Hapag-Lloyd orders six LNG-fuelled boxships with green loan

Hapag-Lloyd has ordered six new 23,500 teu containerships fuelled by liquefied natural gas and financed with green loans.

South Korea’s Daewoo Shipbuilding & Marine Engineering will build the new ships with dual-fuel, high-pressure engines for delivery in 2024.

Hapag-Lloyd’s chief financial officer Mark Frese said the ships would cut CO2 emissions by 15%-25% compared with conventional fuel.

“We would love to have even more, but that’s the technology which is at hand right now and we are very much convinced that we have to take steps now,” he told a webinar.

The German container line placed an order for six of the same ship type in December.

LNG’s environmental benefits are disputed because LNG engines emit unburned methane, a potent greenhouse gas, which is not yet regulated. Hapag-Lloyd’s rival CMA CGM has embraced LNG fuel while Maersk has rejected it.

Mr Frese said the company tested biofuels but found their availability was too low, and there were “a lot of security issues” with hydrogen-based fuels.

The six ships were financed with an $852m syndicated loan with a 12-year maturity from date of delivery.

The loan was in line with the Loan Market Association’s green loan principles and verified by class society DNV. It also satisfied the current draft of the European union  ’s Taxonomy technical screening criteria.

Hapag-Lloyd said the ships would perform well into 2036 and might use bio- or synthetic LNG to stay compliant with the green financing criteria beyond that year.

Hapag-Lloyd’s goal of reducing its fleet’s carbon intensity by 60% by 2030 compared with 2008 levels helped it qualify for the green finance because it was more ambitious than the mandated International Maritime Organization target of a 40% cut.

The company is also issuing a sustainability-linked bond with a coupon payment that increases if it does not meet its targets.

“There should be no trade-off between being sustainable and being profitable,” Mr Frese said. “These ships are very profitable for us because they are much more efficient, both on the propulsion side but also on the slot-cost basis.”

The vessels will be deployed on Europe-Far East routes as part of The Alliance and would “significantly boost Hapag-Lloyd’s competitiveness in this trade”.