12 ships, worth over 20 billion! Cosco Shipping orders the world’s largest methanol dual-fuel container ship

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12 ships, worth over 20 billion! COSCO Orders World’s Largest Methanol Dual-Fuel Container Ships Author/Source: Date: 2022-10-30 Clicks: 12 By investing over 20 billion yuan, COSCO has ordered 12 of the world’s largest 24,000 TEU container ships powered by methanol. Following Maersk and MSC, COSCO Group has now also joined the camp of companies using methanol as fuel, thus ushering in a new era of sustainable development for its container fleet. 　　Built in our own shipyard! Two subsidiaries of COSCO Shipping Holdings place orders for 12 vessels with a capacity of 24,000 TEU
On October 28, COSCO Shipping Holdings (601919), the listed platform for COSCO Shipping Group’s container shipping services and supply chain operations, announced that it had placed orders for 12 methanol dual-fuel powered container ships. Its holding subsidiary Orient Overseas International, along with a wholly-owned single-ship company and another wholly-owned subsidiary, COSCO Shipping Lines, signed shipbuilding agreements with Nantong COSCO KHI Shipyard and Dalian COSCO KHI Shipyard respectively. The total cost for these 12 vessels amounts to $2.3985 billion per ship, or approximately RMB 1.71968 billion each. In total, the value of the orders comes to $28.782 billion, equivalent to roughly RMB 20.63612 billion. 　　Among them, Nantong COSCO Kawasaki will build 7 vessels with a capacity of 24,000 TEU for Orient Overseas; these are expected to be delivered between the third quarter of 2026 and the third quarter of 2028. Dalian COSCO Shipping Kawasaki will build 5 vessels with a capacity of 24,000 TEU for COSCO (Cayman) Mercury Limited, a wholly-owned subsidiary of COSCO Shipping Lines. The ships are scheduled to be delivered between February 2027 and June 2028. 　　Orient Overseas currently expects to secure bank financing covering no more than 60% of the transaction consideration for each vessel prior to delivery, with Orient Overseas providing the financing guarantee. The remaining portion of the transaction consideration will be funded through internal resources of Orient Overseas and its subsidiaries. COSCO Mercury currently expects to arrange bank financing and the corresponding financing guarantees for each vessel, with the amount covering no more than 60% of the transaction value per vessel, prior to the delivery of that vessel; the remaining amount of the transaction value will be covered by COSCO Mercury’s internal resources. 　　Cosco Shipping Holdings stated that, based on the Group’s evaluation of pricing, technical capabilities, and delivery schedules, and in accordance with the aforementioned requirements, after conducting negotiations and comparisons with major shipbuilders—including independent third-party shipbuilders—Nantong Cosco KHI Shipbuilding and Dalian Cosco KHI Shipbuilding possess overall advantages over such independent third-party shipbuilders in terms of shipbuilding technology, quality control, delivery schedules, and ship prices. In addition, Nantong COSCO Kawasaki and Dalian COSCO Kawasaki are the shipbuilders responsible for building the group’s current vessels, and they are more familiar with all the requirements related to the construction of new ships for the group; therefore, they were chosen as the shipbuilders for the vessels to be ordered this time. 　　This custom shipbuilding project is a new initiative by COSCO Shipping to proactively adapt to future competitive challenges, respond positively to the green and low-carbon initiatives of global clients, keep up with the new trends in the development of a green, low-carbon, and intelligent container shipping industry, and advance the construction of a fleet powered by clean fuels. The 12 container ships ordered this time all utilize advanced green methanol dual-fuel technology. Their design and construction incorporate mainstream advanced concepts, integrating numerous energy-saving and emission-reduction technologies. They serve as a crucial foundation for the company to provide customers with comprehensive, green, and low-carbon logistics supply chain solutions that meet their environmental requirements. 　　COSCO Shipping’s efforts and initiatives in the development and application of clean energy for ships reflect its commitment to practicing the principles of energy conservation, carbon reduction, and green development. It adheres to integrating environmental friendliness into its business operations, striving for sustainable corporate development in harmony with the ecological environment. The company is also dedicated to achieving the dual-carbon goals, carrying with it a sense of responsibility and mission to respect, adapt to, and protect nature. 　　At the same time, the ordering of these 24,000TEU container ships is an important measure taken by COSCO Shipping to promote balanced global development of its container business, reduce costs associated with its shipping network, and enhance its core competitiveness. 　　Once the ships under construction by COSCO Shipping Holdings, along with the 12 large vessels ordered this time, are delivered one after another, it will enable the company to further strengthen its competitive advantages on the east-west shipping routes. It will also accelerate the company’s expansion into emerging markets, regional markets, and third-country markets, helping it make a leap from being a global carrier to one that operates across the world. This will enhance the profitability of the fleet and its resilience in the face of economic cycles, while providing a more solid foundation for ensuring the safety, stability, and efficiency of global supply chains. 　　The world’s largest methanol-powered ship! COSCO Shipping orders a dual-fuel container ship for the first time. It is reported that this is also the first time that COSCO Shipping Group has ordered a dual-fuel vessel. As one of the world’s top four global shipping giants, COSCO Shipping Group is the only company that has never invested in any dual-fuel ships. Mediterranean Shipping has ordered a series of LNG-powered ships. Maersk has placed orders with Hyundai Heavy Industries in South Korea for 18 16,000 TEU and 1 3,500 TEU methanol-powered container ships, while CMA CGM has continued to order LNG-powered ships over the past few years; this year it ordered 6 15,000 TEU methanol-powered ships from Daesung Shipbuilding. With this order, COSCO Shipping Group has become the third shipping line, after Maersk Line and CMA CGM, to invest in the construction of large container ships powered by methanol. Given that the methanol-powered ships previously ordered by Maersk and CMA CGM are all New Panamax vessels with a capacity of 15,000–16,000 TEU, this means that COSCO Shipping’s order has now set a new record for the size of methanol-powered container ships. 　　Since 2020, COSCO Shipping Holdings has ordered as many as 32 large container ships at the shipbuilding yards under COSCO Group, through its wholly-owned subsidiary COSCO Shipping Lines and its indirectly controlled subsidiary Orient Overseas. In 2020, Orient Overseas placed orders with Nantong COSCO Kawasaki and Dalian COSCO Kawasaki for the first batch of 12 ultra-large container ships with a capacity of 23,000 TEU. This marked COSCO Shipping’s debut in the category of 23,000 TEU ultra-large vessels. 　　In July 2021, COSCO Shipping Holdings’ indirectly wholly-owned subsidiary COSCO (Cayman) Mercury Ltd. signed a contract with Yangzhou COSCO Heavy Industry for the construction of 10 new Panamax container ships ； In September of the same year, COSCO Shipping Lines signed shipbuilding agreements with Nantong COSCO Kawasaki and Dalian COSCO Kawasaki to build 10 16,000 TEU container ships. All 32 container ships of COSCO Shipping Group are powered by conventional engines, and they are expected to be delivered between 2023 and 2025. 　　Compared to conventional marine fuels, methanol is characterized by the absence of nitrogen oxides and sulfur, as well as low PM emissions. COSCO Shipping said that after thorough research and analysis, methanol as a fuel has advantages such as simplicity in operation, ease of storage and use, low maintenance costs, high safety levels, and relatively stable prices. In particular, the ongoing development and improvement of the green methanol supply chain have made it stand out among various alternative new energy fuels, making it the preferred choice for the company in building a fleet of new energy container ships. 　　Industry experts analyze that there are several reasons why COSCO Shipping Group opted for methanol rather than LNG as its power source this time. Firstly, LNG is quite expensive, and in China, the infrastructure capable of supplying LNG fuel remains rather limited ； Secondly, the construction cost of LNG dual-fuel ships is higher than that of methanol-powered ships; meanwhile, methanol dual-fuel ships are easier to build. Reportedly, COSCO Shipping Group will utilize the bio-methanol project developed by Maersk in China. 　　 According to data from Alphaliner, COSCO Shipping’s fleet currently comprises 467 container ships, with a total capacity of approximately 2.8761 million TEUs. This includes 177 owned vessels and 290 chartered ships. The company ranks fourth globally in terms of shipping capacity. Meanwhile, COSCO Shipping Group has 34 new ships under construction, with a total capacity of approximately 586,700 TEU; the orders placed represent 20.4% of its current fleet size. 　　According to COSCO Shipping’s latest financial reports, the group’s revenue for the first three quarters of this year was 316.541 billion yuan, representing a 36.75% increase on a year-on-year basis. The revenue per container for the group’s container shipping operations increased significantly, while cargo volume declined on a year-on-year basis ； The net profit attributable to the parent company was 97.215 billion yuan, representing a year-on-year increase of 43.74%; the profitability of the container shipping business increased significantly, while that of the port business grew steadily. Among them, revenue in the third quarter was 105.756 billion yuan, representing a year-on-year increase of 14.68% ； The net profit attributable to the parent company was 32.464 billion yuan, representing a year-on-year increase of 6.42%. 　　In the first three quarters, the container shipping business of COSCO Shipping Control handled approximately 18.53 million TEU of cargo, a 9.36% decrease compared to the same period last year. Although freight volume declined slightly, the revenue per container per route increased significantly on a year-on-year basis; as a result, overall performance showed strong growth compared to the same period last year.