China’s top shipbuilder gets its largest contract as demand for huge container ships surges back

Apr 5, 2021 | BUSINESS

The China State Shipbuilding Corporation has won its biggest ever contract – worth over 10 billion yuan ($1.52 billion) – to make a fleet of skyscraper-sized cargo ships, as global trade recovery boosts demand for the vessels.

The shipbuilding giant is set to construct 13 new cargo vessels, which can carry 16,000 standard containers or twenty-foot equivalent units (TEU). The container ships will be about 366 meters long and 51 meters wide, meaning that if the vessels stood vertically, they would be bigger than the Eiffel Tower, as tall as the Bank of America Tower in New York, or reach almost as high as the Empire State Building.

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The order will be split between two shipyards belonging to the state-owned corporation. Some seven ships will be built by the Dalian Shipbuilding Industry Co., and the rest will come from Guangzhou Shipyard International Co.

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The China State Shipbuilding Corporation (CSSC) has not disclosed the future owner of the cargo fleet. According to Caixin, the potential buyer could be Mediterranean Shipping Company (MSC). The Geneva-based carrier is the world’s second-largest shipping line, currently operating 570 vessels along 215 trade routes. 

The container shipping sector has seen rapid recovery since the beginning of the year, as companies have reportedly boosted orders for mega-ships. Demand growth for the vessels is also projected to surpass container ship capacity in the near future, according to the Journal of Commerce (JOC) run by IHS Markit. The report pointed out that volume is set to grow twice as much as deployed capacity, amounting to 7.5% in 2021. While the container shipping orderbook remains relatively low so far, some analysts noted that the industry players would still need to increase orders to make up for older ships that are set to be scrapped.

“The order book is too small,” Rolf Habben Jansen, CEO of shipping company Hapag-Lloyd said, as cited by JOC. “You need to replace what is taken out. We need 14 to 17%, and today we are at around 11% of the current fleet on order. But it is not like the 50 to 60% orderbook that we saw in the past.”

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