Taiwan set to order five 16000 TEU vessels
November 8, 2011
Taiwan’s Yang Ming Marine confirmed that it plans to order five 16,000 teu vessels at CSBC Corp Taiwan, Taiwan’s biggest shipbuilder. The full price for the order, if all options are taken, would be $747m.
The news follows a statement last Friday from Yang Ming’s chief executive Frank Lu that he planned to present a plan for an order of ‘mega’ ships to his board this week.
Yang Ming has been mentioned by Alphaliner and others as a possible casualty on the Asia to Europe trades following the capacity build up of huge ships by Maersk Line, Mediterranean Shipping Co, and CMA CGM. The move is seen by analysts as a defensive action to stay in the trades by deploying bigger ships that can be run at lower cost.
The confirmation of the order was first reported in Taiwan’s Commercial Times, which quoted chief executive Lu as saying, “Shipping companies are building ever larger containerships, and this is a global trend that Yang Ming is unlikely to ignore.”
According to a report in IFW’s sister publication, Lloyd’s List, the order still has to meet board approval later this week. The intended delivery date for the ships would be 2015.
On Monday, Hong Kong based Citi analyst Rigan Wong commented in a report that Yang Ming’s plan to order the ships was “incrementally positive” given the company’s vulnerability of getting squeezed out of the Asia to Europe trades with its current fleet of smaller ships. Alphaliner predicted that by 2013 vessels of 8,000 teu or smaller would not be viable on the Asia to Europe routes.
But Mr Wong also cited risks for Yang Ming. The deal could strain its balance sheet. Yang Ming reported at $176m loss for the first nine months of 2011, citing lower rates and high bunker costs. Another risk: continued market share loss until its new big vessels are delivered.
Courtesy of IFW
