22 June 2012

$450M deal ends Hanjin’s order drought

HANJIN Heavy Industries & Construction (HHIC)-Phil, the local unit of the Korean shipbuilding giant, has won an order to build 10 mid-size container ships worth $450 million at its Subic shipyard, the first bid won by the company since last year.

HHIC-Phil’s Subic Shipyard said it signed a contract with European shipowners to build the ships, which will be capable of carrying 5,000 twenty-foot equivalent units (TEU) of container.

This is the first bid won by the company since last year as the debt crisis in Europe and budget problems in the United States, the world’s two biggest export markets, led to weak global trade that softened demand for shipping.

Shipowners have had to idle capacity or cancel newbuilding orders as freight rates fell to record lows in the past two years amid the demand slowdown, worsened by soaring oil prices and oversupply as vessels previously ordered were delivered.

HHIC said that despite the impact of the financial crisis in the West, the company moved to improve its management and performance, which paved way for the success of the bid.

“Based on recently dramatic improvements in cost-competitiveness, HHIC-Phil’s Subic Shipyard has finally been able to win this bid,” the shipbuilder said in a statement.

The company said it is also in negotiations with other shipowners, and expect “good news may come soon.”

An official from HHIC said currently mid-size vessel orders have been rare due to increasing demand for larger, more efficient vessels as shipping companies aim to cut costs in view of escalating fuel prices.

“Due to economic slowdown around the world, it has been difficult for us to win a new bid,” the official said.

“However, we have been eventually able to win (the $450 million order) thanks to superior cost-competitiveness, high quality and great reliability,” he said.

“Empowered by this success, we are going to keep promoting our sales activities,” he added.

HHIC-Phil said its latest contract involves building state-of-the-art container vessels adopting the eco-design technology. The ship dimensions are 255 meters in length, 37m in width and 22m in depth, and with a maximum speed of 21.5 knots.

Early in 2007, HHIC opened a skills development center in Subic Bay, Olongapo City, and began construction of a shipyard in the first quarter of the same year.

In July 2008, HHIC delivered the first vessel order made from the Subic shipyard.(Jennifer Ambanta, Malaya)