CHINA's official news agency Xinhua was dismissive of Cosco's excuses of a poor business climate to explain its losses in light of big profits made by Denmark's Maersk group in the same troubled market.
Maersk group recently announced profits of US$461 million for 2012, which did not sit well with Cosco's excuse of global market fluctuation to blame for its US$1.6 billion loss.
After posting a loss in 2011, Cosco is expected to post another of CNY10 billion loss this year, called "the king of loss" in the A share market, said Xinhua.
Three straight years of loss will result in an expulsion the stock market under exchange rules, which makes this year's Cosco performance critical for the company's future.
Overcapacity is one problem. An unnamed manager from a carrier in Shanghai disclosed that the industry is mulling a request for government subsidies to scrap older ships.
Bolstered by stringent capacity control and a recent round of rate hikes, Maersk is planning to increase its Asia-Europe rate again, this time by US$600 per TEU to add to the current change of $1,200 to $1,300 per TEU. Chinese carriers are expected to follow.
Besides rate increases, the exchange rate of yuan against US dollar has become stable which will help carriers by stimulating Chinese exports. China's trade increase is expected to increase eight per cent, higher than last year's 6.2 per cent.
Since 2002, the Chinese carriers had enjoyed a boom since 2002 until the economic turmoil broke out in 2008, said Xinhua, adding that the lack of experience to cope with stormy weather has provided a harsh lesson.
Secondly, Chinese shipping lines should diversify. Chinese carriers' assets are concentrated on shipping-related activities such as terminal and shipbuilding while Maersk is also invested in petroleum and retailing, which lessens exposure to shipping in the event of a downturn in the sector.
WORLD SHIPPING
07 March 2013 - 20:17
Cosco suffers US$1.6 billion loss while Maersk makes $461 million profit
CHINA's official news agency Xinhua was dismissive of Cosco's excuses of a poor business climate to explain its losses
WORLD SHIPPING
07 March 2013 - 20:17
Cosco suffers US$1.6 billion loss while Maersk makes $461 million profit
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