Following the order for six 15000TEU methanol powered container ships from Jiangnan Shipbuilding in early April, the world's third-largest container shipping giant, Dafei Group, will increase its investment in methanol fuel and plan to order up to 10 24000TEU methanol dual fuel ships. With the official launch of new global maritime environmental regulations this year, the container shipping market has entered a new era, and a shipbuilding battle for green and environmental protection has officially begun.

Book another 10 ships? Dafei Methanol Power Container Ship's Handheld Orders Will Increase to World First

According to trade news, DaFei has approached major shipyards in China and South Korea to consider ordering 5-10 24000TEU methanol powered ultra large container ships. The relevant shipyards include Hudong Zhonghua, Yangtze River Shipbuilding, as well as the three major South Korean shipping companies, Hyundai Heavy Industry Group, Samsung Heavy Industry, and Daewoo Shipbuilding. It is expected that the cost of each new ship will reach as high as $240 million, with a maximum of 10 ships totaling $2.4 billion (approximately RMB 16.611 billion).

The ship broker believes that due to the large number of orders, it is difficult for DaFei to obtain an early delivery time, and the delivery time for this batch of new ships may have to wait until 2026 to 2027. In addition, some shipyards may not participate in the construction project of DaFei, as the 24000TEU container ship is too large and will occupy a lot of dry dock space at the shipyard.

Experts point out that in the current market environment, shipyards are building as many ships as possible. Compared to ultra large ships, shipyards prefer high value and relatively smaller specifications of high value-added ships, such as 16000TEU container ships or LNG ships. Currently, many Korean shipyards also adopt this strategy, which is to sacrifice some orders rather than accept high value-added ship orders.

If this order is finalized, DaFei will become the second company after COSCO Shipping Group to choose to build a methanol powered container ship with a capacity of over 20000 boxes.

Order 10 more 24000TEU methanol powered ships? The shipping industry enters a new stage

As the earliest shipping giant to invest in LNG power, DaFei has always been the world's largest shipping company to invest in LNG fuel. But in 2022, DaFei suddenly joined the methanol fuel camp, and subsequently ordered up to 24 methanol powered ships, including 12 15000TEUs at Jiangnan Shipbuilding and Dashang Group, as well as 12 13000TEUs from Hyundai Sanhu Heavy Industry in South Korea, totaling 336000 TEUs.

In addition, there were reports earlier this year that DaFei would order 10 4000TEU methanol powered container ships, and Hyundai Weipu Shipbuilding is expected to take over the order. If all 10 orders for 4000 TEU and 10 orders for 24000 TEU methanol powered container ships are finalized, DaFei's methanol powered container ship holding orders will increase to 44, ranking first among all shipping companies.

In order to achieve its goal of net zero emissions by 2050, DaFei is accelerating its decarbonization trajectory by investing heavily in LNG and methanol fuels. The company expects that these two areas will complement each other and promote decarbonization in the shipping industry in the coming years.

In early April, DaFei also signed a memorandum of understanding with COSCO Shipping Group and Shanghai Port Group on cooperation in the supply of green methanol for port ships. According to the memorandum, the three parties will work together to purchase, supply, and deliver green methanol fuel for the future dual fuel methanol fleets of DaFei and COSCO Shipping at major ports in China, including Shanghai Port.

According to the latest data from Alphaliner, DaFei's fleet currently operates 616 container ships, including 239 self owned and 377 leased vessels, with a total capacity of 3.44206 million TEUs, ranking third globally and a market share of 12.9%. In addition, DaFei has 97 new ships under construction, totaling 900835 TEUs, with handheld orders accounting for 26.5% of the existing fleet.

New environmental regulations change market landscape, and container shipping companies rush to build methanol powered container ships

Despite the continuous decline in container freight rates since the second half of last year, container ship orders have reached a new historical high. However, industry insiders believe that the new global carbon reduction regulations for shipping have come into effect this year, and the consolidation market has entered a new era. What is currently affecting freight rates is not only the supply and demand of cabin space, but also the speed at which old ships exit.

Previously, the European Union had decided to introduce a carbon tax starting from 2024 and fully levy it in 2026. Affected by this, major shipping companies must choose environmentally friendly and energy-saving ships for their ships arranged on the European route, so they have launched green ship construction plans. However, even if the shipping company is full of cash and moves too slowly, it will not be able to grab the dock, delay the shipbuilding time, and the ship price will repeatedly rise.

In order to reduce carbon emissions, methanol fuel has become a popular choice for container shipping companies when booking ships. It is understood that methanol fuel has the advantages of low emissions and high energy efficiency, and is therefore considered an environmentally friendly ship fuel that can replace LNG. In the past, due to concerns about the difficulty in obtaining methanol sources and the low ignition point of methanol, which is three times the amount of fuel used, it would occupy a large storage space on ships and affect the loading capacity. Moreover, the price of methanol was about 50% higher than that of LNG, so methanol fuel was not initially favored.

In recent years, due to the increase in natural gas production, the production cost of methanol has been decreasing. In addition, thanks to the development of nitrogen oxide emission reduction technology, the "disadvantages" of methanol compared to LNG have been reduced; On the contrary, the shortcomings of the high-pressure and ultra-low temperature maintenance equipment required for using LNG are becoming prominent.

According to Alphaliner's statistics, as of the first quarter of this year, there were nearly 70 methanol powered container ships under construction worldwide, with a total capacity of nearly 1 million TEUs, accounting for 12% of handheld orders, compared to only 1% in the same period last year.

According to Clarkson's statistics, there were a total of 37 new container ship orders in the first quarter of this year, of which up to 21 were methanol powered ships, including 12 13000TEU ships from Dafei Group at Hyundai Sanhu Heavy Industry, and 9 9000TEU ships from South Korean shipping company HMM at Hyundai Sanhu Heavy Industry and HJ Heavy Industry (formerly Hanjin Heavy Industry). Among the total 392500 TEU container ship orders in the first quarter, methanol powered ships accounted for 237000 TEU, accounting for over 60%.

In contrast, out of a total of 158 new container ship orders in the first quarter of 2022, only Maersk ordered 4 16000TEU methanol powered ships.

Order 10 more 24000TEU methanol powered ships? The shipping industry enters a new stage

According to the International Ship Network, starting with Maersk Shipping's first methanol powered container ship order in 2021, four of the world's top ten shipping giants have joined the methanol fuel camp. In addition to Maersk, there are also third ranked DaFei, fourth ranked COSCO Shipping Group, and eighth ranked HMM.

In addition, the fifth ranked German company, Herbert Roth, recently announced plans to order six 4000TEU methanol powered ships. In addition, the sixth ranked company, Evergreen Shipping, is said to have issued a bidding invitation to shipyards in China, Japan, and South Korea, planning to spend $4 billion to build 24 16000TEU methanol powered container ships.

The world's largest container shipping company, Mediterranean Shipping, has previously publicly stated that it is planning to use methanol fuel in new ships to promote the transition to green methanol.

As the world's first container shipping company to order methanol powered container ships, Henrik Ekmann, head of new shipbuilding and renovation at Maersk, recently stated, "Maersk has reached the next milestone. Our regional ships are now able to operate with green methanol on both the main and auxiliary engines

Previously, experts stated that whoever has energy-saving ships in the future can become the king in the maritime industry. With the implementation of new environmental regulations and changes in market competition rules, the global maritime market has officially entered a new era.

Source: International Ship Network