Onomichi Dockyard has reportedly struck separate newbuilding deals for up to five 40,000-dwt bulk carriers through a new top-heavy payment scheme. The deal is indicative of a structure involving a larger-than-usual initial payment, offered by some Japanese yards, to take advantage of the recent low value of the yen against the US dollar. The yen has been sliding against the dollar since the US Federal Reserve started raising interest rates to counter inflation earlier this year.

By opting for a heavy upfront payment, rather than the usual tail-heavy terms, Japanese yards can immediately get more yen for the dollar, and do not have to hedge the risk in the currency markets. Part of the advantage of the cheap yen can also be passed on to the owner through a lower contract price.

Conventional payment terms involve up to 70% of the contract price of a newbuilding paid on delivery. According to local media reports, a combination of Japanese and foreign owners are behind the orders at Onomichi. The average newbuilding price for a handysize bulker is around $30.5m. The vessels are designed to meet Phase 3 of the International Maritime Organization’s Energy Efficiency Design Index. Delivery is scheduled into 2025.

Japanese yards are eager to take advantage of the low yen, as they have struggled to compete on price with their main rivals in China and are even losing the custom of compatriot shipowners to Chinese yards.

Mitsui OSK Lines ordered four 210,000-dwt capesize bulkers at CSSC Qingdao Beihai Shipbuilding, while Doun Kisen has ordered four open-hatch bulkers at Jiangmen Nanyang Ship Engineering.