Maersk Exercises Option for Additional Methanol-Fueled Containerships

Maersk is contracting for four additional 16,000 TEU container ships from Hyundai Mipo shipyard as part of its order for new vessels capable of operating on methanol originally announced in August 2021. In possibly one of the worst kept secrets in the shipping industry, Maersk is confirming the reports that it exercised the options for the four vessels.

Hyundai Heavy Industries, the publicly traded company that owns the shipyards in South Korea, also made a brief filing with the Korean Stock Exchange acknowledging the order for four containerships due for delivery during the first five months of 2025. The filing only mentions an “European shipowner,” and comes as part of a confirmation from Korea Shipbuilding & Offshore Engineering of a strong start with orders for 2022.

Maersk is highlighting the vessels as part of its efforts to reduce emissions and transition its global operation to more environmentally-friendly ships. The shipping giant is expected to use the four vessels not as fleet expansion, but instead as part of an overall fleet modernization to replace older vessels. The order for the first eight vessels was also part of the fleet modernization. Maersk, unlike many of its major competitors, has not announced a fleet expansion effort and recently ceded the title of world’s largest container carrier to MSC. Maersk’s CEO said the size designation was not significant in the company’s overall strategy to transform into a global logistics company.

The new vessels are part of what Maersk is calling a significant evolution in containership operations. The dual-fuel power plant is designed to operate on methanol full time provided Maersk can source sufficient quantities of the green fuel. The company has said it anticipates at introduction the vessels will be at least partially operating on more traditional fuels but they expect the construction will help to drive the development of the methanol infrastructure. The design also incorporates other advancements including moving the bridge and accommodations block to the front of the ship and placing the funnel to one side to increase cargo capacity and efficiency in loading and unloading containers.

KSOE reported a total of nine orders on January 10 valued at $1.1 billion. The options exercised by Maersk were valued at approximately $700 million with some analysts suggesting that the attractive price was part of the motivation for exercising the option at this time. Shipbuilding prices have been on the rise in part due to strong steel pricing in 2021.

Hyundai Mipo also received an order for four smaller 2,500 TEU containerships. They will be dual-fuel ships due for delivery to an unnamed owner in the second half of 2023. Another one of the group’s shipyards, Hyundai Samho Heavy Industries also reported its first order for 2022. They will be building an LNG carrier for delivery by the first half of 2025.

Overall, KSOE is targeting orders valued at $17.4 billion this year up from its target of $14.9 billion for 2021. The surge in newbuilding orders last year however drove the value of KSOE’s reported new orders in 2021 to $22.8 billion.