The Diversification of China’s Containership Fleet

As China Commentary discussed in December 2014, the Chinese owned containership fleet seems set for significant expansion, with Chinese owners accounting for 25% of capacity on the global containership orderbook at the start of 2015, compared with their share of 7% in the existing containership fleet. This trend has been the result of various moves made by a number of different owner types.
Leading Role Of State Owners

The Chinese containership fleet is dominated by state owned liner shipping companies. By the start of 2015, the fleet of containerships owned by stateinterests totalled 1.08m TEU, accounting for 86% of the total Chinese owned containership fleet. COSCO and China Shipping are the major players, with a combined fleet size of 1.01m TEU.

In recent years, these two companies have expanded their very large containership fleet. By the start of 2015, vessels of 10,000+ TEU accounted for 19% of capacity owned by the companies, reflecting attempts to capitalise on greater economies of scale, especially through ordering larger ships for the Far East-Europe trade. This focus has pushed the average size of boxships on order to COSCO and China Shipping to 14,000 TEU, more than double the average size of vessels in their fleets. At start 2015, the two companies had a combined orderbook of 0.18m TEU, representing 18% of their total fleet, while other state interests had a combined orderbook of 0.08m TEU (representing 109% of their fleet).
Private Players

Independent private owners have played a similar role to the smaller state interests in the containership sector, typically focussing on the intra-Asian and domestic Chinese networks. At start 2015, these companies owned 0.14m TEU, or 11% of China’s existing boxship fleet, and had 31 containerships on order. At 2,100 TEU, the average size of these ships on order was only slightly larger than the average vessel already owned by these companies. The largest owner in this sector, SITC, ordered 12 x 1,800 TEU boxships in 2013 to further consolidate its role in the intra-Asian market.
Emergence Of Chinese Finance

Another notable recent development has been the influx of Chinese finance. While “financial interests” account for only 3% of the existing Chinese containership fleet (with four containerships delivered to such owners in 2014), these companies had a combined boxship orderbook of 0.51m TEU at the start of the year, 61% of capacity on the Chinese-owned containership orderbook. The average size of boxships on order to these companies stood at 11,000 TEU. Demand for containership newbuilding finance led to these companies emerging as “charter owners”, and the vessels ordered are set to be chartered out long-term to foreign boxship operators such as MSC.

The sheer size of the two largest state owners, and their participation in key liner alliances, means that these companies will continue to play a major role in the Chinese boxship fleet. However, it seems likely that they will soon be accompanied in this by a number of financial interests”, whose containership fleet will shortly begin to expand rapidly.
Source: Clarksons