zhonghua Shipbuilding, a subsidiary of the China State Shipbuilding Corporation that builds navy ships for the Chinese military. Each ship is estimated to cost between US$140 million and US$160 million.
Shipping lines have faced a decade of meagre returns thanks to overcapacity and the fallout from the global financial crisis.
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But, with some optimism returning to the market, there has been a shift in recent years towards supersized container cargo vessels, said Sand.
This past summer the world’s second-biggest shipping company, MSC, launched two ships of at least 23,000 TEU, currently the largest on the oceans, with another nine on order.
Alphaliner, which tracks shipping lines’ capacity and order books, already had Evergreen ranked seventh in the world with substantial orders in the pipeline. The additional ships could see Evergreen move up into sixth place above ONE shipping line, a consortium of Japanese shipping companies based in Singapore.
Evergreen is listed on the Taiwan stock exchange. It posted net profit of US$21.2 million on revenue of US$5.47 billion in 2018, a sharp fall from US$120 million in the previous year. In 2015 and 2016, Evergreen suffered considerable losses, of US$126 million and US$246.4 million respectively.
Sand said some shippers had been looking forward to some relief from tough times, with demand for container shipping finally catching up with supply.
But Evergreen’s new ships, with their gigantic combined capacity, “may take away the upside that shippers were expecting,” he said.
The container shipping market is facing considerable uncertainty, thanks to ongoing trade tensions between the US and China, the prospects of a slowing global economy and new fuel and emissions regulations. Sand said shipping routes connecting Asia to Europe and North America might see less demand as smaller, inter-Asian routes pick up.
