CSCL inks $560m boxship newbuilding deals

CHINA Shipping Container Lines’ offshoot, CSCL (HK), has signed contracts worth $559.8m with Chinese shipyard Shanghai Jiangnan Changxing Heavy Industry for eight 4,250 teu boxships.

The deals, which represent a move to reduce the carrier’s reliance on Seaspan, have been expected since last November when CSCL outlined its expenditure plans as part of the run-up to its secondary listing on the Shanghai bourse.

At the time the firm said it would spend Yuan8.8bn ($1.26bn) to help finance the construction of 16 boxships, of which eight would be built in China and eight outside the country.

Five ships — CSCL Hamburg, CSCL Chiwan, CSCL Ningbo, CSCL Dalian and CSCL Felixstowe — were chartered for an initial period of 10 years with an option to extend for two more years from delivery to Seapsan in August 2005.

One source told Lloyd’s List: “The newbuildings are not being used to expand the CSCL fleet. Instead, they are intended to replace tonnage chartered from Seaspan.”

Some 10 4,250 teu boxships currently come into this category.

CSCL also operates another 10 boxships, varying between 2,500 teu and 9,600 teu, that are on 12-year charters from Seaspan. A further seven 2,500 teu vessels are being built for Seaspan for delivery between August 2008 and September 2009 that will be chartered to CSCL for 12 years.

Under the terms of the contracts, which were brokered by China Shipbuilding Trading, each of the eight newbuildings is costing $69.98m.

CSCL (HK) plans to make five equal payments of just under $14m for each of the ships, with the first due to be paid by June 17.

The carrier has also agreed to adjust the purchase price of the ships to take account of fluctuations in the exchange rate between the dollar and the yuan. Using an exchange of $1 to Yuan7.1763 issued by the People’s Bank of China, if the Yuan appreciates, the price of each vessel will increase and vice-versa.

There is no cap on the amount CSCL (HK) could have to pay or receive back from the yard if the Yuan falls in value.

The first vessel is due for delivery by October 31, 2011. Five of the remaining vessels are due to be delivered at monthly intervals. The seventh ship is due to join the CSCL (HK) fleet by May 31, 2012 and the final ship by June 30, 2012.

China Shipping Container Lines company secretary Ye Yumang said the vessels will “strengthen shipping capacity in the Europe, Mediterranean and North America market”.