A.P. Moller-Maersk A/S, the world’s largest container line, agreed to buy as many as 30 of the biggest ships valued at as much as $5.4 billion to counter rising fuel prices and benefit from expanding global trade.
The deal with Daewoo Shipbuilding & Marine Engineering Co. includes 10 firm orders for vessels able to carry 18,000 containers, enough for 18 million flat-panel televisions, the companies announced at a joint press conference in London today. Maersk plans to take delivery of the ships by 2014 and will decide this year whether it will exercise an option for 20 more vessels, Eivind Kolding, chief executive officer of Maersk’s container line, said in an interview.
The 400-meter-long (1,312-foot-long) vessels, with a capacity about 30 percent greater than the largest ships afloat, will help Copenhagen-based Maersk cut emissions and pare fuel usage as it contends with oil prices that have more than doubled in two years. Zodiac Maritime Agencies Ltd. and Neptune Orient Lines Ltd. ordered 10,000-container-plus ships last year as the end of the global recession revived U.S. and European demand for Asian-made goods.
“There’s sure to be more orders for large ships,” said Lee Jae Kyu, a Seoul-based analyst at Royal Bank of Scotland Group Plc. “With fuel prices where they are now, lines need to find ways to lower costs.”
Shares jump
Daewoo, the world’s third-biggest shipyard, and larger rivals Hyundai Heavy Industries Co. and Seoul-based Samsung Heavy Industries Co. will be the main beneficiaries, Lee said.
Daewoo rose 4.8 percent to 35,850 won at the close of trading in Seoul. Samsung Heavy jumped 6.4 percent and Hyundai Heavy gained 1.8 percent. Maersk slipped 0.9 percent to 52,400 kroner at 4:02 p.m. in Copenhagen.
The addition of the 10 vessels corresponds to about one year’s market growth, Kolding said in London.
“If nothing unexpectedly negative happens, we will most likely declare option for the first 10,” Kolding said. “The last 10, we will wait and see and make a decision when the deadline is up.”
The ships, which will be deployed on trade routes between Asia and Europe, will cut costs per container by 26 percent compared with current vessels, according to Maersk. That includes savings on fuel we well as port and canal fees, it said.
Cutting emissions
The new ships feature engines fitted with a heat-waste recovery system that will help Maersk pare carbon emissions 50 percent compared with current vessels on Asia-Europe routes, Daewoo said.
Maersk hasn’t decided how to finance the ships, Kolding said. The company sold bonds in 2009 for the first time in its 106-year history.
“Building in Korea, you get the opportunity to draw on Korea export-import bank facilities, and we can do that,” the CEO said. “We’ll simply find the most optimal way of financing at the time.”
Mediterranean Shipping Co., the No. 2 container line after Maersk, is building up a fleet of 21 vessels able to carry about 14,000 boxes each, according to data compiled by Bloomberg. The ships, including the largest in service worldwide, are being built by Daewoo and Samsung Heavy.
‘Wind of change’
“The wind of change in the container-shipping industry has been set and the trend is now for large ships,” said Lee Sokje, an analyst at Mirae Asset Securities Co. in Seoul. “We could see a shortage of container ships as early as in 2013 if shipping lines don’t order now.”
Rebounding trade has prompted container lines to resume placing orders, which generally take about three years to execute, following a two-year hiatus during the recession.
The global container market may grow by more than 8 percent this year, Maersk forecast last month. Clarkson Plc, the world’s biggest shipbroker, has forecast an increase of 9.7 percent.
Maersk lifted its 2010 earnings forecast on Nov. 10, saying freight rates and volumes will help it post record profits. A year earlier, the shipping line had a loss as trade volumes contracted.
The company operates container ships with a total capacity of 2.2 million 20-foot boxes, or 14.5 percent of the global fleet, according to Alphaliner. Geneva-based Mediterranean Shipping has a 12.8 percent share, according to the maritime- data provider. Twenty months ago, Maersk had 15 percent of the market while Mediterranean had 11.4 percent.
‘Momentous event’
“This order is a momentous event for the container- shipping industry,” Daewoo CEO Nam Sang Tae said in a statement. It “will change the whole landscape.”
The shipyard said in December that it expects to win $11 billion of orders this year, helped by demand for container ships and offshore projects. The company’s biggest single order for container ships was in July 2008 when Maersk ordered 16 vessels able to carry 7,450 boxes apiece, for $2.3 billion.
Neptune Orient, Singapore’s largest container line, ordered two ships capable of carrying 10,700 containers each last year from Daewoo, as part of a $1.2 billion deal. Zodiac Maritime ordered as many as 10 13,000-box ships, costing about $140 million each, from Jinhae, South Korea-based STX Offshore & Shipbuilding Co. in October, according to Clarkson.
Worldwide, a total of 614 ships, with a combined capacity of 3.87 million containers, were on order at the start of this month, according to Clarkson. Vessels able to carry 8,000 boxes or more accounted for 67 percent of the backlog by capacity.
The price of 380 Centistoke marine bunker fuel, used by ships, rose 0.3 percent to $612.50 on Feb. 18 in Singapore. The price has more than doubled in the past two years in line with rising oil costs.
