German Shipping Giant Hapag-Lloyd Secures $4 Billion Green Financing for 24 LNG Boxships
German shipping giant Hapag-Lloyd has revealed long-term financing totaling $4 billion for the 24 liquefied natural gas (LNG) dual-fuel boxships that the company booked in October 2024 at two Chinese shipyards.
The green financing comprises four elements. Approximately $900 million of the purchase price has been set aside from the company’s own funds, while a total of $500 million will be made available from two banks via bilateral mortgage loans. Roughly $1.8 billion will be financed via three leasing structures, with an additional $1.1 billion secured through a syndicated credit facility backed by the China Export & Credit Insurance Corporation (Sinosure).
The financing will be carried out based on Hapag-Lloyd’s Green Financing Framework, which complies with the standards of the Green Loan Principles of the Loan Market Association (LMA). This has been verified by an independent expert opinion of the Norway-based classification society DNV, confirming the high efficiency of the ships and their compliance with the EU taxonomy for sustainable activities.
Mark Frese, CFO/CPO of Hapag-Lloyd AG, commented, “We are continuously modernizing our fleet to deliver a high quality of service and to achieve our ambitious decarbonization goals.”
In addition to the financial transactions, Hapag-Lloyd is pleased to finance newbuild projects in China for the first time with the Sinosure transaction.
Fleet Expansion for Sustainability
In early October last year, Hapag-Lloyd commissioned China’s Yangzijiang Shipbuilding Group and New Times Shipbuilding for the construction of 24 boxships. The units have a combined capacity of 312,000 TEUs, with 12 at Yangzijiang Shipbuilding boasting a capacity of 16,800 TEUs each and the other 12 at New Times Shipbuilding with a capacity of 9,200 TEUs each.
All newbuildings will be outfitted with low-emission, high-pressure LNG dual-fuel engines and will be able to use biomethane, expected to reduce carbon dioxide (CO2) emissions by up to 95% compared to conventional propulsion systems. The vessels are also ammonia-ready and scheduled for delivery between 2027 and 2029.
Commitment to Sustainability
Aside from eco-friendly fleet initiatives, Hapag-Lloyd is committed to wider industry-specific and worldwide sustainability goals, including the 1.5-degree target of the Paris Agreement. By 2030, the company aims to reduce the absolute greenhouse gas emissions of its fleet by around a third compared to 2022, moving closer to achieving net-zero fleet operations by 2045.
Green Financing in the Shipping Industry
Green financing has gained traction in the shipping industry, driven by decarbonization efforts and stricter environmental regulations. Approximately 80% of global shipping lenders have adopted the Poseidon Principles, a global framework to promote decarbonization in the maritime industry.
Hapag-Lloyd’s order for the 24 boxships aligns with the industry’s push towards sustainability. In mid-August 2024, the European Commission unveiled its Ship Financing Portal, providing financial tools to drive fleet renewal, enhance efficiency, and reduce environmental impact.