The “eco-friendly mega containerships” are part of the Korean carrier’s plan to grow its fleet’s carrying capacity to 1 million TEUs.
Hyundai Merchant Marine (HMM) said Tuesday it will order 20 “eco-friendly mega containerships,” 12 with capacity to carry more than 20,000 TEUs and eight with 14,000-TEUs of capacity as part of its plan to grow its fleet’s carrying capacity to 1 million TEUs.
“Through this new shipbuilding, HMM will be able to secure stronger fleet competitiveness with the benefit of economies of scale,” the company said, adding the order “will help HMM to form a stable basis for making profits in the intensely competitive market.”
Korea’s largest container carrier said the dozen 20,000-TEU ships will be deployed in the Asia-North Europe trade, while the eight 14,000-TEU ships will be used in services to the U.S. East Coast. As they will be “new Panamax” ships – having the largest dimensions able to pass through the new locks in the Panama Canal that opened in 2016 – the company expects they will be deployed in the Asia-U.S. trade, probably through the Panama Canal, but this is not yet confirmed.
In order to comply with International Maritime Organization requirements under which ships must use bunker fuel oil with a maximum sulfur content of 0.5 percent or reduce the sulfur oxide content of emissions in another way starting Jan. 1, 2020., HMM said the new ships either will have scrubbers installed or use liquefied natural gas (LNG) for fuel. The company said it will decide whether to use scrubbers or LNG “after thorough discussions with the finally selected shipbuilder.”
“Considering the factors, including the recent increase in new shipbuilding price and dock availability,” HMM said it was starting its selection process by sending shipbuilders a request for proposals Tuesday. HMM did not have an estimated cost for the new ships yet.
“If the shipbuilding process proceeds smoothly, followed by the selection of the shipbuilder, signing of a letter of intent and finalizing its contract, all the new vessels will be sequentially delivered in the right time to prepare for the 2020 environmental regulations,” HMM said.
It added that Korea Ocean Business Corp., a company the South Korean government plans to launch in July, will finance 90 percent of the costs of newbuilding and HMM will take the remaining 10 percent.
HMM currently has a fleet with a capacity of 342,613 TEUs – 12 owned containerships with 107,419-TEUs of capacity and 53 chartered containerships with capacity of 235,194 TEUs – and two 11,000-TEU ships on order, according to Alphaliner’s list of the 100 largest container carriers. An HMM spokeswoman noted the company has also chartered ships with about 100,000 TEUs of capacity to 2M carriers.
HMM also has five very large crude carriers with 300,000-DWT of capacity on order.
The company said that “along with the fleet expansion, HMM is going to set a new mid-long-term plan to enhance its global competitiveness to promote business normalization and shareholder value and to create added value between shipping and logistics for mutual growth. To do so, HMM will boost its organizational capability, develop IT technology adopted in shipping and expand global networks.”
Lars Jensen, the chief executive officer of SeaIntelligence Consulting in Copenhagen, said the order would account for approximately 1.5 percent fleet growth in 2020.
That’s a substantial order, he noted, and “not disruptive in itself. The problematic part is that this will double Hyundai’s size – and a carrier suddenly needed to double its size in a year, when you are the size of Hyundai, will be disruptive in the market.”
The new ships “may be seen by HMM to be a bargaining chip for alliances – their agreement with 2M runs until 2020, and hence they need to start negotiating for a new position at that time. The problematic part is that I am not sure bringing capacity to the table is sufficient to have good bargaining position unless you are actually able to also bring volumes to the table filling that capacity.”
Hyundai Merchant Marine ordering 20 ships
