Alibaba-linked Transfar Shipping is exploring newbuilding opportunities as part of a long-term commitment to container shipping.

The Shanghai-based liner operator is looking to order ships that are both larger and greener than vessels up to traditional panamax size that it currently operates.

These would be deployed on its growing network of services from China to the US, with plans to extend those to South East Asia.

Chief operating officer Robin Li told TradeWinds that the move into ownership would help balance the company’s exposure to the charter market.

The Alibaba-owned company entered the sector 10 months ago when shippers were facing record high freight rates and difficulties finding space on container vessels.

But Li explained that the company’s move into ship operating was not a temporary response to “crazy” rates.

“We are here for the long-term as a stable service provider,” he said.

Over time, Transfar expects to carry more cargoes for e-commerce player Alibaba.

That could see the company expand its existing service between China and the US to other ports in South East Asia and even ultimately to Europe.

Alibaba currently has long-term contracts with other liner operators, but Transfar expects to win more cargoes.

The goal is to establish a “closed-loop, transportation network”, with as much as 80% or 90% of the vessels filled by Alibaba cargo.

“Slowly we can onboard more Alibaba customers, as long as our services are competitive,” Li said.

Newbuilding talks

Transfar currently operates five vessels taken from the charter market comprising sub-panamax and traditional panamax boxships up to 5,000 teu.

The newbuilding plans would focus on larger and more modern vessels that could be built in China.

These would serve the company’s needs over the next 10 or 20 years.

“We are under discussions with a few ship designers, institutions, and shipyards to look for opportunities,” Li said.

This year, the company moved into shipowning with the acquisition of four secondhand vessels.

TradeWinds reported last week that the company had purchased three 1,800-teu container ships in a $110m en-bloc deal with China’s StarOcean Marine.

That came after the Singapore-incorporated company forked out $53m in February to take the 2,872-teu Windswept (built 2010) from UK-based Lomar Shipping.

Transfar is one of a number of new operators in the transpacific trade, as is Sea-Lead Shipping, the operator of the 6,661-teu Hakuna Matata (built 2008). Photo: Sea-Lead

Li said the company had opted to purchase vessels to provide some balance in its fleet.

“We are waiting for the charter market to fall, but we see no sign of that — even now the market is super-hot,” he said.

“That’s another reason why buying ships is a better choice. We pay the same money, but after one year we have the ship.”

Starting from zero

Li, who worked for Maersk for 16 years before joining Transfar, acknowledges the challenges in establishing a liner operation from scratch.

He said the company employs a small team recruited from liner companies APL, Hamburg Sud and Cosco, around 15 of whom are based in Shanghai.

Transfar was one of the newest entrants to the transpacific trade, where it launched services in August last year.

The company has also considered entering the Asia-Europe trade, but Li said that would require a greater number of larger vessels.