The French shipping company CMA-CGM's order for ultra-large container ships has eventually gone to a Chinese shipyard. The company reportedly received letters of intent from three domestic shipbuilders and two Chinese shipyards before the order, but appears to have fallen behind in the price competition.
The domestic shipbuilding industry is in full swing to secure work after 2028, but as Chinese shipyards increase their production capacity and aggressively continue to win contracts, there are forecasts that price competition may arise in the future.
According to the shipbuilding industry on the 29th, CMA-CGM has placed an order for 10 container ships with a capacity of 22,000 TEU (1 TEU is one 20ft container) with Dalian Shipbuilding Industry Company (DSIC), a subsidiary of China State Shipbuilding Corporation (CSSC). The ships will be built as dual-fuel vessels powered by liquefied natural gas (LNG), and the contract size is reported to be approximately $2.1 billion (2.9 trillion won).
CMA-CGM has reportedly reviewed orders for the container ships since mid-year and inquired about construction conditions with domestic shipbuilders such as HD Hyundai Heavy Industries, Samsung Heavy Industries, and Hanwha Ocean.
CMA-CGM has inquired with Chinese shipyards, including China State Shipbuilding Corporation (CSSC), Hengli Heavy Industries, and Yangtze River Shipbuilding, about construction, and it is known that these companies offered prices lower than the new build price of $230 million for ships of that scale.
Domestic companies have reportedly engaged in a competitive bidding war by citing high-spec technologies such as GTT Mark III Flex LNG tanks and MAN ES ME-GI dual-fuel engines, along with their track record of supplying eco-friendly vessels. The domestic construction price for a 22,000 TEU-class container ship is about $250 million, which is higher than in China.
The domestic shipbuilding industry has mostly secured workloads until 2027 and is looking for work after 2028. The industry suggests that the price competition will intensify as Chinese shipbuilders aggressively expand their production capacity.
According to Clarkson Research, Chinese shipbuilders are expected to expand their annual production capacity to 7 million CGT (Compensated Gross Tonnage) by 2030. This figure is 12 times greater than the 500,000 CGT that domestic shipbuilders plan to expand during the same period. The increase in China's annual production capacity corresponds to 9.3% of last year's total global order volume (74.89 million CGT).
Chinese shipbuilders are also active in securing work. By 2028, the expected delivery volume of the Chinese shipbuilding industry is 20.36 million CGT, which is more than three times that of the domestic shipbuilding industry at 6.74 million CGT.
An industry insider said, "For now, we have secured a certain level of workload and are not in a situation where we need to engage in low-price bidding due to higher completion quality compared to China," adding, "However, if the order volume, which began to decline this year, does not recover, price competition will be inevitable."
According to Clarkson Research, the global ship order volume, which recorded 28.01 million CGT in 2020, has shown a sharp decline after recording 74.89 million CGT last year. The amount of ships ordered globally in the first half of this year is 23.26 million CGT, representing a 51% decrease compared to the same period last year.