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Mediterranean Shipping to Acquire Five Giant Container Ships from Daewoo Shipbuilding

Logistic News - Published on Thu, 17 Oct 2019

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Mediterranean Shipping Co will buy five giant container ships from South Korean yard Daewoo Shipbuilding & Marine Engineering Co. for Dollar 762 million in a new sign that ocean cargo carriers are building up their capacity despite falling freight rates and weak trade growth. DSME announced the order without naming the buyer. Two people familiar with the matter said Geneva-based MSC, the world’s second-largest container shipping carrier by capacity, exercised an option to buy the vessels as part of a previous order. The ships likely will be deployed on the Asia-to-Europe trade lane and will be able to move 23,000 containers each. The route is the world’s busiest ocean container lane and carriers including MSC, AP Moller-Maersk A/S and China’s Cosco Shipping Holdings Ltd. use their biggest vessels there, but faltering global trade has left the operators competing more aggressively on pricing.

The Shanghai Containerized Freight Index shows freight rates from Asia to Europe at USD 581 per box this week, the lowest in three years. Trans-Pacific rates, which have been highly volatile on the back of the US-China trade tariffs, were at USD 2,335 per container, the lowest this year.

Jonathan Roach, an analyst at Braemar ACM Shipbroking said that “Container volumes from Asia to Europe rose 4.6% on year from January to August while the fleet of new very large container ships [vessels that move more than 10,000 boxes] has grown 12%. With a weak European economic backdrop, combined with a very large container ship fleet expansion program, freight rate deflation has become difficult to avoid.”

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Posted By : Mohan Sharma on Thu, 17 Oct 2019
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