Jun 4, 2015

Maersk orders up to 17 units of 20,000-TEU boxships

Soren Skou, CEO, Maersk Line (left), Sung-Leep Jung, CEO, Daewoo Shipbuilding & Marine Engineering (right)

Danish liner giant Maersk Line on June 2 signed a newbuilding contract for eleven 19,630-TEU containerships with six more on option with South Korea's Daewoo Shipbuilding & Marine Engineering (DSME) at its head office in Copenhagen. Total contract value for 11 units on firm order was given at $1.8 billion. Scheduled to be completed between April 2017 and May 2018, the 11 mega-boxships will be deployed on the Asia-Europe route. Maersk earlier disclosed its plan to make equipment investment totaling $15 billion over the five years from 2015 through 2019. It already ordered seven 3,600-TEU boxships at the turn of 2015. The above order is also in line with such investment plan. By deploying cutting-edge ultra-large boxships, Maersk intends to bolster its cost competitiveness.

Maersk has a track record in ordering 20 units of 18,000-TEU Triple-E vessels from DSME in 2011, and it decided to place the above order with DSME again. The ships in the latest order will be second-generation Triple-E vessels. All vessels will fly Danish flag, and each will measure about 400 meters in overall length, 58.6 meters in width and 16.5 meters in draft. New model's loading capacity will be improved, but its ship type will be almost the same with current Triple-E units. Container loading capacity of the units in the latest deal will be the largest in its operational fleet.
Soren Toft, COO of Maersk, commented that, "These next-generation Triple-E vessels will help us stay competitive in the Asia-Europe trade and will be key in our strategy to grow with the market." The vessels will also replace smaller, less efficient vessels, according to Maersk.
After ordering its Triple-E vessels, Maersk has been freezing newbuilding order placements for three years. But at the Capital Market Day of Maersk Group held in Copenhagen in the fall of 2014, Soren Skou, CEO, said in a speech, "New vessel capacity, 425,000 TEUs in total, is needed for delivery in 2017-2019 in order to grow with the market," and disclosed the company's plan to make massive investments in newbuildings, containers, IT and other facilities over the next five years.
In January 2015, Maersk already ordered from China's COSCO Shipyard seven ice-class 3,600-TEU units bound for Seago Line, intra-Europe operator in Maersk Group. The latest order with DSME follows this.
Maersk, with its policy to grow keeping step with the market, has been reinforcing its cost competitiveness in recent years. The 18,000-TEU Triple-E vessels currently under construction will have a larger loading capacity than hitherto 14,000-TEU E-Class ships, but will also feature a significant improvement in fuel efficiency. The last ship in the series is scheduled to be delivered within June, completing the series. By deploying the vessels, Maersk will go ahead with reducing unit cost. On the East-West route, ship deployment through "2M" alliance with Mediterranean Shipping Co. (MSC) is expected to expand its service network while creating $350 million in annual cost savings. As a result, Maersk achieved a wide-margin year-on surge of 57% to $714 million in its net profit for January-March quarter of 2015. With the deployment of cutting-edge newbuildings, Maersk intends to further boost its cost competitive edge.

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