COSCO announces Historic $7 Billion Order: 87 New Vessels to Drive Fleet Restructuring Strategy
SHANGHAI: In an industry accustomed to mega-deals, China’s COSCO Shipping Group has signed newbuilding order for 87 vessels, covering the entire spectrum of its current fleet operations. China State Shipbuilding Corporation (CSSC) reported the value of the order at approximately $7 billion, though it noted in stock exchange filings that final terms are subject to change as projects progress.
Chinese media reported that this is the largest order ever placed between a shipping company and a shipyard in China. The deal was announced with a level of fanfare commensurate with its scale.
COSCO termed the contract a crucial measure to adapt to market trends. The group emphasized the order as a move to maintain the company’s scale advantage while optimizing its fleet. The company stated the vessels will reflect emerging market trends of “large-scale, green, and intelligent development.”
Comprehensive Segment Coverage
No specific delivery timeline has been released, but the companies emphasized that this cooperation framework will touch upon all of COSCO’s business segments. These include container shipping, dry bulk, oil and gas, specialized transport, and passenger transport.
Among the vessel types mentioned are:
• Ultra-large container ships
• Ultra-large bulk carriers
• Very Large Crude Carriers (VLCCs)
• Grain carriers
• Multi-purpose heavy lift vessels
• Medium Range (MR) tankers
• Ro-Ro vessels and smaller container ships.
Strategic Handshake with CSSC
This deal comes just months after CSSC completed its latest restructuring designed to boost efficiency and competitiveness. In the announcement, they stated that most of their member units would participate in this project, including Jiangnan Shipyard, Dalian Heavy Industry, Wuchang Shipbuilding Industry, Guangzhou Shipbuilding International (GSI), China Shipbuilding Chengxi, and Beihai Shipbuilding.
This move suggests COSCO appears unconcerned by U.S. plans to impose fees on Chinese-built and owned vessels. Observers had previously pointed out that the company could face billions of dollars in fees if the U.S. does not agree to postpone the application of these fees for a year as part of trade negotiations.
Expanding an Already “Massive” Orderbook
While the new framework may incorporate some previously announced orders, it also indicates an expansion of COSCO’s already massive orderbook.
Data from Alphaliner indicates the group already has 82 container vessels with a total capacity of 1.1 million TEU on order. Year-to-date, according to media reports, COSCO has ordered 25 Capesize bulk carriers. Two months ago, the company also added 23 bulk carriers and 6 VLCCs to its order list.
Analysts note that an order of this magnitude is likely to create ripple effects throughout the industry for months to come.