Maersk Line, Daewoo seal partnership on 11 ultra-large container vessels

MAERSK LineMAERSK Line has signed a new building contract with Daewoo Shipbuilding & Marine Engineering (DSME).

The order is for eleven plus six optional second generation Triple-E container vessels with a capacity of 19,630 Twenty foot Equivalent Unit (TEU) each.

The vessels will have a length of approximately 400 meters (m), width of 58.6m, and a 16.5m draft.

The contract has a value of $1.8 billion. It was signed by President and Chief Executive Officer of DSME, Sung-Leep Jung and Chief Executive Officer of Maersk Line, Soren Skou, at a ceremony at Maersk Line’s headquarters in Copenhagen.

This is the second new-building order in Maersk Line’s investment programme, following the seven 3,600 TEU feeder vessels announced earlier this year.

Over the coming five years, Maersk Line is planning to invest $15 billion in new-buildings, retrofitting, containers and other equipment.

Maersk Line will thus be able to maintain the necessary capacity to grow with global demand as well as replace less efficient tonnage.

“I am very happy with this order. These vessels will help us stay competitive in the Asia – Europe trade and will be key in our strategy to grow with the market. It is the second order this year and we expect to order more vessels, which we can add to our fleet from 2017 and onwards,” says Soren

According to agency report, the new vessels will be the largest in Maersk Line’s fleet and are intended for the Asia – Europe service. The vessels will replace smaller, less efficient vessels.

Maersk Line has a long and close relationship with DSME. Most recently, DSME built the pioneering Triple-E vessels. The last (out of 20) will be delivered this month.

The 11 new vessels will join Maersk Line’s fleet between April 2017 and May 2018. They will sail under Danish flag. 
“I am very confident placing this order with DSME. The company has a very good track record. Together we can leverage our Triple-E experiences to further improve performance, not least energy efficiency,” says Soren.

DSME and Maersk Line are working on amplifying the features of the Triple-E vessels (efficiency, economy of scale and environmentally improved) in the new vessels.

The foremost shipping firm explained early this year that it is considering ordering 11 container megaships from Asian ship builders in the second quarter of this year.

“We need to grow with the market and increase our capacity by 425,000 containers from 2017 onward for three years,” Skou told The Wall Street Journal, adding that  “It’s very likely the first order will be 11 Triple E size ships. That’s what we need for a weekly round trip from Asia to Northern Europe.”

At the time, competitors doubted whether Maersk Line would be able to fill such behemoths. But those competitors are now rushing to place their own Triple-E orders. Those vessels, the world’s biggest and most fuel efficient, can save around 25 per cent  of the cost of moving a container from Asia to Europe, compared with smaller vessels in Maersk’s fleet, provided they sail fully loaded.

Skou said he expects tough competition in the industry to continue, suppressing freight rates this year. Demand for seaborne-moved cargo is expected to grow three per cent five per cent this year, he said.

“Over the past 10, 15 years prices have come down on average one to two percentage points a year. We need to build a business that can sustain that kind of deflationary pricing market,” Skou said, adding that “I can’t have a strategy that is based on a hope that prices will magically start increasing.”

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