Seaspan Increases its Record Orderbook as Zim Exercises Boxship Option

containership construction charters drive market
Zim exercised an option for five additional 7,00 TEU boxships (Zim file photo)

Published Sep 1, 2021 4:49 PM by The Maritime Executive

The unabated strong demand in the container shipping markets and positive long-term is continuing to drive the orderbook towards an all-time high while also attracting new investors into the segment. Among the areas seeing the strongest growth is the charter market, which permits the shipping lines to expand without upfront capital outlays and provides a strong, steady income for investors building the new ships.

Seaspan has been among the most aggressive in this strategy developing long-term relationships with all the major carriers. Seaspan announced today a further expansion of its already strong orderbook adding another five percent in capacity on order. In total, Seaspan now has 60 newbuilds ordered, with a total capacity of 769,000 TEU, all of which will operate on long-term charters to major carriers. That represents a nearly 50 percent increase in the number of vessels and a two-thirds increase in TEU capacity over Seaspan’s current fleet.

The latest order for five 7,000 TEU containerships is an extension of an agreement announced in July with Zim. The Israeli shipping company exercised an option in its contract with Seaspan bringing the total long-term charter to 15 vessels. These latest ships will also be dual-fuel LNG containerships due for delivery in the fourth quarter of 2024. The previous ten ships are due for delivery starting in the fourth quarter of 2023 and are in addition to 10 LNG containerships each with a capacity of 15,000 TEU ordered earlier in 2021 under another long-term charter between Zim and Seaspan.

“The exercise of this option, with valuable vessel deliveries at competitive pricing, highlights the continued quality growth for both companies,” commented Bing Chen, Chairman, President and CEO of Seaspan. “With strong customer interest in this vessel size (7,000 TEU), we consider this category to be the natural successor to the aging global fleet of conventional vessels between 4,000 and 9,000 TEU."

Earlier in August, Zim, which went public at the beginning of 2021, announced all-time record financial results for the first half of 2021. The carrier following a strategy of operating niche and high-value services reported better than a 30 percent increase in volumes to more than 1.7 million TEU transported in the first half of 2021 while the average freight rate per TEU more than doubled to $2,145. The strength of the market helped Zim achieve a record $4.13 billion in total revenues with operating income (EBIT) of $1.84 billion in the first six months of 2021.

Last week, BIMCO reported that eight months into the year orders for containerships had doubled since the beginning of the year. Construction is approaching an all-time high reached 13 years ago and with orders such as the latest from Seaspan, the record may be broken during the last four months of the year. BIMCO notes that shipping lines are anxious to add capacity and are increasing the size of their orders to realize perceived market opportunities.

The strength of the market and the charter opportunities is not only driving Seaspan’s growth but also others including the major shipyards in China, Japan, and South Korea. The yards have formed relationships to build and charter ships. Now, based on the strength of the market Taiwanese shipbuilder CSBC Corp announced that it too is looking to expand into the build-and-lease business. Chairman Cheng Wen-lon cited the historic high demand in the container segment and record freight rates. Having built more than 130 containerships for major carriers including Evergreen, Yang Ming, and Wan Hai, CSBC believes the charter market could stimulate business and provide a positive, long-term revenue stream for the shipbuilding which has been working to stem financial losses incurred over the past few years.