China’s Cosco Shipping Lines Group has signed a time charter agreement with Singaporean owner Pacific International Lines (PIL) for twelve containerships.
Under the deal, Cosco Shipping will lease a 6,500 TEU containership with shore supply and five 4,250 TEU containerships from PIL. On the other hand, PIL will charter in six 5,500 TEU boxships from Cosco.
After an “arm’s length negotiation” between the parties, the rental price has been set at USD 1.1 per TEU per day.
Cosco’s vessels being hired by PIL are the 5,446 TEU Cosco Shanghai, Cosco Hamburg and Cosco Antwerp that have been chartered out for a daily rate of USD 5,990. The 5, 668 TEU Xin Xia Men, Xin Chang Shu and Xin Fu Zhou have been hired for USD 6,234/6,256 daily rate, bringing the total charter hire to USD 10.3 million.
The ships hired from PIL include 4, 250 TEU Kota Laju, Kota Layar, Kota Lambang, Kota Lumyan and Kota Latif hired on a USD 4,675 daily rate each, and the 6,606 TEU Kota Cantink chartered at a daily rate of USD 7,266, totaling in USD 8.5 million.
The ships are scheduled to start their charter period on September 5, 2017, lasting until May-July 2018 depending on the ship.
The aggregate transaction amount of charting vessels involved is approximately RMB 123 million (USD 18.7 million).
COSCO said that the transaction may resolve “the difficulties faced by Cosco Shipping Lines Group for lack of suitable internal shipping capacity and the ship hiring difficulty for specific ship type in the external ship leasing market (…) Meanwhile, by leasing surplus vessels, vessels of Cosco Shipping Lines will be properly deployed.”
The company said that the deal would not have an adverse financial effect on its profit, or assets.