Gerry Wang, the chief executive officer of Seaspan, one of the world’s largest builders and charterers of containerships, told financial analysts that while freight rates are depressed, there is no shortage of demand for efficient new vessels.
Referencing the price war on the Asia-Europe trade, he said ships are still loading up by 75-80 percent, and said in other industries it might be possible to make money by increasing prices, but “because of some stupidity” among operators competing for market share, rates are low.
But he also pointed out that with newer ships, carriers have sharply lower unit costs.
"At $600 per TEU for the 18,000 TEU, you can make some money. But for the older vessels, smaller vessels, it’s $1,000 per TEU to break even. That shows again why people are really hungry for new, big, modern ships, fuel efficient ships."
Wang said for older 10,000-TEU ships, capital costs or charter rate accounts for about 15 percent of its costs. Fuel is about 35 percent to 40 percent, with the remaining 50 percent derived from the cost of stevedoring, containers, overhead, booking cargo, and paying fees to brokers and forwarders.
“Everyone knows the only way to drive the unit cost is to work very hard on the fuel consumption,” he said.
Emphasizing that Seaspan is not just a financial leasing company, but has technical operational know-how including a team involved in ship designs, he said Seaspan’s new “SAVER” design ships will deliver approximately 20 percent to 30 percent more fuel efficiency.
The company is positioned for the demand for fuel-efficient ships, and “we are benefiting,” he said. “Fortunately, we are in a position to be able to do a little bit cherry-picking," he added.
Wang noted that the price of ships, which had been above $16,000 per TEU in 2007-2008, is now below $10,000 per TEU.
“Today after almost 15 years, we’re entering another low cycle of very attractive ships,” Wang said.
He said ship prices “are the lowest in history. We have the best design and fuel efficiency, and financing cost is lowest. I have never seen that combination, these three things happening at the same time. So that’s where we are today. That’s why we’re so excited." - Chris Dupin