UASC's 13,000 TEU A13 ships represented a step up in size from older ships
United Arab Shipping Co. (UASC) may buy five huge, fuel-efficient Triple-E container ships for about $700 million to start a new Europe to Asia service, Dow Jones Newswires reports.
UASC would run the new service jointly with China Shipping Container Lines Co., which is ordering five of its own Triple-E ships.
Maersk Line was the first company to order Triple-E ships, which have a capacity of more than 18,000 twenty-foot equivalent units (TEU) and it is expecting delivery of the first such vessel at the end of June.
With fuel costs rising and shipping rates remaining low, companies say using larger ships is more efficient as they use less fuel per container.
"All 20 big major container players will have to choose to either order similar ships or find themselves out of the Europe-Asia trade as smaller, less fuel-efficient vessels won't be able to compete," said Lars Jensen, chief executive of Denmark-based SeaIntel Maritime Analysis.
While the orders of large ships are partly a reaction to low shipping rates, they may also help keep rates low since they add extra capacity to an already oversupplied market.
Lars Jensen, Chief executive, SeaIntel Maritime Analysis
Lower rates for a significant period of time will lead to the industry being unsustainable
Maersk Line officials have said they will introduce the Triple-E ships slowly, while removing smaller ships, in an effort to avoid flooding the market.
Freight rates from China to northern Europe are reported to have fallen 30 percent since the start of the year to $796 per container.
"The minimum freight rate in the Europe-Asia route should be around $1,400 per box," Jensen said.
"Lower rates for a significant period of time will lead to the industry being unsustainable."
UASC announced last year that it had received its eighth 13,500 TEU A13 container vessel, a larger class of ship than it had previously used, as part of an effort to compete on transportation costs and reduce environmental impacts.