Big shipowners take wind out of US sails, continue to order vessels from China

Despite a new US port fee targeting ships linked to China, Mediterranean Shipping Company (MSC), the world’s largest, will continue ordering vessels from Chinese shipyards due to their unmatched competitiveness and capacity to build ships needed for the energy transition, according to MSC senior vice-president Marie-Caroline Laurent. Laurent noted that while the US is attempting to revive its shipbuilding activity, Chinese shipyards currently possess the competence and capability to meet the demand for new vessels equipped with decarbonization technologies required to meet the International Maritime Organisation's net-zero emissions target.

Analysis

Mediterranean Shipping Company (MSC), the world's largest shipping line, has affirmed its intention to continue ordering vessels from Chinese shipyards, despite the introduction of a US port fee targeting ships linked to China. According to MSC senior vice-president Marie-Caroline Laurent, Chinese shipyards currently possess unparalleled competence and capability, particularly in constructing the new vessels required for the maritime sector's energy transition towards net-zero emissions, a goal set by the International Maritime Organisation for the next approximately 25 years. This reliance stems from the advanced decarbonization technologies and green fuel compatibility that Chinese yards can deliver at scale. While acknowledging US efforts to revive its domestic shipbuilding industry, MSC views this as a long-term endeavor requiring substantial state subsidies and strategic asset retention, unlikely to alter its immediate procurement strategy. The continued preference for Chinese shipbuilders, even by major industry players like MSC, underscores their current competitive advantage and capacity to meet the surge in demand for environmentally advanced ships, suggesting that the US port fee, in its present form, may not significantly deter large-scale orders or shift global shipbuilding dynamics in the short term.

Key Decisions for Investors

• Investors should recognize the sustained order pipeline for Chinese shipbuilders specializing in eco-friendly vessels, as major shipping lines prioritize fleet modernization for energy transition compliance.
• Consider that shipping companies heavily investing in green fleet renewal will likely continue sourcing from dominant Asian shipyards, primarily in China, due to current capacity and technological expertise, potentially mitigating the immediate impact of targeted US port fees on their strategic plans.
• Monitor the evolution of US trade policies and subsidies aimed at bolstering domestic shipbuilding, as any significant success in this area, though a long-term prospect, could eventually reshape supply chain dependencies and competitive dynamics within the global shipbuilding industry.