Seaspan Adds to Record Orderbook with 10 Boxships for Zim
Seaspan is continuing the record pace of containership newbuilds working with its customers among the leading carriers to expand and renew their fleets. In the latest development, Seaspan announced an agreement with Zim for 10 additional boxships that Seaspan will build at a major shipyard.
Unlike the other recent construction orders, this one is for smaller ships designed to serve niche markets. Seaspan is ordering 10 dual-fuel liquified natural gas containerships in a contract valued at $1.05 billion. They will each have a capacity of 7,000 TEU with deliveries to begin in the fourth quarter of 2023 and continue through 2024. The LNG containerships are anticipated to be financed from existing liquidity, cash flow from operations, and additional borrowings.
The new agreements both double the number of vessels Seaspan is building for Zim and the number of LNG-fueled boxships Seaspan has on order. Concurrent with the order, Seaspan also announced a new strategic agreement for the long-term charter of the vessels to Zim. The twelve-year charter is valued at more than $1.5 billion for the ten containerships. Zim said these vessels will serve various global-niche trades. The vessels are in addition to ten 15,000 TEU LNG-fueled vessels Seaspan ordered in February 2021 under a separate agreement with Zim. The largest vessels will operate on Zim’s Asia to U.S. East Coast trade.
“We are very pleased to collaborate with ZIM on this forward-thinking project which provides advanced designs, competitive pricing, and valuable deliveries,” said Bing Chen, Chairman, President and CEO of Seaspan. “We see these modern 7,000 TEUs to be the natural successor to the aging global pool of conventional vessels in the 4,000 to 9,000 TEU range, where relatively little fleet renewal has taken place. We are experiencing strong customer interest for this vessel size.” Most of Seaspan’s previous orders have been between 12,000 and 15,000 TEU.
With this additional order, Seaspan brought its record book to a total of 55 vessels, which will add more than 730,00 TEU to its fleet. The vessels will be operated under long-term charters by the leading carriers who are customers of Seaspan and use the relationship to expand and modernize their fleets without capital investments. The new ships represent a nearly 75 percent increase in Seaspan’s total capacity.
“We continue to execute on our growth plan in a prudent manner,” said Graham Talbot, CFO of Seaspan. “In line with all of our vessel investments, we have de-risked the $1.05 billion capital expenditure associated with the dual-fuel LNG Containerships by signing long-term charters with a leading global liner representing approximately $1.8 billion of contracted cash flow. We intend to maintain balance sheet and risk management integrity while continuing the growth track that we have established over Seaspan’s 20-year history. We remain diligent on our path toward an investment-grade credit rating, and operational scale will play an important role in this pursuit.”
News of these latest orders came as Seaspan also took delivery of two containerships it had acquired in the secondhand market. The two vessels built in 2019 each have a capacity of 15,000 TEU and are operating under a long-term charter to one of Seaspan’s liner customers. With the delivery of these vessels, Seaspan's current fleet consists of 131 vessels with a total capacity of 1,120,200 TEU.