- Hapag-Lloyd plans to order 30 large container ships valued at $5.1 billion, intensifying competition between South Korean and Chinese shipyards.
- The order includes 15 ships of 15,000-16,000 TEU and 15 ships of 8,000-9,000 TEU, all to be dual-fuel (D/F) powered by LNG. This comes as the South Korean shipbuilding industry, which has focused on high-value-added ships, shifts towards container vessels due to rising freight rates.
- The high price of container ships has increased competition, with Chinese shipyards expanding capacity and South Korean firms leveraging their expertise in ship equipment and D/F propulsion technology to gain an edge.
Hapag-Lloyd, the world’s fifth-largest shipping company by fleet capacity, has announced a significant order for large container ships valued at approximately $5.1 billion (7 trillion won). This order, which includes 30 container ships of varying sizes, has ignited fierce competition between South Korean and Chinese shipyards, reports Business Korea.
About the deal
The order specifies 15 container ships with capacities ranging from 15,000 to 16,000 TEU (Twenty-foot Equivalent Unit) and 15 ships with capacities between 8,000 and 9,000 TEU. All 30 vessels are required to be dual-fuel (D/F) powered by liquefied natural gas (LNG). This move sets the stage for intense competition between South Korea’s top three shipbuilders and their Chinese counterparts.
Historically, the South Korean shipbuilding industry has focused on “selective orders,” prioritizing high-value-added ships such as LNG carriers and very large ammonia carriers (VLAC). As of last month, China held a significant lead with 411 container ships on order, accounting for 57% of the global market share, while South Korea had only 170 ships, holding a 32% market share.
However, with global shipping companies enjoying higher freight rates, South Korean shipbuilders are now aggressively pursuing large container ship orders. The price of a 15,500 TEU container ship has surged by approximately 30% from $168.5 million at the end of last year to $220 million, reflecting the increasing profitability and competitive nature of the industry.
Chinese shipyards, such as Yangzijiang Shipbuilding, are expanding their production capabilities to meet this rising demand. Yangzijiang recently acquired a large site in Jiangsu Province to build a new shipyard, illustrating China’s commitment to enhancing its shipbuilding capacity.
South Korean shipbuilders are optimistic about their competitive edge. Although there is little technological difference between the shipbuilding capabilities of South Korea and China, South Korean firms are noted for their advanced ship equipment, particularly D/F propulsion engines. For instance, HD Hyundai Heavy Industries recently secured an order for 12 LNG D/F 15,500 TEU container ships from a European shipping company, likely CMA-CGM.
The South Korean shipbuilding industry also benefits from the fact that Chinese shipbuilders, with their substantial order backlogs, are unlikely to adopt a low-price strategy. As of now, China’s order backlog stands at 74.65 million CGT (compensated gross tonnage), nearing the peak recorded during the 2008 global shipbuilding boom.
According to industry experts, rising freight rates, driven by increased ton-miles due to disruptions such as the Red Sea crisis, are creating opportunities for fleet expansion and replacement with eco-friendly ships. This market dynamic is prompting large shipping companies like Hapag-Lloyd to place significant orders for new container vessels.
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Source: Business Korea
