Seaspan Corp., a ship-leasing company part-owned by Tiger Group Investments, may order as many as 15 more container ships over the next year to benefit from the lowest vessel prices in more than four years.
Seaspan is in talks with two to three container lines to lease the ships it plans to purchase, Chief Executive Officer Gerry Wang said in an interview yesterday. The company had already ordered another 15 vessels in the last three weeks, he said in Hong Kong.
Ship prices have dropped because of industrywide losses, overcapacity and tighter financing caused by European banks paring lending. The price of a vessel that can carry as many as 13,500 20-foot containers was worth $107 million last month, according to Clarkson Plc, the world’s biggest shipbroker. That is the lowest since it started compiling the data in June 2008.
“We are happy with the price level right now,” Wang said. “We hope to capitalize on the situation. I have no reason to say the market will go down further.”
Seaspan fell 0.2 percent to close at $18.77 in New York trading yesterday. The stock rose 17 percent in 2012, its fourth straight annual gain.
The new vessels that the Hong Kong-based company plans to order will be able to carry at least 10,000 20-foot-boxes each, Wang said. Seaspan has agreed to charter five 14,000-box vessels to Taiwan’s Yang Ming Marine Transport Corp., he said. The ships, to be built by Hyundai Heavy Industries Co., will be delivered from 2015.
“It’s quite reasonable for Seaspan to place orders as operators are preferring leasing to owning ships in this market,” said Lawrence Li, a Shanghai-based analyst at UOB-Kay Hian Holdings Ltd. “The new-building price is pretty low at the moment and players like Seaspan have bargaining power.”
Yang Ming is following other lines in ordering more fuel-efficient vessels as A.P. Moeller-Maersk A/S will take delivery in June the world’s biggest container vessel that will consume about 35 percent less fuel per box than those currently in service.
The price of 380 centistoke bunker fuel used by ships has jumped about 13 percent in two years, according to data compiled by Bloomberg.
The average age of Seaspan’s fleet is about four years old, compared with the industry average of 11-years, Wang said. The company has 69 ships on its fleet, according to its website.
“There’s always demand for modern ships and for fuel-efficient ships,” Wang said. “Operators are getting more confident, and I will see more older ships being phased out.”
Trade between Asia and the U.S. was stronger in last 12 months as China continues to expand and the U.S. is on a “solid” path of recovery, Wang said.
Chinese industrial companies’ profit rose 17.3 percent in December, adding to signs the world’s second-largest economy’s rebound is gaining momentum. Industrial profits may rise by an average 30 percent this year as China recovers from a seven-quarter slowdown, businesses start restocking and export demand improves, Standard Chartered Plc forecasts.
Tiger Group, Carlyle Group LP and other investors formed a ship fund in 2011 with the goal of buying $5 billion in assets as container lines add new vessels to counter rising fuel costs. Tiger also owns dry bulk ships and chemical tankers through investments including Seaspan and Greathorse Shipping.