Evergreen Orders 24 Methanol-Fueled Ships at a Cost of Nearly $5 Billion 

Evergreen methanol
Evergreen will spend up to $5 billion for a new class of methanol dual-fuel ships (Evergreen)

Published Jul 11, 2023 2:58 PM by The Maritime Executive

Evergreen has become the next major carrier to join the growing list of lines investing in methanol dual-fuel newbuilds. Not waiting for the technology to be commercialized for other alternative fuels but seeking to protect their investments in new capacity, the carriers are turning to methanol as an available technology that will meet the emerging requirements for low emissions.

In a stock exchange filing with the Taipei Stock Exchange, Evergreen reported today, July 11, that it has completed two contracts that could represent an investment for as much as $5 billion for new methanol dual-fuel containerships. Brokers reported in April 2023 that the carrier had begun a tender process seeking proposals from the leading shipyard for a new class of containerships.

Samsung Heavy Industries received the larger portion of the order for a total of 16 containerships. Each will have a capacity of 16,000 TEU with a cost of between $180 million and $210 million per ship. Speculation is that deliveries would start in 2026 based on the available building slots at the yard. The contract with the South Korean builder is valued at between $2.88 billion and $3.36 billion.

Yard capacity is also being speculated as the reason that Evergreen decided to split the order between multiple yards. The second contract was signed with Japan’s Nihon Shipyard Co. They will build a further eight vessels also with a 16,000 TEU capacity and the same cost per ship. This second contract is valued at between $1.44 billion and $1.68 billion.

Evergreen had previously led the industry with the move to ultra large container vessels building the first vessels to reach and exceed the 24,000 TEU hurdle. Evergreen is already the world’s sixth largest carrier according to the rankings from Alphaliner with a fleet of over 200 ships and total capacity of nearly 1.7 million TEU.

The carrier has built up strong cash balances reporting record results during the past few years. Even in 2022 where volumes and rates began to fall, Evergreen was up by more than a quarter over 2021. The company reported more than $20 billion in revenues for 2022 with operating profits of nearly $12 billion.

Speculation is that the new vessels will be deployed between Asia and Europe to address the emerging EU ETS regulations and other environmental requirements set to go in place for European ports and shipping.

Electing to proceed with methanol-fueled ships Evergreen follows Maersk which was the first to place orders and yesterday took delivery on the first methanol-fueled containership. Ordering 24 methanol containerships Evergreen will be just one behind Maersk which has 24 on order in addition to the one just delivered. Other major carriers including COSCO/OOCL and CMA CGM have also followed with methanol orders. Feeder ship operators such as X-Press also ordered methanol-fueled containerships.

DNV’s principal consultant Martin Wold had predicted that methanol would gain momentum as the preferred fuel for new orders. He has cited evidence of the growing pipeline and at the beginning of 2023 highlighted that methanol had reached 13 percent of the orderbook in record time. As of mid-2023, DNV calculated that the total orderbook for methanol-fueled ships has reached 130 vessels for delivery over the next five years. From a small base of just 24 ships at the end of 2022, they expect it will exceed 150 ships in 2028 and the shipping companies are just beginning to explore conversions for existing ships to methanol capabilities.