A regional shipping company has ordered up to US$2 billion worth of mega-sized vessels, a sign of optimism amid weakened container volumes.
United Arab Shipping Company (UASC), based in Dubai and owned by the governments of the UAE, Saudi Arabia, Qatar, Kuwait, Bahrain and Iraq, signed an order this week for 10 vessels from South Korea's Hyundai Heavy Industries.
Should UASC exercise an option for seven extra vessels - with capacities ranging from 14,000 to 18,000 20-foot-equivalent units (TEUs) - the order would total more than $2 billion.
Although the ships due for delivery next year will be built to run on fuel oil, they will be capable of switching to liquefied natural gas with some technical changes that the company estimates would take just a few weeks.
"This is a critical step for the company to deliver on its long-term growth objectives," said Abdul Aziz Al Ohaly, a board director. "UASC hopes to set new benchmarks for fuel economy and environmental performance."
The new vessels will represent a large chunk of the company's fleet, which include 27 of its own ships and 26 chartered vessels.
The order comes amid declines in shipping volumes in Europe, the Middle East and Africa. Last month DP World, the Dubai-owned port operator, reported a 5.8 per cent decline on container volumes shipped through its ports during the first half of the year.
Shipping companies around the world have been opting for bigger vessels like the ones chosen by UASC, which offer better value in terms of fuel consumption. But analysts say the rapid increases in vessel size could disadvantage smaller ships and ports that have not adapted to accommodate the mega-ships.
