Maersk suspends methanol ship order to Chinese shipbuilder

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Maersk, the world’s second-largest shipping company, has reportedly postponed an order for 15 methanol-powered container ships from a Chinese shipbuilder. The delay is reportedly due to Maersk’s objections to design drawings submitted by the Chinese shipbuilder. Experts say that this means that South Korean technology has proved once again to be better than Chinese technology in high-value vessels.

According to shipbuilding and shipping magazine TradeWinds on May 9, Danish shipping company Maersk recently informed Huangpu Wenchong Shipbuilding, a subsidiary of China Shipbuilding and Shipping Corporation (CSSC), that it would postpone the order. It will reportedly reconsider the project by the second half of this year. Industry watchers think it unusual for the world’s second-largest shipping company to delay the construction of a ship which it has selected as a key vessel for the future.

Maersk signed a deal with the company in December last year to order up to 15 3,500 TEU container ships. The contract is worth a total of US$1.02 billion. While the ships were not large, they were notable for being ordered from a Chinese shipbuilder as they were ships powered by a next-generation fuel, methanol.

It is not clear why Maersk decided to suspend the project. Insiders of the Korean shipbuilding industry believe the Chinese shipbuilder’s drawings failed to meet Maersk’s standards. The decision to postpone the project came at a time when the shipbuilder submitted its drawings, and the drawings were going through revisions and inspections at the client’s request after signing an order contract. However, given a hefty penalty associated with canceling the contract, there is a small possibility that Maersk will cancel the order itself. “I think that Maersk said that it will reopen the project when it is satisfied with the Chinese shipbuilder’s design technology,” said one industry insider.

After liquefied natural gas (LNG), a ship fuel of choice for the future is one of two — ammonia or methanol. This year, Chinese shipbuilders swept the world’s orders for methanol-powered vessels, while Korean shipbuilders took all ammonia-powered ship orders. “If China continues to build a track record of building methanol ships and becomes competitive in the high-value vessel market, some carriers may turn to methanol instead of ammonia,” said one industry observer.

However, with this case in the spotlight, Korean shipbuilders may have an advantage when carriers order methanol-powered vessels. In January, HD Hyundai Heavy Industries announced the world’s first methanol-powered container ship in the world. “Shipping lines are more likely to order container ships from Korean shipbuilders, even if the delivery time is late, as they prioritize operational stability,” an industry observer said.

Source: Business Korea