12 vessels for $2 billion! CMA CGM increases order for methanol-fueled container ships

The downturn in the container shipping market has not hindered the industry's energy transition. Following the initial order of six 15,000TEU methanol dual-fuel container ships from China State Shipbuilding Corporation, CMA CGM has placed a further US$2 billion order for 12 methanol-powered container ships. Led by Maersk, methanol fuel is becoming increasingly favored by shipping giants.

A total of 18 vessels: CMA CGM ordered 12 methanol-powered 10,000-TEU container ships from Hyundai Mipo Dockyard.

On February 1, HD Hyundai Group (formerly Hyundai Heavy Industries Group)'s shipbuilding holding company, Korea Shipbuilding & Offshore Engineering, announced that it had signed a contract with a European shipowner for the construction of 12 methanol-powered container ships, with a contract value of 2.5264 trillion won (approximately US$2.056 billion). These 12 new vessels will be built at Hyundai Mipo Dockyard and are scheduled to be delivered to the shipowner successively before December 2026.

Korea Shipbuilding & Offshore Engineering did not disclose specific information about the shipowner, but it is reported that the order came from CMA CGM of France, and the vessel type is a 13,000TEU new Panamax container ship.

It is understood that this is CMA CGM's second order for methanol-powered container ships, bringing the company's total number of methanol-powered ships under construction to 18. In June last year, CMA CGM placed its first order for methanol-powered ships, signing a contract with China State Shipbuilding Corporation for the construction of six 15,000TEU methanol dual-fuel container ships. The new ships will be delivered in the second half of 2025, with a total contract value of US$1.05 billion.

As one of the earliest investors in LNG-powered container ships, CMA CGM suddenly changed its stance last year and turned to methanol fuel, becoming the second company after Maersk to build methanol-powered 10,000-TEU container ships. CMA CGM previously stated that it would accelerate its decarbonization trajectory through large-scale investment in LNG and methanol fuels, and that these two areas would complement each other in the coming years, with the goal of achieving net-zero emissions by 2050.

In addition to LNG and methanol fuels, CMA CGM is also exploring solutions for more renewable fuels. In September last year, CMA CGM announced the establishment of a Special Fund for Energies to accelerate its energy transition. The energy transition fund focuses on four key areas, one of which is to support the development and production of renewable fuels, including biofuels, biomethane, green methane, carbon-free methanol, and other alternative fuels.

According to the latest data from Alphaliner, CMA CGM currently operates a fleet of 595 container ships, including 232 owned vessels and 363 chartered vessels, with a total capacity of approximately 3.3963 million TEU, ranking third globally with a market share of 12.9%. In addition, CMA CGM has 77 new vessels under construction totaling 660,500 TEU, with outstanding orders accounting for 19.4% of its existing fleet.

Last year's orders totaled 32 vessels with 600,000 TEU, with methanol fuel becoming an increasingly mainstream choice for decarbonizing container ships.

Starting with Maersk's first orders in 2021, methanol fuel, which was originally controversial, is gradually becoming the mainstream choice for shipping companies when ordering ships.

Data from Clarksons shows that shipping companies' interest in methanol fuel increased significantly last year, with new orders and additions of methanol-powered container ships totaling 32 vessels with 600,000 TEU, accounting for 21% of total container ship orders, second only to LNG-powered container ships. To date, there are a total of 47 methanol-powered container ships on order globally, of which 36 are ultra-large vessels of 15,000-24,000 TEU and 11 are feeder vessels.

In 2021, Maersk took the lead in ordering one 3,500TEU and twelve 16,000TEU methanol-powered container ships from Hyundai Heavy Industries Group in South Korea, becoming the world's first company to build methanol-powered container ships. Last year, Maersk added another order of six 16,000TEU vessels at Hyundai Heavy Industries. In Maersk's view, green methanol is the only currently marketable low-carbon fuel in the shipping industry.

Following Maersk and CMA CGM, COSCO SHIPPING Group has also joined the methanol fuel camp. In October last year, it ordered 12 24,000TEU methanol-powered container ships through two subsidiaries, Orient Overseas and COSCO SHIPPING Lines. Seven of these will be built by Nantong COSCO KHI Ship Engineering Co., Ltd., and five by Dalian COSCO KHI Ship Engineering Co., Ltd. This is COSCO SHIPPING Group's first order for dual-fuel ships, and its order also sets a new record for the scale of methanol-powered container ships.

In addition, at the end of last year, HMM (formerly Hyundai Merchant Marine), South Korea's largest shipping company, launched a tender for nine 8,000TEU methanol-powered container ships, with South Korea's three major shipbuilders, Hyundai Heavy Industries, Samsung Heavy Industries, Daewoo Shipbuilding & Marine Engineering, and HJ Heavy Industries (formerly Hanjin Heavy Industries), participating in the bidding. This order is part of the company's medium- and long-term development strategy, aiming to expand its container ship fleet from 820,000 TEU to 1.2 million TEU by 2026.

Compared with traditional energy ship fuels, methanol has the characteristics of containing no nitrogen oxides and sulfur, and low PM emissions. The advantages of methanol fuel lie in its mature technology, low retrofitting difficulty, safe use, convenient refueling, and low cost, especially since the recent surge in LNG prices has also increased the operating costs of LNG-powered ships. Secondly, the construction cost of LNG dual-fuel ships is higher than that of methanol-powered ships, and methanol dual-fuel ships are also easier to build.