Samsung Heavy wins $3.1 bn methanol-fuelled container ship order

Samsung Heavy Industries Co.’s container ship [Courtesy of Samsung Heavy Industries]

Samsung Heavy Industries Co. has won a large order from Taiwan-based shipping company Evergreen Marine for 16 methanol-powered container ships worth 3.96 trillion won (about $3.1 billion), according to regulatory filings on Monday. This marks Samsung Heavy Industries’ first-ever order for methane-powered vessels and is the largest order in terms of contract value in the company’s history.

As Samsung Heavy Industries secured a large order for next-generation eco-friendly methanol-powered container ships, it is being evaluated that a fierce competition has begun in the eco-friendly ship market with HD Korea Shipbuilding & Offshore Engineering Co., which has HD Hyundai Heavy Industries Co., Hyundai Mipo Dockyard Co., Hyundai Samho Heavy Industries Co. as affiliates.

Until now, HD Korea Shipbuilding & Offshore Engineering had a dominant position in the eco-friendly ship market, being the first shipbuilder in the world to deliver methanol-powered vessels. However, with Samsung Heavy Industries securing a significant order for methanol-powered ships, they have set a new record for the largest order value in their history, intensifying the competition between the two companies in the eco-friendly ship market.

According to industry sources on Monday, Samsung Heavy Industries has already achieved 66 percent of its annual order target of $9.5 billion with the latest 16,000-TEU-class container ship order, adding $3.1 billion to the existing order of $3.2 billion this year. The order backlog has also increased to $33.6 billion, the highest level in five years.

Out of the 24 methanol-powered ships ordered by Evergreen Marine, eight were ordered from Japanese companies, and the remaining 16 were placed with Samsung Heavy Industries. Evergreen, ranked sixth globally among container shipping companies, currently owns 213 container ships.

Methanol has gained attention as an eco-friendly ship fuel, along with liquefied natural gas (LNG), as it can reduce sulfur oxide by 99 percent, nitrogen oxide by 80 percent, and greenhouse gas emissions by up to 25 percent compared to conventional bunker C fuel.

As the International Maritime Organization (IMO) has implemented stringent greenhouse gas regulations, with the introduction of carbon intensity rating from this year, there is an urgent need to secure alternative eco-friendly fuels to replace fossil fuels, such as bunker C fuel, which is currently used as the primary fuel for most ships in operation.

This has led to intense competition among global shipping companies to dominate the eco-friendly ship market. Denmark’s Maersk Line A/S, the world’s largest shipping company, has ordered 25 methanol-powered vessels from Hyundai Mipo Dockyard since its first order in 2021. French company CMA CGM, ranked third globally, has also ordered 18 methanol-powered vessels, showing their commitment to methanol. In Korea, HMM Co. has ordered 9 methanol-powered vessels.

In line with the green trend, shipbuilders are also shifting their focus to next-generation eco-friendly fuel-powered vessels from LNG propulsion ships. The demand for low-carbon alternative fuels is increasing due to strengthened carbon regulations, and with Chinese shipbuilders catching up in the LNG ship market, there is a higher need to pioneer new high-value markets for Korean shipbuilders.

While LNG is classified as an eco-friendly fuel, it is still considered a bridge fuel in the process of developing future fuels since it is essentially a fossil fuel with moderate carbon emissions. Samsung Heavy Industries is attributing significant importance to this order, as it expands its eco-friendly ship product line from LNG to methanol.