YANGZIJIANG: Its ship orders will recover. Why wouldn't they? But how soon?

chart4.25 Yangzijiang stock was rising with higher annual profits, until the US dropped news in Feb this year of huge port fees on Chinese vessels.

One day, will Yangzijiang Shipbuilding shareholders look back on the recent share-price plunge as a market "overreaction" to the US plan to impose huge port fees on Chinese-built or operated vessels?

The big picture favours this scenario.

The global trade is bigger than any one country, even the US.

Chinese-built ships ferry goods to all corners of the globe, not just to the US.

There's plenty of trade that goes on non-U.S. routes like Asia-Europe, intra-Asia, or China-Africa. (The exact market share data for Chinese-built ships by route is unavailable).

They are untouched by those US fees entirely.

A WorldPorts.Org article says that Chinese-built ships account for 28% of the global container fleet’s gross tonnage and 23% of the oil tanker fleet’s gross tonnage. It also states that the U.S. accounts for only 2% of global dry bulk imports.

So while China has a dominant and growing share in new ship construction, significant portions of the existing fleets were built in other countries such as South Korea and Japan.

Thus there are plenty of non-Chinese built ships that may be redeployed to incorporate US routes as part of their overall movements.

As for those that currently call at US ports, there's a plausible way for some to adjust in order to avoid fees, as highlighted in a WorldCargoNews.com article.

Ship operators may redirect these Chinese-built vessels to non-U.S. ports, such as those in Canada or Mexico, transshipping goods into the U.S. via rail or truck.

Thus, it stands to reason that ship owners -- currently in a wait-and-see mode -- will resume placing orders for new ships from Chinese yards, as has been the dominant trend in recent years benefitting the likes of Yangzijiang.

UOBKH 5.25 UOB Kay Hian has flagged the dirt-cheap valuation of Yangzijiang given its profitability in the next few years.
Ref: YANGZIJIANG: US Fee Threats Dent Shares, but Robust Backlog Keeps Analysts Bullish

All this is not to say that the US port fees are insignificant in their impact on those ships that call -- there's no doubt that the US is a key market for containerized goods, and the fees will impact freight rates.

A S$8.4 billion shipbuilder listed on the Singapore Exchange, Yangzijiang does not bear the direct brunt of the fees. That's why it has reported zero order cancellations or delays for ships.

Still, order wins virtually dried up in Q1 2025 when it booked six new orders worth US$300 million.

REDEPLOY

Carriers will revise how fleet is used across alliance partners. If they can avoid using the largest China-built ships on US services, they could minimize the impact greatly.
-- WorldCargoNew.com

Its blockbuster backlog stands at 230 vessels valued at US$23.2 billion, with deliveries lined up through 2030.

That pipeline will keep its yards full until 2027.

New ship orders can be expected to flow again to Chinese shipyards including Yangzijiang's simply because they still lead on price and speed, thanks to state subsidies, low labor costs and an integrated supply chain.

That's why they have captured lots of newbuild orders in recent years.

Buyers pay 10–15% less per ship than at Korean or Japanese yards and often get financing support from Chinese banks to boot.

Some owners may flirt with South Korean yards for earlier delivery slots.

But Yangzijiang’s scale and proven build flexibility mean it can jump back to the front of the queue. The question is when and what's the magnitude.

It might take a while even if there are positive signs as reflected by the action of this giant German shipowner: "Hapag-Lloyd revisits Chinese shipyard after considering Hanwha Ocean deal"

TradeWinds reported that the price of a 16,000 TEU dual-fuel ship from China is around US$190 million, compared to about US$225 million from Korean yards. This price gap, along with eased U.S. port fees, led Hapag-Lloyd to reconsider its order location.

RenLetian JV

Crucially, global fleet renewal is only ramping up.

International Maritime Organisation emissions targets and aging tonnage mean demand for green carriers is set to soar.

Chinese yards have already focused on green tech–capable designs, capturing early mover orders even outside the U.S. market.

For the booming Asia–Europe, South America–Asia and intra-Asia corridors, shipowners will likely come knocking again on Yangzijiang’s doors.

In the end, U.S. port fees will shuffle where and when Chinese yards win contracts, but it's unlikely they will dry up the orders.

The big picture is clear:

• Non-U.S. trades dominate global flows.

• Global demand for new vessels, driven by fleet renewal and emissions targets, supports a rebound in orders for new Chinese vessels.

YANGZIJIANG: Its ship orders will recover. Why wouldn't they? But how soon?

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