Seaspan says no to force majeure by Chinese shipyards

Seaspan, part of Atlas Corp, has received force majeure notifications from four Chinese shipbuilders regarding the construction of newbuilding vessels citing the latest lockdowns in China caused by the COVID-19 pandemic.

Specifically, shipyards from Shanghai, Jiangsu, and Zhejiang have been delaying newbuild deliveries as they face challenges in sourcing materials for the construction amid fresh rounds of COVID-19 outbreaks resulting in lockdowns.

“The company rejected those forces majeures, and our team is working very diligently, yard by yard, vessel by vessel in finding the ways to help mitigate any potential impacts to those deliveries,” Bing Chen director, president, and chief executive officer of Seaspan Corporation said in an earnings call.

The company has yet to respond to the request for more information on the matter to our editorial team concerning how many ships might be affected.

Four ships are scheduled for delivery in the remainder of 2022, and their construction is progressing as planned, according to Graham Talbot, CFO of Atlas and Seaspan.

In total, Seaspan has an additional 67 vessels under construction.

Based on the data from VesselsValue, the construction of these ships is spread between Chinese and South Korean shipbuilders, the former accounting for a great majority of ships (around 50 ships). The delivery dates extend from 2022 up to 2025.

The Chinese shipyards in charge of building Seaspan’s newbuilds include CSSC’s Shanghai Waigaoqiao Shipbuilding, Hudong Zhonghua, and Jiangnan Shanghai Changxing HI, followed by Yangzijiang Shipbuilding Holding’s yards Jiangsu Yangzi Xinfu and Jiangsu Yangzijiang.

Seaspan, the largest independent owner and operator of containerships in the world, has employed the same tactics of working closely with the yards in ensuring 7 newbuilds were delivered to the company in the 2nd quarter of this year.

Specifically, in April and May 2022, Seaspan accepted delivery of its fourth and fifth 12,200 TEU vessels, marking the completion of its five 12,200 TEU newbuild order placed in late 2020. In June the shipowner took delivery of its first two 11,800 TEU vessels, each of which commenced a 5-year charter upon delivery.

“We are working diligently to deliver our newbuild program on time and on budget, and thanks to our experienced team and integrated platform, all seven of our newbuilds were delivered ahead of schedule. We have now completed 117 newbuilds since our IPO in 2005, a proud track record that our customers deeply value,” Chen said.

Seaspan has been on an ordering spree over the past few years, investing heavily in LNG as fuel as part of its strategy to decarbonize its fleet.

To remind, back in May, the company placed an order for four 7,700 TEU LNG dual-fuel containerships which remain subject to certain closing conditions. The four vessels are expected to be delivered in the second half of 2024 and the first quarter of 2025.

The latest order brings the company’s fleet of dual-fuel LNG newbuilds to a total of 29 vessels.

On the other hand, the company has been recycling capital by divesting its older and some of its smaller-size ships (TEU 4,000) and investing in fleet optimization. In that context, Seaspan completed the sale of nine vessels for total gross proceeds of $224.3 million in the second quarter of this year.

Seaspan’s operating fleet stands at 127 vessels with a total capacity of 1,156,630 TEU, which is expected to reach up to 1,950,430 TEU, on a fully delivered basis.