News / Evergreen spends soaring profits on more box ships and containers

Source Jiangnan Shipyard

Evergreen is adding to its fleet and equipment capacity with an order for two 24,000 teu ships from China’s Jiangnan shipyard and 55,500 containers from three manufacturers.

The newbuildings will cost $140m-$160m each and delivery is expected 2024-2025.

The new containers will cost Evergreen $338.5m – 27,500nfrom Dong Fang International Container (Hong Kong), 15,000 from Guangdong Fuwa Equipment and 13,000 from CXIC Group. They comprise 20ft and 40ft units and will be delivered in mid-2022.

Among liner operators, Evergreen now has the most newbuilding orders, with 78 vessels under construction. Alphaliner estimates that Evergreen’s orderbook-to-fleet ratio is around 45%.

In September, Evergreen ordered 24 ships from another Chinese shipyard, CSSC Huangpu Wenchong Shipbuilding, 20 15,000 teu ships from Samsung Heavy Industries in March and two 24,000 teu ships from Hudong-Zhonghua Shipbuilding in June, as well as four 24,000 teu ships from Jiangnan Shipyard that are due for completion next year.

Evergreen president Eric Hsieh said recently: “We never saw such high freight rates and the present situation is quite positive for liner operators’ future business prospects.”

He believes the runaway increase in freight rates is mainly the result of supply and demand dynamics, adding that in the first eight months of 2021, cargo volumes on the Asia-US west coast and -east coast lanes have risen by 30% and 25%, year on year respectively, buoyed by rising electronics exports.

That has led to Evergreen net profits soaring, the first three quarters this year seeing 1,347% year-on-year increase. to $5.69bn.

Congestion around US west coast ports is also propping up freight rates, as vessel supply has been reduced by 12% due to waiting times.

Even though the ports at Los Angeles and Long Beach will impose surcharges for extended container dwell times, Mr Hsieh said the International Longshore and Warehouse Union, which represents the dockers, will demand higher salaries next year and this could affect container movements.