French Shipping Operator CMA CGM SA has ordered 10 container mega-ships from state-owned China State Shipbuilding Corp. as part of a string of deals that Chinese President Xi Jinping signed Monday with his French counterpart Emmanuel Macron.
The agreements in France follow a series of deals that President Xi struck in Italy, including pacts with state ports aimed at extending China’s Belt and Road Initiative deeper into Europe.
The CMA CGM purchase, which shipyard executives estimate is valued at more than $1 billion, is for ships that carry 15,000 containers each. The transaction is seen as a significant win for CSSC as it seeks to compete with bigger rivals in South Korea at a time when orders for mega-container vessels are increasingly rare.
Container ships move the vast majority of the world’s goods, including food, clothing, electronics and heavy machinery. But a capacity glut, a slowing economic outlook and trade tensions between the U.S. and China have depressed container freight rates and earnings at many carriers.
Five of the ships will be powered by liquefied natural gas, an increasingly popular choice as regulators push the industry to use cleaner burning fuel. The other five will be equipped with “scrubbers” that clean ship emissions.
CMA CGM is the world’s fourth largest container operator in terms of capacity.
The vessels will be deployed in routes between Asia and the Mediterranean. The world’s biggest shipping companies have spent billions of dollars over the past five years to buy dozens of supersize vessels that carry around 20,000 boxes apiece on the Asia-Northern Europe route. Those ships are increasingly seen as too big and costly, and some shipping operators say 15,000-container ships are a better size.
Shipping and logistics are high on President Xi’s agenda. In a visit to Rome last week, he signed deals that will give Chinese ships access to the port of Trieste. Chinese state-owned companies will also be involved in works to upgrade the port of Genoa. The deals are part of Beijing’s multitrillion-dollar Belt and Road initiative that aims to connect Asia and Europe through massive investments in maritime, rail and road projects.
Although about a dozen smaller EU members have signed Belt and Road memorandums with Beijing, Italy is the biggest European country to do so, and the first member of the Group of Seven major advanced economies.