In the race between liquefied natural gas (LNG) and methanol as an eco-friendly marine fuel, the world’s major containership owners seem to favor LNG.
Hapag-Lloyd to place orders for up to 30 LNG containerships
Earlier, French shipping giant CMA CGM placed an order for up to 12 LNG dual-fuel containerships, and methanol-fueled Maersk was rumored to be building new ships that will use LNG fuel. Now, German shipping giant Hapag-Lloyd has also announced its choice of LNG and plans to spend money on up to 30 containerships.
According to Trade Winds, Hapag-Lloyd is making a large-scale inquiry to shipyards about as many as 30 LNG dual-fuel-powered containerships in hopes of booking slots for newbuildings, and the total value of the orders is expected to reach up to $5.4 billion.
Hapag-Lloyd is planning to order 10+5 large containerships of 15,000 TEU to 16,000 TEU class and 10+5 medium-sized containerships of 8,000 TEU and 9,000 TEU class, shipbrokers revealed. Hapag-Lloyd is said to have specified LNG dual-fuel propulsion systems for up to 30 of its containerships, but some shipyard sources say Hapag-Lloyd is also seeking methanol-fueled offers. Yet industry insiders following this newbuilding program see the quest for a methanol-fueled offer as a benchmark test for Hapag-Lloyd.
Taking the total of 12 15,500 TEU LNG dual-fuel powered containerships ordered by CMA CGM from HD Hyundai Heavy Industries and HD Hyundai Samho last month as an example, the shipbrokers are of the opinion that the current market cost of large LNG dual-fuel powered containerships has exceeded $220million/unit, and that the market cost of 8,000TEU and 9,000TEU class mid-sized containerships is around $140million / unit, depending on ship specifications and fuel choice.
Hapag-Lloyd has been a strong advocate of LNG fuel so far, and the company currently has only one collaborative project related to methanol fuel, a five containership methanol dual-fuel power conversion project with Canadian shipowner Seaspan. The project will be carried out by COSCO Shipping Heavy Industries (Shanghai), with a total investment of about $120 million, and will be chartered by Hapag-Lloyd upon completion.The five ships, all of which were completed and delivered by Chinese shipyards in 2014, are about 337 meters in length and have a maximum capacity of 10,100 TEU.
Regarding industry rumors of up to 30 LNG dual-fuel powered containerships, a Hapag-Lloyd spokesperson said the company does not comment on market speculation, but added: “The company has not yet made any decisions on newbuilding projects. However, as part of its day-to-day business, the company is in talks with shipbuilders and constantly evaluating opportunities to modernize our fleet.”
Containership deliveries have reached a 15-year high, with shipowners’ enthusiasm for shipbuilding unabated
The enthusiasm of the current containership owners remains high, and they are making a new round of inquiries to shipyards. However, due to the tight shipyard slots, the price of container newbuildings keeps rising. According to the data provided by Clarkson, from January to July 2024, the global containership newbuilding orders have exceeded 140 units, and prices in the containership market have risen by about 28% since January this year. The current container newbuilding order book accounts for about 18% of the existing fleet, and the number of container ships of different specifications under construction has exceeded 700 units.
A few days ago, Niels Rasmussen, chief shipping analyst at BIMCO said,“Since the beginning of the year, the capacity of the containership fleet has increased by 1.6 million TEU. Compared to one year ago, the capacity has risen 11% to 29.5 million TEU, the fastest fleet growth in 15 years”.
In the first half of 2024, global shipyards delivered a total of 264 containerships with a total capacity of 1.6 million TEUs, two-thirds more than the record set in the first half of last year. In addition, high demand for containers has helped to dampen ship recycling activity due to strong growth in freight volumes and containerships diverting to the Capesize to avoid the threat of the Red Sea. This year, only 36 containerships were recycled and dismantled globally, with a total capacity of 51,000 TEU.
Despite the fact that deliveries have reached an all-time high, as early as the beginning of July Hapag-Lloyd CEO Rolf Habben Jansen “dismissed” rumors that the global order book for containerships had begun to reach a “dangerously high level” and said that “in view of the need to replace older ships and to achieve sustainability goals, Hapag-Lloyd will also continue to invest in shipbuilding. He noted that the market dynamics will be different by the time of peak deliveries in 2028 and 2029.