Cosco Ship Holdings' net profit plunges 57pc in Q1 due to Covid-19
COSCO Ship Holdings and China International Marine Containers, both subsidiaries of the Cosco group, posted lower earnings for the first quarter of 2020, as the Covid-19 pandemic impacted on shipping demand during the period
COSCO Ship Holdings and China International Marine Containers, both subsidiaries of the Cosco group, posted lower earnings for the first quarter of 2020, as the Covid-19 pandemic impacted on shipping demand during the period.
Domestic volumes were hit the hardest and weak demand was also a factor as Cosco Ship Holdings announced that net profit for the first quarter of 2020 fell 57 per cent to CNY292 million (US$41 million), as container volumes fell 4 per cent to 5.61 million TEU.
Chinese domestic routes saw the largest drop, with volumes falling 16 per cent to 1.05 million TEU. Asia-Europe and intra-Asia volumes were fairly resilient, registering negligible drops of less than 1 per cent, to 1.13 million TEU and 1.83 million TEU.
Cosco Ship Holdings' terminal operating unit, Cosco Shipping Ports, earlier announced a 4 per cent drop in throughput in Q1 2020, recording roughly 27.48 million TEU.
China International Marine Containers (CIMC), the world's largest container manufacturer, said container and reefer sales for the first quarter of 2020 fell 28 per cent and 23 per cent to 164,500TEU and 25,200TEU, respectively, due to weaker demand. The company believes that demand will gradually recover as the situation normalises, reports Container News, Jacksonville.
CIMC's revenue fell 17 per cent to CNY15.85 billion resulting in a net loss of CNY568.05 million compared with a net profit of CNY500.19 million in Q1 2019.
While CIMC tried to maintain container prices, this was not supported by the weak demand for new containers, as well as a slowdown in manufacturing operations due to government-imposed movement controls.
CIMC said: 'The container market is expected to revert to its normal state in the future upon the stimulus of new fiscal policies of governments and the gradual recovery of economy.'
Shipping consultancy Drewry said that the disruption to shipping demand will keep container prices and rentals under pressure in 2020.
Drewry's head of research products, Martin Dixon, noted that at the start of 2020, a 20ft standard container was priced around $1,750, and rose to as much as $2,150, before dropping to $1,900 in late March.