CHINA's Cosco Shipping Holdings said it had eked out a profit attributable to equity holders of the
company of CNY40.8 million (US$6 million) in the first six months of
this year compared with a profit of CNY 1.86 billion in the same period
last year, a 98 percent drop.
The decline in profit came despite an
increase in revenue to about CNY45 billion in the first half of this
year compared to CNY43.5 billion in the first half of 2017.
Cosco called the profit a "hard-won" result and attributed it to an
operating performance of its container shipping business "which was
better than the industry average and the profit contribution of the
The company's terminal business handled 2.8 million TEU in the first
half of 2018, 35 per cent more than in first half of 2017. Revenue from
the terminal business was up 67.5 per cent to CNY3.18 billion, while
revenue from container shipping was up just 1.3 per cent to CNY42.4
The company noted that in the first half of the year, demand for
container transportation grew moderately and global cargo volume
increased by 6.2 per cent as compared to the same period of last year.
The company itself achieved a shipping volume of 11.24 million TEU,
representing an increase of 12.4 per cent as compared to the same period
of last year, American Shipper reported.
"However, due to the concentrated delivery of large container vessels
during the same period, the growth in global capacity exceeded the
growth in demand, which put downward pressure on the market price.
"In the first half of the year, the average of the China Containerised
Freight Index (CCFI) was 797 points, representing a decrease of 3.8 per
cent as compared to the same period of last year, while the average CCFI
for the second quarter recorded a decrease of 4.6 per cent as compared
to the first quarter of this year."
Cosco also said that surging bunker prices resulted in the increase of the cost of liner companies.
Looking ahead to the second half of 2018, Cosco predicted the "world
economy will remain on the path of recovery. Although trade
protectionism is on the rise and Sino-US trade frictions may inhibit the
growth of the global economy to a certain extent, it is expected that
the global economy will continue its growth since 2017, thus providing
guarantee for the growth of container shipping volume."
Cosco noted its acquisition of the parent company of Orient Overseas
Container Line was completed at the end of the July and said COSCO "will
soon open a new chapter of developing 'dual brands'".
The front desk sales and customer service systems of Cosco and OOCL "will remain unchanged to ensure the continuity of customer services;
while middle and back desk functions such as cost control will be
gradually optimised to improve operation efficiency and service
standards, which is expected to result in obvious synergies in areas
such as route networks, information systems, container fleets and
At the end of June, Cosco said its container fleet reached 393 vessels
with carrying capacity of 2.04 million TEU, 15.8 per cent more than a
year earlier. With the acquisition of OOCL and new ships on order,
Cosco's capacity now exceeds 3 million TEU, which it says now makes it
the third largest in the world, ahead of CMA CGM, and behind only Maersk
Most of its new capacity was put in emerging markets, which it says had
growth of 27 per cent, "which was significantly higher than the routes
in Europe and America".
The company noted that 60 per cent of its capacity is along routes that
are part of China's "Belt and Road" initiative that aims to connect
China with trading partners in Asia, Europe and Africa.