On the 23rd, it was reported that the German shipping company Hapag-Lloyd has resumed discussions with a Chinese shipbuilder regarding vessel orders. This concerns six liquefied natural gas (LNG) dual-fuel container ships, which were part of a prior letter of intent with Hanwha Ocean.
According to industry publications like TradeWinds, Hapag-Lloyd has recently initiated discussions about ordering six vessels with a capacity of 16,000 TEU from the Chinese shipbuilder Yangtze River Shipbuilding. This order is part of an option that Hapag-Lloyd had when it contracted 12 vessels of the same size from Yangtze River Shipbuilding last year.
Hapag-Lloyd had examined changing the orderer after signing a letter of intent with Hanwha Ocean in February due to the impact of U.S. regulations on China, but it appears to be turning back to the Chinese shipbuilder. A letter of intent outlines discussions regarding orders within a specified timeframe but does not have binding force. The contract amount related to the letter of intent signed with Hanwha Ocean is reported to be $1.2 billion (approximately 1.7 trillion won).
Analyses suggest that Hapag-Lloyd's initiative to switch orderers has been influenced by the U.S. easing of regulations on China and relatively high prices from Korean shipbuilders. As the United States Trade Representative (USTR) eased restrictions on Chinese vessels, it is more profitable for shipowners to place orders in China, even if they have to pay port fees for using Chinese ships.
The USTR announced last month that it will impose a port fee of $50 per net ton (907.2 kg) on Chinese-manufactured and owned vessels starting on Oct. 14. This fee will increase by $30 each year for the next three years. A fee of $18 per net ton will be imposed on vessels manufactured in China but owned by other corporations, increasing by $5 each year for three years.
The upper limit for the fees has not yet been set. However, the industry assesses that this has been softened compared to the initial regulatory proposal, which indicated imposing a maximum fee of $1.5 million (approximately 210 million won) on Chinese vessels.
TradeWinds reported that "for dual-fuel vessels with a capacity of 16,000 TEU, the price in China is around $190 million, while the price for Korean shipbuilders is about $225 million," noting that "the difference in prices and the easing of U.S. port fee regulations prompted Hapag-Lloyd to reconsider its orders."
Hanwha Ocean stated that it has no additional information to disclose regarding the letter of intent signed with Hapag-Lloyd.