Container shipping lines between Asia and Europe, weakened by the crisis due to the Covid-19 pandemic, are anxiously awaiting the arrival of new HMM mega container ships.
The first container ship with a record capacity of 24,000 TEU, named Algeciras, will join the merchant fleet on the Asia-Northern Europe route.
On April 23, 2020, the world’s largest container ship to date was launched by HMM at the DSME (Daewoo Shipbuilding & Marine Engineering) shipyard at Okpo in South Gyeongsang, South Korea. And already on April 26, 2020, HMM Algeciras set off on its maiden voyage from the port of Qingdao in Shandong province in eastern China.
The dimensions of the champion are impressive.
The length of the vessel is 399.9 meters, the width is 61.03 meters, and the deck area is more than 24,000 square meters, which corresponds to the size of three with half standard football fields. Zhang Jun, Deputy General Director of the Qingdao Qianwan United Container Terminal, said this.
HMM Algeciras is capable of carrying 200 more containers than the previous largest container ship, MSC Mia, built by Samsung Heavy Industries, he said.
HMM Algeciras is the first of twelve 24,000 TEU class vessels scheduled for delivery in September 2020.
In September 2018, HMM signed an official contract for 20 “green” mega container ships with three shipyards – DSME, HHI (Hyundai Heavy Industries) and SHI (Samsung Heavy Industries).
Shipyards DSME and SHI are building seven and five container ships of the 24,000 TEU class respectively, these container ships are due to be commissioned by September 2020. HHI is building eight 16,000 TEU class containerships to be ready in the second quarter of 2021.
The new container ships will mainly be equipped with scrubber systems in accordance with IMO 2020. The improved hull design and high-efficiency engine are expected to improve the energy efficiency of container ships and reduce carbon emissions.
“HMM is committed to expanding its presence in the global shipping industry through streamlined fleet management and a new partnership with THE Alliance,” said Bae Jae Hong, President and CEO of HMM.
HMM Algeciras will operate on line FE4, one of the trade lines of the alliance linking Asia with Northern Europe, on the route Qingdao, Busan, Ningbo, Shanghai, Yantian, Suez Canal, Rotterdam, Hamburg, Antwerp, London Gateway, Singapore (via the Suez Canal) .
But the giant ship and its 11 giant cousins, which will join the Asia-Europe container ship fleet this year, are entering a market where the balance of supply and demand has been hit hard by restrictions caused by the Covid-19 pandemic.
Peter Sand, chief freight analyst at BIMCO, told JOC.com that freight demand in Europe is likely to remain low for a long time. Given the gloomy outlook for plummeting demand, Sand said it couldn’t be a worse moment for the world’s 12 largest container ships to arrive.
The Asia-Europe freight traffic data compiled by the Container Shipping Statistics Service (CTS) is two months lag, meaning April demand data will not be available until the end of June, but the unprecedented number of flights canceled through July is a clear indication of expectations of low demand from carriers and lack of pre-orders.
According to Sea-Intelligence Maritime Consulting, flight cancellations announced by sea carrier alliances in Asia and Europe peaked this week, resulting in a 34% reduction. On routes between Asia and the US West Coast, 25% of flights will be canceled in the next few weeks, and 20% of flights between Asia and the US East Coast.
Since April 1, 2020, HMM has joined the international THE Alliance, which includes Hapag-Lloyd (Germany), Ocean Network Express (Japan) and Yang Ming (Taiwan). Accordingly, HMM’s mega-container ships will also join the partnership, whose members have announced more canceled flights than its competitors, the 2M and Ocean Alliances.
Until the first week of July, THE Alliance will cancel 29% of its flights from Asia to Northern Europe, Sea-Intelligence reports, with an incredible 41% of Asian-Mediterranean flights cancelled. In comparison, 2M alliance members Maersk Line and Mediterranean Shipping Co. will cut 26% of their flights in Asia and Northern Europe and 19% of their Asia-Mediterranean flights.
Rapid flight cuts by the alliances have thus far enabled carriers to keep trade rates between Asia and Europe from falling despite deteriorating demand, with rates remaining even above last year’s levels in recent weeks.
Spot rates determined by the Shanghai Exchange Shipping Exchange (SCFI) were USD 1,725 per TEU as of April 17, 2020, up ten percent from the same period last year. In fact, the spot rate has only fallen by $79/TEU in the past seven weeks.
Even before the global COVID-19 crisis, HMM has been striving for profitability ever since it became the flagship carrier in South Korea following the bankruptcy of Hanjin Shipping in 2016. Despite a 46 percent increase in operating profit in 2019, the company still posted an operating loss of $246 million.
However, the Korean government has provided financial support to the HMM as part of the emergency state aid for the Korean maritime sector. The operator should receive 382 million US dollars.
South Korean President Moon Jae-in, who delivered a speech after the baptism of the world’s largest container ship at the Okpo shipyard in South Gyeongsang, expressed among other things his concern about the global crisis, which is leading to a sharp reduction in global cargo transportation.
“The IMF predicted the biggest downturn in the global economy since the Great Depression,” Moon said. “Our government will support shipping companies that are suffering losses due to the Covid-19 pandemic. In addition, loan repayments will be suspended and port dues will be reduced.”
The President also added that he considers Algeciras another marvel of the South Korean shipping industry and economy.
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Based on materialswww.joc.com, www.hmm21.com, www.koreajoongangdaily.joins.com and open source data.