MSC Mega-Order Revives China's Rongsheng Shipyard, a Long-Defunct Giant

 

MB Shipbroking has confirmed long-running rumors that Jiangsu Rongsheng Heavy Industries, a dormant mega-yard near Shanghai, will be revived after a decade of inactivity. A large-scale contract from number-one ocean carrier MSC appears set to bring the shipyard back to life.

Boxship construction slots are all but spoken for through next year at the top East Asian shipyards, but MSC has an insatiable appetite for new tonnage. It has the world's largest boxship fleet, as well as the world's largest boxship orderbook. By underwriting a reboot at a shuttered shipyard, the Swiss-owned company appears to have found a way to acquire even more vessels, even if existing yards are full. 

Rongsheng - located on an island near Nantong - was a cautionary tale from the last boom-and-bust cycle of shipbuilding. It invested heavily in a rapid expansion program in the 2000s, but a downturn in ordering activity and lagging payments from owners left Rongsheng unable to buy parts or service its debt. It collapsed and closed its doors in 2014.

Rongsheng's revival was first rumored in 2022, when George Economou's TMS Bulkers was said to be in talks for a series of bulk carrier newbuilds. That order never firmed up past the letter of intent stage, and the yard remained dormant for two more years - until a flurry of revival for Chinese shipbuilding yards swept it back into the spotlight. 

Word of a possible multibillion-dollar order with the long-defunct Rongsheng Shipyard began circulating in August, but no official confirmations were forthcoming. MB Shipbroking has now confirmed a firm contract for a series order for 12,000 TEU LNG dual-fuel boxships for MSC, a comparatively complex vessel class with a higher profit margin. 

Rongsheng used to have a peak production capacity of about eight million deadweight tonnes, spread across four drydocks. It is so large that if it returns to business, it could increase global shipbuilding capacity by about one percentage point on its own, according to MB Shipbrokers. 

Satellite imagery from earlier this year shows that the yard will be making a substantial transition. Years of inactivity left large areas abandoned and overgrown, with all four drydocks flooded. One dock contained a partially-complete, rusting bulker - visual evidence of the downturn that followed the last shipbuilding boom.