Shipping Lines Must Be `Level Headed' on Capacity, Avoid Glut, Cosco Says
China Cosco Returns to Profit on Container, Dry-Bulk Rebound
Kiyoshi Ota/Bloomberg
China’s largest operators of container vessels both ended 18 months of losses as U.S. and European retailers boosted imports of Asian-made toys, furniture and clothes after last year’s recession.
China’s largest operators of container vessels both ended 18 months of losses as U.S. and European retailers boosted imports of Asian-made toys, furniture and clothes after last year’s recession. Photographer: Kiyoshi Ota/Bloomberg
China Cosco Holdings Co., Asia’s largest shipping company by market value, said lines needs to stay “level-headed” to prevent a capacity glut from overwhelming a rebound in cargo demand.
“We call upon chief executive officers to remain level- headed to help ensure stable growth,” Executive Vice President Sun Jiakang told reporters today in Hong Kong. “The global economy is recovering, but it’s a process that can take years.”
China Cosco and China Shipping Container Lines Co. both said today they won’t order any new vessels this year as shipyards works through box-ship backlogs with a combined capacity equal to about a quarter of the existing fleet. Shipping lines posted industrywide losses last year as rates tumbled because of overcapacity and slowing demand.
“The whole container market is still in a state of fluctuation,” China Shipping Chairman Li Shaode said at a separate press conference in Hong Kong today. “Uncertainties over demand still exist.”
China Shipping may lease container vessels or buy second- hand ones through the first half of next year, he said. The China Shipping (Group) Co. unit and China Cosco, which also operates dry-bulk ships, both yesterday reported first-half profits, ending 18 months of losses.
“I will use my influence to urge all members of the Asian Shipowners’ Forum to be cautious when expanding capacity,” said China Cosco Chairman Wei Jiafu. “You can go ahead and complete existing orders.”
Rising Rates
China Cosco, controlled by China Ocean Shipping (Group) Co., fell 3.3 percent to close at HK$8.32 in Hong Kong today. China Shipping Container dropped 2.1 percent to close at HK$2.79. The shipping line is little changed this year, compared with China Cosco’s 13 percent decline.
Transpacific container rates have risen as much as 37 percent from June to $2,600 for a 40-foot equivalent box, said China Shipping Container Managing Director Huang Xiaowen. Asia- Europe rates are little changed from June at $1,750 for a 20- foot unit, he said.
Container-shipping rates have risen from last year as U.S. and European retailers boost imports of Asian-made toys, furniture and clothes. Lines have also slowed vessels and idled ships to pare capacity.
Globally, as much as 8 percent of container-ship capacity may be parked by year’s end, China Shipping Container’s Huang said.
To contact the reporter on this story: Wing-Gar Cheng in Hong Kong at wgcheng@bloomberg.net
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