[081111.EN.SEA] China Cosco Reports Loss of US$325.8 Million In Third Quarter

CHINA Cosco Holdings, the nation's largest shipping conglomerate, recently announced its third quarter results, posting a net loss of CNY2.07 billion (US$325.8 million) due to falling freight rates, overcapacity and declining international shipping market, especially the severe situation in the international dry-bulk shipping market.

For container shipping business, the Tianjin-based carrier handled a total volume of 1,892,161 TEU in the third quarter, showing an increase of 14.2 per cent year on year. For the first three quarters, the total volume of container handled reached 5,131,795 TEU, up 11.4 per cent over the same period last year.

However, total revenue of the container shipping business shrank 21.3 per cent year on year to CNY9 billion. From January to September, the total revenue of the container shipping business decreased 11.7 per cent to CNY25.6 billion.

The result was better than a UBS forecast for a loss of CNY2.25 billion but worse than CNY1-1.5 billion loss projected by China's largest commercial bank ICBC, reported Reuters.

Its chairman and CEO Wei Jiafu, who will become non-executive chairman as Cosco, blamed the global overcapacity for pushing down the freight rates, according to a Bloomberg report, adding that the carrier's average container rates fell 26 per cent year on year on transpacific trade and 41 per cent on Asia-Europe routes.

Sales at China Cosco's container shipping business plummeted 21 per cent in the third quarter although the volume increased 14 per cent. Likewise, Asia-Europe sales decreased 33 per cent, while the volume upped 13 per cent.

Xia Yongjian, an executive at the carrier's unit's strategic development department for container shipping, said on a conference call with analysts that the carrier will idle vessels if no improvement in the market is seen.

A Hong Kong-based BOC International analyst Huang Wenlong was cited by Bloomberg as saying: "The dilemma for container-shipping lines now is that the more cargo you carry, the more money you lose."

Source : HKSG.