Shipyard becomes ship owner! Taiwan Shipbuilding Corporation self-builds 4 container ships, high-priced bidding

2023-08-05 09:00

Taiwan Shipbuilding Corporation's (TSC) sale of four self-built 2800TEU container ships is progressing smoothly.

On July 29, TSC issued an announcement stating that 20 international companies were invited to bid, with 10 ultimately submitting bids. The bidding process has been successfully completed, and TSC will now begin the review process.

Last year, TSC capitalized on the strong demand, record-high prices, and tight capacity in the container ship market to plan the construction of four 2800TEU container ships. The plan was to either lease them out after construction or sell them opportunistically. The first ship is expected to be delivered at the end of March next year, and the fourth in the third quarter of next year.

At the end of last year, construction began on the first of TSC's four self-built 2800TEU container ships, marking the first time TSC has decided to build ships and act as the ship owner.

In the past few years, TSC has built 10 such 2800TEU container ships each for Evergreen Marine and Yang Ming Marine Transport. These ships are the mainstays of popular feeder routes in Asia, and currently enjoy high market acceptance. They were featured on the cover of the Royal Institution of Naval Architects (RINA) World's Top Ships in 2017 and 2020.

According to TSC, this series of ships meets the latest energy-saving standards of the International Maritime Organization's (IMO) Energy Efficiency Design Index (EEDI). Incorporating TSC's technological research and development achievements of the past decade, they surpass their peers in terms of speed, fuel consumption, and loading performance. They have also obtained the American Bureau of Shipping's "SMART (INF)" smart ship class notation, meeting the operational needs of new-generation ship equipment management and ship owners through approved network connectivity and communication.

Furthermore, the main engines of this series of ships use electronically controlled fuel-efficient models, meeting IMO Tier II emission standards and reducing nitrogen oxide emissions by approximately 20% compared to the previous generation. Container lashing forces are analyzed for different operating routes and sea conditions to increase deck stacking weight, enhance operational flexibility, and comply with the latest CSS regulations for cargo lashing safety. They utilize a ballast water treatment system certified by the U.S. Coast Guard and are equipped with scrubbers to reduce sulfur oxide emissions.

It is understood that the sale price of each of these four ships is expected to be between US$53 million and US$54 million. Clarkson data shows that the current newbuilding price for container ships of this specification is approximately US$43 million per ship.

Previous reports suggested that a Taiwanese shipping company had won the bid, but TSC denied this. It is understood that among the major Taiwanese container shipping companies, Yang Ming Marine Transport and De Xiang Marine Transport have denied participating in the bidding. Wan Hai Lines is reportedly among the bidders, but a company spokesperson stated that they have not received any relevant information.

In the first half of this year, TSC's revenue reached NT$9.79 billion (approximately RMB 2.2 billion), a year-on-year increase of 3.81%. However, its pre-tax loss was NT$1.09 billion (approximately RMB 245 million). The pandemic, exchange rates, and rising raw material prices were the main reasons for TSC's losses.

Due to the pandemic, in June alone, TSC experienced an average of approximately 150 confirmed worker cases per day, impacting shipbuilding progress and resulting in a significant increase in monthly losses to approximately RMB 0.89 billion. TSC stated that in July, the number of daily absent workers has dropped to around 20, a significant improvement. If the four self-built ships are successfully sold in the second half of the year, it will boost profitability.

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