Cargo Business Newswire

Monday, March 17, 2014

COSCO Chair: Container carriers in for another rough year

Container carriers should prepare for another rough year as vessel overcapacity will continue to negatively impact profits and margins, according to the chairman of China's largest shipping concern, China Ocean Shipping Group Co.

"The industry turnaround will still take a long time," said Ma Zehua in a Reuters interview this week. "There are a lot of challenges ahead."

COSCO Group is one of China's top 100 state-controlled corporations, and operates more than 700 vessels with covering 1,600 ports. The group controls five listed companies, including China COSCO Holdings Co. and COSCO Corp.

COSCO Corp. reported a 71 percent drop in net profit last year, while China COSCO Holdings Co. said it should return to profitability after posting losses in 2011 and 2012 after selling its logistics business, container manufacturer stakes and office properties.

But the COSCO chairman said he wasn't sure China COSCO could make a profit this year due to the uncertainty regarding the global economy.

"We haven't announced any target (for China COSCO) because we can't say for sure it won't make losses in 2014," Ma said. "There aren't that many ways left to tackle losses through asset disposal."

A recent transport sector survey by global law firm Norton Rose Fulbright reported that 40 percent of those polled cited overcapacity as the biggest threat to the recovery of the shipping sector.

Earlier this year, COSCO Group and competitor China Shipping Group inked a strategic deal to share resources for terminal operation, shipbuilding and other areas.

For more of the Reuters story: in.reuters.com