Newbuild strategy creates advantage for Zeamarine

Newbuild strategy creates advantage for Zeamarine

The project cargo market is seen as spotty and inconsistent. Photo credit:

The multipurpose and heavy-lift (MPV/HL) fleet is at an interesting flex point. According to many familiar with the industry, it's still over capacity looking down the barrel at IMO 2020 (along with the rest of the global fleet) but perhaps just on the threshold of a healthier market.

The MPV/HL newbuildings orderbook is in stasis, with newer, modern ships barely replacing demolitions of older, less-efficient vessels, according to Drewry Maritime Research.

Andre Grikitis, president and CEO of Zeamarine, recently spoke with via email about his company’s newbuildings strategy and the overall state of the fleet. Zeamarine is the joint venture created last year between Bremen-based ocean carrier Zeaborn and Intermarine. Grikitis was formerly CEO of Intermarine, based in Houston and New Orleans.

The MPV/HL industry has experienced such poor results over the past decade that there is no capital available to initiate significant newbuilding projects, Grikitis said. As the segment is quite opaque, outsiders are not attracted to invest in it. “We take all of this as a good sign and expect the orderbook to stay sparse, with demolitions and ill-suited vessels reducing useful capacity to the point where supply and demand will reach equilibrium even in the face of a flat cargo market.”

Grikitis said he expects the current lack of newbuilding orders to help reset vessel supply and demand as vessels in the sector age, often without adequate maintenance. He expects demolitions to increase and accelerate the reduction of the trading fleet, which he assesses at about 550 to 600 ships, a number he considers about 30 percent above sustainable demand for MPV/HL ships.   

As far as market demand goes, “The project cargo market remains inconsistent and spotty, and as such we do not consider it [in] isolation as determining the health of our industry,” Grikitis said. “We rely on a combination of cargoes from adjacent sectors and continue to depend on a robust, homogenous cargo market, which for us is generally forecast by the health of the Baltic Handysize Index.

“We anticipate having advantages in certain sectors of the project cargo industry, particularly those requiring extra-long holds for very tall pieces and those requiring lifts to the limit of our 900-ton lifting capacity. Perhaps the most voluminous cargo in this segment is wind cargo and equipment.

“We also anticipate that the fuel efficiency of our newbuildings will create a leading advantage over our competitors, as there is no comparable newbuilding program in the market, and as such these vessels will attract clients who are also particularly safety conscious.”

Newbuildings will operate globally

Zeamarine’s newbuildings will operate globally throughout the company’s core services. “We have studied various trading patterns and modeled them on some of the larger-scale projects that we have been quoting in the market,” Grikitis said. “Zeamarine operators are essentially concerned with the daily operating costs of a vessel; and the prices of either newbuildings or secondhand vessels impact us by what they cost us in the short, medium, or long term. Our charters can support either newbuildings or secondhand newbuilding projects, and we are there to support investors for the right kind of asset at a rate that allows us to earn a profit over the course of the charter.”

In anticipation of IMO 2020’s Jan. 1 deadline, the Zeamarine fleet will prepare its fuel tanks to accept and burn low-sulfur fuel by the fourth quarter of 2019 at the latest, Grikitis said. The fuel efficiency of its newbuildings will be advantageous, and it will also be looking at scrubber technology and durability, he said.

“Our expectation is that with dramatically higher fuel costs affecting [everyone], freight rates will be clearly impacted. Container carriers have already prepared by introducing surcharges. Breakbulk and heavy-lift operators will have to adjust similarly to account for charges both in liner and contract services,” he said.

Zeamarine’s newbuilding program is focused on three vessel types: F500s, of 12,300 deadweight tons with combined lift capacities of 500 metric tons; F900s, of 14,000 deadweight tons with combined lift capacities of 900 metric tons; and Car8000s, of 8,000 deadweight tons with combined lift capacities of 300 metric tons. As of early 2019, Zeamarine expected approximately 10 vessels to be delivered during the year.

Only Leer-based MPV/HL carrier BBC Chartering has a similarly active newbuilding program.

Super-heavy-lift carrier SAL was recently quoted in the European press as showing some interest in a newbuilding program.  

Contact Janet Nodar at and follow her on Twitter: @janet_nodar.