Tuesday, April 3, 2012

China COSCO posts 255pc loss of US$1.66 billion, boxes lose $1 billion


HONG KONG listed China Cosco Holdings has posted a loss of CNY10.5 billion (US$1.66 billion) in 2011, down 255 per cent year on year from a profit of CNY3.78 billion in 2010. Revenues were also down 12.3 per cent to CNY84.64 billion in 2011.

Looking ahead, the company said: "On one hand, weaker consumption in developed countries will slow growth of global trading volumes; on the other hand, overcapacity will remain unfavourable to the shipping market because of a large amount of new build vessels to be delivered."

The company's shipping line, Cosco Container Lines, and related businesses experienced a loss of CNY6.35 billion with a total throughput of 6.91 million TEU, up 11.2 per cent year on year. But the division's revenues were down 10.7 per cent to CNY41.4 billion.

But revenues for its domestic logistics division, comprising some forwarding and ship agency business, grew about 15 per cent to CNY17.74 billion from CNY15.21 billion in 2010, attributing to a profit of CNY626.5 million.

Its terminal operations, including all major Chinese ports, plus facilities in Greece, Suez Canal, Singapore and Antwerp, posted a profit of CNY492.7 million due to a growth in both throughput and revenues.

Regarding fleet development in 2011, six containerships with a total capacity of 69,458 TEU delivered, bringing the fleet to 157 operated containerships with a total capacity of 667,970 TEU and representing an increase of 8.8 per cent year on year. Thirty-two vessels were on the company order book, totaling 244,168 TEU at the end of 2011.

The company has 28 new vessels scheduled for delivery between 2012 and 2014. The company also expects to receive ten new 4,250-TEU ships and four chartered-in 13,000-TEU vessels this year. Cosco expects to carry 7.3 million TEU this year.

Said the company statement: "Over 80 per cent of the contracts of Pacific routes included terms for the separation of bunker surcharges and freight rates, while bunker surcharges and currency exchange surcharges of Europe Mediterranean routes were adjusted monthly."

The company said it "has raised freight rates seven times and introduced surcharges for Australia routes. Extra risk surcharges and war insurance premium were introduced to routes to Persian Gulf and other hazardous areas."

"More shipping capacity will be allocated to emerging markets and feeder routes to build up an extensive global service network and speed up the recovery of freight rates," the company said.

But it forecast the global demand for the container shipping will maintain steady growth. It quoted Clarkson's February report that the volume will increase 7.7 per cent in 2012, but it would be difficult for the growth rate of the container shipping volume on Pacific routes to exceed five per cent despite the recent partial recovery signal of the US economy, and the Europe-Asia routes will continue to be stagnant due to European debt crisis.

"Since the beginning of 2012, the freight rates of Europe-Asia routes and Pacific routes have been improved and the overall freight rates of in the container market are expected to recover to normal level. Yet, due to the intensifying political situation in Iran, bunker costs will further increase and the cargo shipping in this region will be hindered, and the risk of economy of emerging markets being impacted will increase," said the Cosco statement.

source: shippingazette.com / picture: google.com