Due to a strategic shift in focus, Fujian Guohang Ocean Shipping (Group) Co., Ltd. (Guohang Ocean Shipping) has announced the termination of its plan to build two 73,800 DWT domestic bulk carriers.
Recently, Guohang Ocean Shipping released a progress report on a major contract, stating that its board of directors has approved a resolution to terminate the construction contract for two 73,800 DWT bulk carriers. This means that Guohang Ocean Shipping has voluntarily terminated the order for two 73,800 DWT bulk carriers.
According to the announcement, the two 73,800 DWT bulk carriers terminated by Guohang Ocean Shipping were originally scheduled to be constructed by Jiangsu Haitong Offshore Engineering Equipment Co., Ltd. (JSHT). The relevant shipbuilding contract was signed on January 28, 2024, and these vessels were part of the optional vessels under the 4+2 bulk carriers of 73,800 DWT contract signed by both parties in January 2023.
On November 28, 2023, Guohang Ocean Shipping held its 15th Extraordinary Meeting of the 8th Board of Directors and its 6th Extraordinary General Meeting of Shareholders in 2023 on December 15, 2023. The meeting reviewed and approved the proposal to build two 73,800 DWT bulk carriers, and clarified that it intends to sign a contract with JSHT to build two 73,800 DWT bulk carriers.
Based on the contractual terms, the contract would only become effective after Guohang Ocean Shipping paid the first installment. However, from the date the contract was signed on January 28, 2024, to the date of this announcement (October 24), Guohang Ocean Shipping has not paid the first installment for the two vessels. This means that the orders for these two bulk carriers have not yet become effective.
Guohang Ocean Shipping explained that the two 73,800 DWT bulk carriers to be built under the contract were mainly intended for domestic dry bulk shipping and were not suitable for direct operation on international shipping routes.
If the construction plans for these two bulk carriers are adjusted based on existing needs, a comprehensive overhaul of the original hull structure, load capacity, and seaworthiness standards is required. Such overhauls involve high costs, and the operational efficiency and maintenance costs of the retrofitted vessels will not be competitive compared to the original export vessel types.
Taking into account the development opportunities in both domestic and international trade markets and the economics of vessel retrofitting, Guohang Ocean Shipping has decided to shift its future capacity expansion focus to routes that combine domestic and international trade, as well as international trade routes.
Continuing to advance the construction of these two domestic bulk carriers is neither in line with Guohang Ocean Shipping’s strategic direction of expanding into international trade routes, nor will it result in the inefficient use of funds and resources. Therefore, Guohang Ocean Shipping has decided to terminate the contract implementation process and instead allocate related resources to capacity projects that are more suited to the needs of international trade routes.
According to its official website, Guohang Ocean Shipping was founded in April 2001. It is one of China’s large-scale dry bulk shipping enterprises, mainly engaged in dry bulk cargo transportation on international ocean routes, domestic coastal routes, and the middle and lower reaches of the Yangtze River.
The company was successfully listed on the Beijing Stock Exchange (BSE) on December 15, 2022, becoming the first enterprise from Fujian Province to be listed on the BSE. It has formed a business layout centered on shipping operations, supplemented by related businesses such as ship management and commodity trading.