South Korea’s HD KSOE Anticipates $3.4 Billion Order from France’s CMA CGM

South Korea’s largest shipbuilder, HD Korea Shipbuilding & Offshore Engineering Co. (HD KSOE), is poised to secure a significant order from CMA CGM, the world’s third-largest shipping company. The deal, valued at approximately $3.4 billion, includes the construction of 18 container ships, with expectations that container ship prices will rise.

Details of the Agreement

Industry sources reported on Sunday that HD KSOE, operating under the interim shipbuilding holding company HD Hyundai, has signed a letter of intent with CMA CGM. The agreement involves building six vessels with 80,000 twenty-foot equivalent units (TEU) each and 12 vessels with 15,000 TEU each. The final contract is anticipated to be finalized within a month.

Should the deal be finalized, HD KSOE’s total orders for the year will reach $15.5 billion, surpassing their $13.5 billion target. The six and 12 dual-fuel container ships are slated for sequential delivery in 2027 and 2028.

Rising Prices of Container Ships

According to Clark’s Research, the price of a 15,000 TEU LNG dual-fuel vessel has surged to over $200 million per unit, nearly doubling from the previous year. “The price of container ships continues to increase, in contrast to the price growth slowdown in LNG carriers and large oil tankers,” noted a shipbuilding industry official.

Global Shipping Market Trends

Major global shipping companies, including Denmark’s A.P. Moller-Maersk A/S, Germany’s Hapag-Lloyd AG, and China’s Cosco Shipping Corp., are also preparing to place new shipbuilding orders, driven by a bullish outlook for the maritime transport market.

Impact of the Shanghai Containerized Freight Index (SCFI)

The Shanghai Containerized Freight Index (SCFI), a key measure of container shipping rates, has been on the rise since March 29 due to extended global trade disruptions in the Red Sea. The index has increased for 11 consecutive weeks, reaching 3476.60 last week, thereby driving up the newbuilding price index for container vessels.

Shift in the Shipbuilding Market

Korean shipbuilders have not built container vessels recently, with China dominating the market. Chinese shipbuilders account for over 50% of the global container ship market and 96% of global container orders, according to the Center for Strategic and International Studies (CSIS).

Korean shipbuilding major Hanwha Ocean Co. has temporarily halted container ship orders since last year. Meanwhile, HD KSOE has concentrated on gas carriers, such as ammonia carriers, due to its dockyards being booked for three years with no space for large container ships.

Strategic Implications

Amid the expanding US-China trade feud into maritime logistics, Korean shipbuilders are expected to attract more orders from global shipowners, potentially curbing China’s dominance in the market. Industry sources suggest this could lead to increased demand for Korean-built vessels, thereby balancing the competitive landscape.