UPDATE 1-Yang Ming Marine to charter up to 10 new ships from Seaspan

Fri Jan 4, 2013 12:45am EST

Related Topics

* To award 10-year charter contract to Seaspan

* Vessels likely to be built by South Korean firm

* Yang Ming shares up 1 pct, outperforming main index

By Alison Leung

HONG KONG, Jan 4 (Reuters) - Taiwan's government-owned Yang Ming Marine Transport Corp will lease up to 10 new ultra-large container ships (ULCS) from U.S.-listed Seaspan Corp to cut unit costs and weather a volatile global shipping market.

Set to be delivered from 2015, Yang Ming will charter five of the new ships for 10 years, with an option to lease another five, spokesman Winsor Huang said.

"Seaspan has won the tender to provide the new ships and an agreement is expected to be signed later this month," Huang told Reuters on Friday.

The vessels of 14,000 twenty-foot-equivalent units (TEU) each, which will be the first ULCS for Yang Ming, are most likely to be built by a South Korean shipbuilder, he said, but declined to provide any details.

A Hyundai Heavy Industries Co Ltd official told Reuters that the shipbuilder was in talks with Seaspan concerning the contract but that nothing had been decided.

The market price to build a new 14,000 TEU is estimated at $100 million to $120 million, analysts say.

Hyundai Heavy has said it aims to win $29.7 billion in orders this year.

Shares of Yang Ming rose 1 percent on Friday, outperforming Taiwan's main TAIEX index, which eased 0.5 percent.

The global shipping market is set for another volatile and low return year in 2013 due to a lingering supply glut, analysts said.

Macquarie forecasts new vessel deliveries will rise 8-10 percent year-on-year in 2013, while growth in demand for container shipping is seen remaining weak at 4-5 percent this year.

Yang Ming's move is positive as it will help lower unit operating costs, said Bonnie Chan, a shipping analyst at Macquarie.

"This is something they need," said Chan. "Yang Ming needs to contribute to the alliance in order to make the alliance stay competitive."

In the four-member CKYH alliance, China COSCO Holdings Co Ltd's COSCO Container Lines and Hanjin Shipping Co Ltd already operate 13,000 and 14,000 TEU ships.

After Yang Ming begins leasing ULCS, Kawasaki Kisen Kaisha Ltd will be the only alliance member with no immediate plans to deploy ships of more than 10,000 TEU.

Yang Ming, which in December sold a 30 percent stake in its Kao Ming Container Terminal in Taiwan's Kaohsiung to Chinese investors for $135 million, says it currently operates container ships with a total capacity of 359,523 TEU and has outstanding orders for new vessels of 50,686 TEU.

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