HHI Worries over Container Ship Order Cancellation

South Korea’s Hyundai Heavy Industries (HHI) is in jeopardy as orders for nine container ships received from a German shipping company are about to be cancelled. According to foreign press and industry sources on April 2, Rickmers Group has officially decided to cancel the orders placed to HHI for four units of 8,500 TEU containers and five units of 7,000 TEU containers. An official of HHI has said in response that the orders have not been cancelled yet and the two parties were currently undergoing discussions. However, with the recent contract cancellation for five oil tankers ordered by a Greek shipping company, there are high anxieties.
Market shipping charges of the orders for nine large-sized containers placed by Rickmers is estimated to reach a total $1 billion. Financial difficulties of Rickmers Maritime, a subsidiary of Rickmers, are presumed to have triggered the order cancellation.
There have actually been constant worries over orders for container ships possible to be cancelled because container ships were the type of ship that had been hit the hardest by the global economic crisis and moreover, there were more of the ships to be supplied in the future.
According to last month’s news released by AXS-Alphaliner, a weekly summary of the latest liner shipping news of France, orders for 140 units of 436,000 TEU containers have been cancelled worldwide since September 2008. Among the total cancelled orders, South Korean shipbuilding companies were shown to have received orders for 26 units of 113,000 TEU containers.
Until now, Hanjin Heavy Industries & Construction Co. is the only company known to have called off contracts with CMA CGM due to lack of funds but now, there stands possibility of more cancellations to be reported.