CMA CGM in talks to order at least three container megaships

France’s CMA CGM SA is in talks to build at least three container megaships, joining the race among the top container operators that already use such vessels to increase their market share on the world’s busiest trade routes, people with knowledge of the matter said.

The ships would be able to carry around 20,000 containers each and cost about $420 million in total, the people said.

Deliveries would start in 2017, and the order will probably go to South Korea’s Hanjin Heavy Industries & Construction Co., which offered the French company a discount of around 5% compared with other South Korean yards that have so far monopolized the construction of the huge Triple-E class of container vessels, the people said.

South Korea’s Daewoo Shipbuilding & Marine Engineering Co., Hyundai Heavy Industries Co. and Samsung Heavy Industries Co. have won almost all orders for Triple-E’s to date.

CMA CGM, the third-largest container-shipping company by capacity, would deploy the vessels to move cargo between Asia and Europe, the world’s busiest ocean trade route. It would join its bigger competitors, A.P. Møller-Mærsk A/S’s Maersk Line of Denmark and Swiss-based Mediterranean Shipping Co., which already use Triple-E-class ships as part of their so-called 2M alliance. That alliance moves around 35% of all goods between Asia and Europe and controls a market share of 15% and 37% of goods moved on the trans-Pacific and trans-Atlantic routes, respectively.

Container shipping, which carries about 95% of the world’s manufactured goods, has suffered for the past decade from overcapacity that has led to falling freight rates, which major operators have described as unsustainable. Dozens of smaller operators regularly undercut freight rates from Asia to Europe and across the Atlantic and Pacific oceans, hoping to stay in business until the industry recovers.

Fully loaded, Triple-E’s cut the cost of moving a container across the oceans by around 25%, and industry executives say smaller operators that can’t afford to buy such behemoths will increasingly lose market share on the biggest trade routes.

Last September, CMA CGM formed its own alliance with China Shipping Container Lines Co. and Middle East shipping major United Arab Shipping Co. called Ocean Three, which controls a 20% slice of all cargo between Asia and Europe and 13% and 7% across the Pacific and Atlantic oceans, respectively.

Maersk Line Chief Executive Officer Soren Skou said in a recent interview with The Wall Street Journal that the operator would place an order of 11 Triple-E’s in the first half of this year. Maersk Line ordered 20 such vessels in 2011.

Demand for container shipping is expected to grow by around 4% to 5% this year, but Mr. Skou said he doesn’t expect freight rates to increase.



Copyright Ships & Ports Ltd. Permission to use quotations from this article is granted subject to appropriate credit given to www.shipsandports.com.ng as the source.

..