The trial run of a 14,700 TEU LNG-powered ultra-large container ship delivered by Hyundai Samho Heavy Industries last year. (Photo provided by HD Korea Shipbuilding & Offshore Engineering)
Greek shipping company Capital Maritime has recently placed an order for 10 container ships of 8,400 TEU (20-foot equivalent unit) class from China's New Times Shipbuilding. The contract, valued at $1.25 billion (approximately 1.7318 trillion won), includes six confirmed ships and four optional ones. This move is part of a broader trend in the shipping industry, which has seen a surge in orders for new container ships amid rising freight rates due to the Red Sea situation.
Norwegian shipping company SFL Corporation has also joined the fray, ordering five 16,000 TEU LNG dual-fuel container ships from New Times for $1 billion. These vessels are expected to be delivered between 2027 and 2028, reflecting the industry's shift towards more environmentally friendly technologies.
Singaporean shipping company Eastern Pacific Shipping (EPS) has signed a construction contract with New Times for 12 container ships worth $2.45 billion.
These significant investmentsby global shipping companiesunderscore the growing demand for new shipping capacity as global trade rebounds.
The recent rise in the Shanghai Containerized Freight Index (SCFI) to 3674, a 312% increase compared to October last year, and the China Containerized Freight Index (CCFI) to 2085, a 154% increase, highlights the booming market conditions. These indices measure the cost of shipping containers and are key indicators of market trends and profitability.
According to the shipping industry on July 18, 41 container ships of 8,000 TEU class or larger have been ordered, with China securing about 30 of them. This surge in orders is driven by the need to capitalize on the high freight rates and the profitability they bring.
In a parallel development, HD Korea Shipbuilding & Offshore Engineering has signed a construction contract with French shipping company CMA-CGM for 12 container ships of 15,500 TEU class. HD Hyundai Heavy Industries and HD Hyundai Samho will each build six ships, which will be delivered sequentially from June 2027 to June the following year. The total contract amount is 3.6832 trillion KRW, with the order price about 10% higher than the market price due to shorter delivery times.
The market price for a 15,000 TEU container ship is about $210 million per ship. The higher price tag for HD Korea Shipbuilding & Offshore Engineering's order reflects the premium placed on faster delivery times, a crucial factor in the current market environment.
The global shipping industry is experiencing a dynamic shift, influenced by various factors such as Red Sea crisis, environmental regulations and the shift towards LNG dual-fuel technology. Companies are increasingly investing in more environmentally friendly ships to comply with these regulations and reduce their carbon footprint.
As the shipping industry navigates through these changes, the impact of supply chain disruptions, such as those caused by the COVID-19 pandemic and geopolitical tensions, remains a critical factor. These disruptions have highlighted the importance of having a robust and flexible shipping capacity to ensure the smooth flow of global trade.
