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Mega ships still save OOCL mega bucks, says OOIL's CFO Tung
MEGA boxships are still more economical to run than smaller vessels, says Orient Overseas (International) chief financial officer Alan Tung.
While the benefits of ultra large containerships have declined with the drop in oil prices, he said, "comparing our 20,000-TEU class to 13,000-TEU, we are still expecting lower unit system costs".
Before the plunge in oil prices, the reduction of unit costs could have been as much as 20 per cent. "Today's savings are half that, which is still significant in an industry where margins remain competitive.
OOIL ordered six 21,100-TEU ships from Samsung Heavy industries in March 2015. These newbuildings are scheduled for delivery in 2017.
Mr Tung's came partly in response to Hong Kong's China Merchants general manager Bai Jingtao saying mega boxships have drawbacks that overshadow their benefits.
But Mr Tung said his mega ship orders will serve his company's strategy well in expanding Asia-Europe services - where these leviathans can be well deployed.
"I don't think any shipping lines can predict the performance of each individual trade lane. So in our concept, the appropriate diversification on the [market] portfolio will probably be the safest and wisest way to operate the business," he said.
While the benefits of ultra large containerships have declined with the drop in oil prices, he said, "comparing our 20,000-TEU class to 13,000-TEU, we are still expecting lower unit system costs".
Before the plunge in oil prices, the reduction of unit costs could have been as much as 20 per cent. "Today's savings are half that, which is still significant in an industry where margins remain competitive.
OOIL ordered six 21,100-TEU ships from Samsung Heavy industries in March 2015. These newbuildings are scheduled for delivery in 2017.
Mr Tung's came partly in response to Hong Kong's China Merchants general manager Bai Jingtao saying mega boxships have drawbacks that overshadow their benefits.
But Mr Tung said his mega ship orders will serve his company's strategy well in expanding Asia-Europe services - where these leviathans can be well deployed.
"I don't think any shipping lines can predict the performance of each individual trade lane. So in our concept, the appropriate diversification on the [market] portfolio will probably be the safest and wisest way to operate the business," he said.
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