Evergreen poised to order ships

Mitsubishi Heavy Industries Ltd, Japan's largest heavy-machinery maker, may soon win an order for about 30 container ships from the Evergreen Group (長榮集團).

Mitsubishi Heavy has made "the most attractive offer so far," according to Evergreen Marine Corp (長榮海運). The only other bid is from Norway's Kvaerner ASA, the company said.

The Japanese company's offer is to build ships that can hold 6,000 20ft containers, the company said, adding that the number of ships may change.

The price of such a ship would be between US$60 million and US$70 million, estimates Karen Chan, an analyst at Credit Suisse First Boston.

Such an order from Evergreen would help Mitsubishi Heavy reverse declining shipbuilding sales. Revenue from that division in the six months ended Sept. 30 fell 7 percent to ?123.4 billion (US$1.1 billion).

The company has been cutting costs to help compensate for falling sales. The company said it delivered a total of four container carriers last year.

Mitsubishi Heavy spokesman Hiroyuki Yamakado declined to comment on winning the order. The company, which builds container ships at its Kobe shipyard, has no outstanding orders from Evergreen, he said. It delivered its last container ship to the company in January.

Evergreen chairman Chang Yung-fa (張榮發) said the ships, which are larger than he originally planned, offered a better balance of speed and capacity, the Financial Times reported earlier today on its Web site.

Evergreen Marine, the world's fourth-largest shipping company by container capacity, also said it was considering splitting the order among an undisclosed number of shipyards to speed up delivery.

The company said it didn't know when it would be able to announce a final decision.

The Financial Times said that a decision could come by the end of the week.

``The new bigger ships are more efficient in terms of using bunker, so they can save some costs," said Chan.

``These ships will mainly be replacements for them," she said.

Freight rates started to pick up in the last three months of last year, after dropping for two years, partly because shipping lines cut capacity and extended peak season surcharges for carrying cargo across the Pacific.

Shipping companies lost a combined US$2 billion last year on trans-Pacific routes and are banking on continued rate increases to help earnings.

Evergreen Marine and other shipping lines aim to raise their trans-Pacific rates by US$700 per 40ft-container starting in May. They also plan to raise rates by US$650 per 20ft-container on Asia-Europe routes in three stages between January and July.