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Hanjin, China Shipping Plan Orders on ‘Roaring’ Trade

Kim Young Min chief executive officer of Hanjin Shipping Co Ltd. Photographer: Forbes Conrad/Bloomberg
Kim Young Min chief executive officer of Hanjin Shipping Co Ltd. Photographer: Forbes Conrad/Bloomberg

Nov. 9 (Bloomberg) -- Hanjin Shipping Co., South Korea’s largest shipping line, and China Shipping (Group) Co. said they were close to ordering new vessels as world trade rebounds from the global recession.

Hanjin may announce a deal for mid-size container ships by as early as year-end, Chief Executive Officer Kim Young Min said today at a conference in Guangzhou, China. China Shipping will make an order soon, President Li Shaode said at the same event. He declined to say which type of ships the group was looking at.

Evergreen Group is also near to ordering about 10 ships, part of plans to buy 100, as trade recovers from a slump last year that caused industrywide losses. Global container-shipping volume may jump as much as 8 percent next year, as economic growth in the U.S. and Europe spurs demand for Asian-made goods, Kim said.

“The worst is over for Asian shipping lines, so it’s a good time to order vessels,” said Minoru Matsuno, president of Value Search Asset Management Co., a Tokyo-based investment advisory firm. “At the same time, the industry needs to ensure it doesn’t repeat the overcapacity mistakes that helped hammer rates last year.”

Evergreen Orders

Evergreen Group, Asia’s largest container line, plans to order ships able to hold about 8,000 containers, said Vice Chairman Bronson Hsieh. The Taiwan-based company has ordered 20 similar vessels, worth about $2 billion, from Samsung Heavy Industries Co. since June. Second-ranked Neptune Orient Lines Ltd. has ordered 12 ships from Daewoo Shipbuilding & Marine Engineering Co. in the same period.

Evergreen Marine Corp., Evergreen’s listed unit, fell 0.2 percent to NT$25.15 at 1:03 p.m. in Taipei trading. Hanjin Shipping rose 1.7 percent to 35,250 won in Seoul. China Shipping Container Lines Co., a unit of China Shipping Group, fell 0.3 percent to HK$3.44 in Hong Kong.

The global economy is recovering and the shipping market is “roaring,” Wei Jiafu, chairman of China Cosco Holdings Co., Asia’s biggest shipping line by market value, said at the Guangzhou conference.

Still, the industry needs to adopt a “more rational mentality” to prevent a glut of new vessels from damping rates. China Cosco has no plans to order vessels this year, and it will assess market conditions before deciding on fleet plans next year, he said.

Sinotrans & CSC Holdings Co. plans to adjust orders in segments where there is overcapacity, said President Zhao Huxiang. He declined to elaborate. The company is China’s third-largest state-controlled shipping group behind China Cosco parent China Ocean Shipping (Group) Co. and China Shipping.

Shipping lines have eased overcapacity by scrapping vessels and by operating ships more slowly. This reduces capacity as the same number of vessel make fewer trips and also pares fuel usage.

Separately, China Shipping Group also plans to announce a “major” logistics investment in coastal regions, Li said, without elaboration. The group operates container vessels and dry-bulk ships used to carry commodities.

To contact the reporters on this story: Kyunghee Park in Singapore at kpark3@bloomberg.net; Wing-Gar Cheng in Beijing at wgcheng@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net

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