GEOJE, South Korea -- Mitsui O.S.K. Lines has unveiled the world's largest containership, aiming to save on shipping costs and take advantage of recovering rates, though competitors making similar investments could send the market sinking once again.
The 20,000-container vessel is an eye-catching sight in light blue, measuring 400 meters long and 58.8 meters wide. Even as reporters gathered at a Samsung Heavy Industries yard here for the Tuesday unveiling, workers from the South Korean shipbuilder rushed about, adjusting electrical systems and applying paint in preparation for a late-March handover.
The ship will be "No. 1 in terms of safety, environmental soundness and economic viability," Mitsui O.S.K. President Junichiro Ikeda told a news conference. It could enter service between China and Europe as soon as April.
The Japanese marine shipping company decided in 2015 to add six container megaships to its fleet. The remaining five are to be completed by January 2018. In all, the vessels could save Mitsui O.S.K. some 20 billion yen ($174 million) a year in shipping costs, the company anticipates.
Mitsui O.S.K.'s timing is not bad. The container shipping market as a whole seems to have found its footing, signaling an end to a long slump due to a global economic slowdown and a surfeit of new vessels. Rates on routes from Asia to Europe are four times what they were a year ago, in large part because the bankruptcy of South Korea's Hanjin Shipping last summer has tightened the market considerably.
But with little to support hopes of a robust market recovery, few insiders are entirely optimistic. Japanese shipbuilders received orders for nine ships for export totaling 654,700 gross tons in February, according to the Japan Ship Exporters' Association. While the tonnage is up 68% from a year earlier, most of the ships are bulk carriers for such goods as iron ore. Orders for cargo vessels, which are predominantly container vessels, have sat at zero since January 2016 in reflection of an ongoing capacity glut.
Nor are prospects strong for a sharp rise in freight shipping demand. President Donald Trump has urged manufacturers to make goods in America, spurring efforts to produce in the U.S. parts and materials that companies had previously relied on Chinese and Southeast Asian imports for. Deceleration in the Chinese economy and political instability in Europe could also weigh on freight volumes.
Follow the leader
Meanwhile, rivals to Mitsui O.S.K. have ordered up megaships of their own. Several other vessels on the 20,000-container scale, commissioned by other shipping companies, are nearing completion at Samsung Heavy's yard here. Once such cost-cutting becomes standard, shippers will again be forced to compete by reducing rates.
Mitsui O.S.K., Nippon Yusen and Kawasaki Kisen are to merge containership operations in April 2018. The six megaships are to form the core of the combination. But rate competition could be tough to overcome.
"It is difficult to stand out based on equipment alone -- we need to continue efforts to build experience and expertise as well," Ikeda said.