Seaspan Orders More Boxships Contributing to Construction Boom
Seaspan is continuing to push forward with an aggressive ship construction program that will expand its capacity by nearly 50 percent over the next four years. Working with the major and regional carriers, Seaspan is making significant investments into container shipping reflecting the carriers' belief that the sector is at the beginning of a long-term upward cycle. The construction orders are also providing a boost for shipbuilders who were otherwise facing uncertain prospects.
In its latest move, Seaspan announced that it has placed an order for six additional containerships. The vessels, which will each have a capacity of 15,000 TEU, will be built at “a major shipyard,” and when completed will enter long-term charters with an unidentified global liner company. The ships are scheduled to begin delivery in the fourth quarter of 2023.
The order of new containerships might not seem all that significant, especially in light of the strength the market has been showing since late in 2020, except these orders come a week after Seaspan announced other orders for four 12,000 TEU vessels, four 15,000 TEU vessels, and an option for yet four more 15,000 TEU boxships. A month earlier, Seaspan announced another order for ten 15,000 TEU LNG-fueled containerships, which will be operated under a long-term charter to Zim.
Since December 2020, and including this week’s announcement, Seaspan in total has places 31 newbuild orders with a total capacity of 457,000 TEU. The company also announced it was acquiring two second-hand vessels built in 2019 with an additional 30,000 TEU capacity. The new orders and acquisitions in total represent a 25 percent increase from Seaspan’s fleet of 127 containerships as of September 30, 2020. Reflecting another trend in the industry the 31 ships are also larger totaling a 45 percent increase in the fleet's capacity.
Part of what makes the rapid expansion possible is Seaspan’s strategy of concentrating on the 10,000 to 15,000 TEU capacity segment, as well as the company’s long-standing relationships with a large and diverse group of carriers. Only two of the orders are for ultra-large 24,000 TEU vessels. The boom in container shipping is driving the lines' interest in fleet expansion and Seaspan is leveraging the capital markets to finance the construction while spreading the risk over a broad base of charter contracts.
Bing Chen, Chairman, President and CEO of Seaspan, commented, "With our recently announced 31 newbuilds, it is a strong testament to the trust our customers have in our long-term partnerships. I am extremely proud of our team who has flawlessly executed these complex projects leveraging our operational excellence and fully integrated platform. I am confident that the relentless focus on our core competencies proves our resiliency and ability to achieve quality growth despite all market challenges and cycles."
The boom in new construction orders for boxships is also good news for the shipbuilding industry. Clarkson Research reports that two-thirds of the new orders on the books are for containerships representing 2.45 million compensated gross tons.
Nearly half of all the containership orders are going to South Korean shipbuilders. Currently, the South Korean yards have orders for 22 containerships, which represent 1.2 compensated gross tons. These orders represent nearly half the tonnage and a third of the total number of ships currently contracted for with the Korean shipbuilders.
South Korea’s Pulse media reports that Korea Shipbuilding & Offshore Engineering Co., the shipbuilding holding company of Hyundai Heavy Industries Group, has already booked 19 percent of its targeted 2021 contact values with orders totaling $2.9 billion as of the beginning of March 2021.