CMA CGM on the verge of ordering nine 22,000 TEU ships

Despite a long period of sobriety by shipping companies in making new orders for large ships, the race seems to be starting again with news that CMA CGM is preparing to order nine units of 22,000 TEUs.

According to a report by Drewry, following the information provided by “Dayly Splash” and another by Lloyd’s List, the French shipping company is said to be in the last stages of negotiations to finalize six new orders, plus another three options.

If confirmed, the ships could become the largest of their kind, beating the 21,413 TEU OOCL ship (and its five twins yet to be delivered). According to the news media, it is likely that the ships will be of the Dual GNL type and will be built by the Chinese shipyard Shanghai Waigaoqiao or the South Korean Huyndai Heavy Industries (HHI) individually or jointly.

CMA CGM is increasing its fleet.

CMA CGM is increasing its fleet.

But given the chronic problem of overcapacity that has ruined the profits of shipping companies in recent years, what could have tempted CMA CGM to risk the still fragile recovery of the industry?

The answer to this question recalls that, firstly, the major shipping companies make decisions and investments with a view to their own interests and the potential impact on the industry becomes a secondary consideration. From the point of view of CMA CGM, this aims to face its fall in the shipping ranking, after the emergence of Cosco and OOCL, and the approach in capacity of its closest rivals.

It should be added that the low utilization of the shipyards allows the offer of a discount (although Drewry admits that it does not know the terms of the potential order) making it easy to observe how CMA CGM was convinced to acquire more ships. In fact, neither the improvement in cash flows nor the high freight rates could have given this shipping company greater confidence to invest its capital.

The largest active vessels of CMA CGM are six (they own three of them) units of between 17,722 TEUs and 17,859 TEUs, while the largest ships ordered are three units of 20,600 TEUs, which were originally agreed for this year, but were postponed to 2018.

By comparison, Maersk Line has a total of 31 units – operating and ordered (owning all) – up to 18,000 TEUS.

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