Shipping lines Evergreen Marine Corp. of Taiwan and Germany’sHapag-Lloyd AG have put in separate requests to Asian yards for the construction of more than a dozen mega-container ships that would have a combined value of about $2.2 billion.
The proposals signal that a lull in new orders in the sector is ending as carriers seek ever-bigger vessels to carry goods. The fleet additions would widen the gap between capacity and demand on container shipping’s critical Asia-to-Europe trade lanes, where operators have been mostly losing money over the past five years.
Hapag-Lloyd, the world’s fifth-largest container operator in terms of capacity, is sounding out yards in Japan, South Korea and China for up to six ships that could each move 23,000 containers, people with knowledge of the matter said. Evergreen, the seventh-biggest player, is considering adding eight or nine ships in a deal that may be signed by the end of the summer, these people said.
“Evergreen’s order will come faster and Hapag-Lloyd will be later,” a person involved in the matter said.
The carriers are members of competing alliances that share ships and port calls to cut costs. A typical one-way trip from Asia to Northern Europe involves at least 10 port calls in which the megaships drop off and take on cargo.
“Some of the vessels are to fulfill capacity commitments within the alliances and others to renew older and less efficient ships,” another person involved in the matter said. “Yes, there is overcapacity and the trade picture does not look good with the tariffs and the economic slowdown, but these ships will run for the next 25 years and now is a good time to buy.”
Taiwan’s Yang Ming Marine Transport Corp. and China’s Cosco Shipping Holdings Co. , the third-biggest box-ship operator, are also in the market for new ships but no orders are imminent, the people said.
The orders would be the first for big ships in the container-shipping sector since last fall, when South Korea’s Hyundai Merchant Marinesigned contracts for 20 vessels. The order included 12 of the biggest ships, carrying up to 23,000 20-foot containers.
Demand for shipping consumer goods, manufacturing parts and other staples of global trade is waning this year amid a slowing global economy and continuing tensions between the U.S. and China. Maritime data provider Alphaliner in late May cut its container volume growth estimate for this year to 2.5% from 3.6%.
Chinese shipping executives say they have withdrawn capacity in the trans-Pacific route since a first round of U.S. tariffs on Chinese goods happened last summer.
Operators say they have little choice but to invest in new ships despite a gloomy outlook because of stricter environmental regulations kicking in next year. Starting in January, all oceangoing vessels will have to sharply reduce their sulfur emissions. Maritime operators expect to slash greenhouse gas emissions from ships by half by 2050.
“This means a lot of older ships will be scrapped because the cost of retrofitting them to meet clean-air standards will be too expensive,’’ one of the people familiar with the recent orders said. “We actually expect supply of new ships to match demand by 2021, which is just around the corner.”