Hapag-Lloyd will use nearly US$1Bn in ‘green loan’ financing to build six 23,500- TEU+, LNG-fuelled box ships, while Seaspan orders 10 dual-fuel ULCSs for Zim long-term charter
German shipping giant Hapag-Lloyd’s order for six 23,500-TEU+ ultra-large container ships (ULCSs) will not only push the capacity boundaries of its largest ships, but also break new ground in financing. Hapag-Lloyd reported concluding two debut transactions according to the Green Loan Principles of the Loan Market Association (LMA), which was verified independently by DNV GL.
The syndicated green loan of US$417M has a 12-year maturity and will be used to finance three of the six ULCSs on order at South Korea’s Daewoo Shipbuilding & Marine Engineering (DSME). The credit facility is being backed by the Korea Trade Insurance Corporation, and the syndicate consists of 11 banks. KfW IPEX-Bank and BNP Paribas were in charge of structuring and co-ordinating the transaction.
The lease financing for the remaining three newbuildings is US$472M, has a maturity of 17 years plus construction-phase financing, and has been structured by the Industrial and Commercial Bank of China Leasing.
“Our first green financings are a major milestone for us, as we are breaking new ground in the container shipping segment by financing newbuilding projects geared towards sustainability,” says Hapag-Lloyd chief financial officer Mark Frese.
“The transactions will help us to modernise our fleet while further reducing our CO2 footprint,” says Mr Frese.
Each of the new ULCS vessels will be fitted with a two-stroke, high-pressure, Diesel-cycle dual-fuel MAN B&W 11G95ME-GI Mk10.5 engine that will be capable of operating on LNG or traditional compliant fuel.
MAN Energy Solutions reports the engines will be built in South Korea and will be fitted with selective catalytic reduction technology to meet IMO Tier III emission standards. The first engine will arrive at the shipyard in May 2022. DSME plans to deliver the six ULCSs between April and December 2023.
Hapag-Lloyd chief executive Rolf Habben Jansen says “With the investment in six ultra large container vessels, we will not only be able to reduce slot costs and improve our competitiveness on the Europe–Far East trade, but also take a significant step forward in modernising our fleet. Additionally, we will further reduce our environmental impact.”
In a press statement, Hapag-Lloyd says the “extremely fuel-efficient high-pressure, dual-fuel engines… will be able to reduce CO2 emissions by approximately 15 to 25%. This means that in addition to the requirements of the LMA’s Green Loan Principles, the ships will also satisfy the EU Taxonomy’s technical screening criteria for sea and coastal freight water transport.”
The engines will operate on LNG but have sufficient tank capacity to operate alternatively on conventional fuel. For the newbuilds, Hapag-Lloyd is considering utilising two LNG bunker tanks on deck of a new IMO Type B tank of 18,000 m3 constructed with cryogenic high-manganese steel in preference over the normal membrane type.
BRL reports that using high-manganese steel for the LNG fuel tanks in Hapag-Lloyd’s newbuild box ships could yield potential cost savings of “US$2M to US$3M over competitors and be worth the investment in the long run. This will allow bunkering on board from self-sufficiency.”
In discussing the ship’s propulsion, MAN Energy Solutions senior vice president and head of two-stroke business Bjarne Foldager, says “These newbuildings will be fitted with mature ME-GI technology that continues to accumulate references across multiple segments. The engines’ fuel-efficiency and negligible methane slip tie in perfectly with Hapag-Lloyd’s strategy of sustainability.”
Mr Foldager notes the ME-GI’s fuel flexibility and continued success in other ship type segments. “As we move towards a zero-carbon future, the ME-GI showcases our dual-fuel engine portfolio that is future-proofed to handle whatever alternative fuels come to prominence in the decades ahead,” he says.
Meanwhile, if Hapag-Lloyd exercises options with DSME to build six additional ships, it may need additional green loan financing. The 12 LNG-powered ULCSs would raise its total investment close to US$2Bn.
Transporting some 12M TEU annually with its fleet of 234 vessels, Hapag-Lloyd reports the six new ULCSs will be deployed on Europe–Asia routes as part of The Alliance, which includes liner companies Japan’s Ocean Network Express, China’s Yang Ming and South Korea’s Hyundai Merchant Marine.
Mammoth diesel named most powerful
Engine designer and manufacturer WinGD says its Otto-cycle 12X92DF dual-fuel engine has received official recognition by the Guinness World Record as the most "powerful dual-fuel engine ever built".
Tests carried out at engine builder CSSC-MES Diesel and verified by Guinness World Record for the official record title of ‘Most powerful marine internal combustion engine (Otto cycle) commercially available’, the 2,140-tonne engine demonstrated a power of 63,840 kW at a speed of 80 rpm.
WinGD says the super-sized engines are the same as those in French shipping giant CMA CGM’s nine 23,000-TEU container ships, including the flagship CMA CGM Jacques Saade. 400 m long and 61 m wide, the ULCSs are the largest LNG-powered ships ever built.
Built to Bureau Veritas class, each ship is fuelled by a membrane storage tank with a capacity of 18,600 m3 – the amount of LNG fuel required for the round-trip voyage on the Asia-Europe route. This allows CMA CGM to bunker cheaper LNG fuel in Rotterdam that will last for the entire round trip.
The GTT design of the fuel storage tank was optimised to minimise the impact on cargo storage, with the tank located below the crew accommodation and a cargo space replacement impact of less than 300 TEU. The box ships also have tank storage for a few hundred cubic metres of pilot fuel, MGO.
The construction of the tank was a technological feat that required significant engineering and the assembly of 1,649 stainless steel panels. The shipyard reports that it took nine months to build and install the LNG tank on CMA CGM Jacques Saade.
With the first LNG-powered CMA CGM ULCSs sailing, WinGD’s team of remote experts sitting in Winterthur, Switzerland provide a 24/7 support centre service that can monitor engine performance in real time, allowing the crew to call at any time to speak with an expert to troubleshoot.
Auxiliary power for CMA CGM Jacques Saade is supplied by Wärtsilä 34DF dual-fuel engines. The fuel gas supply system is fitted with Wärtsilä’s operational performance improvement and monitoring system, which uses digital technology to provide real-time data to allow the system to operate at optimal efficiency at all times, in all weather and sea conditions.
WinGD chief executive Klaus Heim says “The future uptake of LNG as a marine fuel is being driven by large merchant vessels with two-stroke engines, where the savings – and the environmental benefits – are the greatest. We are delighted with this achievement, which was made possible by CMA CGM’s strong vision and close co-operation with engine builder CSSC-CMD and Bureau Veritas. The 12X92DF is not just the biggest dual-fuel engine in our portfolio – it is now officially the most powerful of its type in the world.”
The 12X92DF engine was introduced in 2019 and demonstrates the viability of scaling a lean-burning combustion cycle to larger engine sizes. The X-DF range of dual-fuel engines enables the use of LNG as a marine fuel. The engine series draws on design and field experience earned through an installed base of more than 100 X-DF engines logging nearly 1M running hours with almost 400 X-DF engines on order.
Class society Bureau Veritas awarded the dual-fuelled 12X92DF engines type-approval in May 2020 following a series of full-load tests in diesel and gas operation.
Seaspan orders 10
In February, Seaspan Corporation, a wholly owned subsidiary of NYSE-listed Atlas Corp, ordered 10 LNG-powered 15,000-TEU ULCS from Samsung Heavy Industries for delivery starting in H1 2023. When delivered, the 10 box ships will go on a 12-year charter with Zim Integrated Shipping Services. Zim says the ships will be employed in Asia-US east coast service, with deliveries between February 2023 and January 2024.
Zim president and chief executive Eli Glickman calls the deal a “milestone agreement for Zim, valued in excess of US$1Bn” which will allow the company to meet growing market demand on the Asia-US east coast trade and its sustainability goals.
Seaspan chairman, president and chief executive Bing Chen adds “This transaction signifies both Zim’s and Seaspan’s commitment to ESG principles, carbon reduction, and resolve to contribute to a greener business community in the future."
Expanding fuel tank options for LNG-powered ULCSs
Bureau Veritas (BV) has awarded an approval in principle (AiP) to French cryogenic technology firm GTT to apply its NO96 membrane containment system for LNG fuel tanks in ultra-large container ships (ULCSs).
GTT and BV reviewed the compatibility and safe integration of NO96 technology as an LNG fuel tank in a container vessel hull. Over the course of the AiP study, a liquid motion assessment of the tank configuration was performed, according to GTT.
GTT chairman and chief executive Philippe Berterottière, says the AiP will “enable all our licensees to offer membrane solutions to this market.”
The AiP comes at a time when shipowners are increasingly ordering dual-fuel LNG tonnage as they look to comply with the IMO 2020 0.50% sulphur cap and transition towards decarbonisation.
BV Marine & Offshore president Marine Matthieu de Tugny, says “LNG is at the heart of the transition to a cleaner and more sustainable maritime industry. It is a pleasure, once again, to be able to support GTT with our expertise – encouraging innovation and the expansion of options available for LNG fuel containment systems.”
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