Sunday, August 30, 2009

China Crisis Could Cause Cosco Container Cutbacks

Chinese Giant Poised to Cancel New Container Orders
Shipping News Feature

CHINA – After posting its massive $632 million operating loss last week speculation grew that the giant China Cosco Holdings group would slash its proposed purchase of new containers following the cancellation last month of eight new ships.

Cosco, the worlds second largest shipping line, is feeling the squeeze just like its bigger rival AP Moeller-Maersk A/S who, as reported earlier, has its own plans to ride out the recession. All ten of the largest fleet owners have posted losses this year and the signs are many lines will cut rates to draw trade away from rivals. Cosco say they are planning the reverse strategy by promoting a rise in rates to “drive the market up”.

Cosco intends to reduce its capacity between Europe and Asia by around 20% and will introduce a swathe of cost reducing measures to spread the effects of the downturn more effectively. These include delaying the delivery of vessels it has on order (reportedly over 100 container and bulk cargo carriers), terminating existing charters and selling off obsolete vessels or those excess to current requirements.