China International Marine Container (CIMC) has placed orders for seven compact wide-beam ships of 8,800 teu at China’s state-owned Dalian Shipbuilding Industry Corporation (DSIC). The USD 595 million deal is backed by (very-)long-term charters to the Mediterranean Shipping Company (MSC). The vessels are scheduled for delivery in 2015 and 2016.
Market rumors suggested that MSC and CIMC were mulling such a newbuilding deal since the beginning of this year, but it appears that the two companies waited for newbuilding prices to bottom out. At USD 85 million per unit, the cost of the ships is in line with comparable orders placed in recent months for container ships in the 8,800 – 9,200 teu size range.
Since CIMC is not a ship manager, MSC is believed to take the ships on bare-boat charters and manage them in-house. Alternatively, management could also be outsourced to a third party. The former however seems more likely, since the deal between CIMC and the Swiss-Italian shipping line stipulates that MSC will charter the ships for USD 25,000 per day from delivery for an unusually long period of 17 years. At the end of this long-term lease, MSC is obliged to purchase all seven vessels at a cost of USD 21.5 million per ship. The CIMC deal therefore appears to be more of a funding exercise by its nature than a typical time-charter deal, which includes aspects such as crewing and ship management.
For CIMC, the MSC-contract marks the company’s second foray into vessel ownership. In September of 2012, CIMC had ordered ten 9,200 teu compact wide-beam ships for 12-year bare-boat charters to CMA CGM. CIMC, which designed the ships in-house, ordered six units at DSIC and four ships at STX Dalian. Earlier this year, the financial instability of the STX group forced CIMC to cancel the orders at STX Dalian and replace them with new orders for four identical ships at New Century Shipyard Jingjiang.
MSC has been at the forefront when it comes to ordering compact wide-beam vessels of the new 19-row wide ship class. MSC already received such ships from Hyundai Samho and from Sungdong and it is to take delivery this month of the first 9,400 teu compact wide-beam (MSC ANTALYA aka JUDITH SCHULTE) from Shanghai Jiangnan Changxing Shipbuilding.