COSCO hurt by global shipping slip

By Freddie Pierce
Chinas state-owned shipping giant COSCO has outgrown itself at one of the worst possible times. The freight shipping company has seen its fleet size mo...

China’s state-owned shipping giant COSCO has outgrown itself at one of the worst possible times.

The freight shipping company has seen its fleet size more than double over the last decade, but that growing capacity can’t deal with a slowing global economy that has hit the brakes since record-breaking growth levels in the early 2000s.

COSCO is taking action, demanding that ship-owners reduce rental costs, while simultaneously working to put political pressure on Beijing to halt competition within the industry.

“Being the key import country in the dry cargo business and almost everything else, they want to throw their weight around and secure more of the business themselves,” Anders Karlsen, an analyst for Nordea Markets, told Reuters.

COSCO recently halted some payments for vessels it had chartered to negotiate better terms, which angered many in the shipping industry. Some ship-owners threatened to seize COSCO-operated vessels.

“For any charterer not to pay hiring costs in an attempt to renegotiate charter rates is very bad business,” Arthur Bowring, managing director of Hong Kong Shipowners Association, told Reuters.

“If there are people out there doing that and COSCO is one of them, I do hope it will come back to bite them.”


Top Container Shipping Lines in the World

Container shipping capacity set to outgrow demand

Check out the latest issue of Supply Chain Digital!

COSCO has reportedly reached deals with ship-owners on 18 vessels, and Greece-based DryShips said that the company had resumed payments on three of its ships.

Many shipping contracts held by COSCO were struck in 2008 during the global shipping explosion, when large capesize vessels were being rented by COSCO and other shipping companies for more than $100,000 a day.

According to Reuters, the dry bulk market has fallen sharply since then, “leaving COSCO paying 2008 prices for ships that now rent for less than $25,000 a day.”

Click here to download Supply Chain Digital’s iPad app!


Featured Articles

Accenture supply heads probe value chain resilience

Accenture's Maria Rey-Marston & Stephane Crosnier say best way to achieve supply resilience is real-time dynamic visibility, with people at its heart

Weekly news round-up across supply, logistics & procurement

CIPS chief in supply cash-flow warning; Women do better in large firms - Gartner; Accenture Euro chief's Ukraine advice; Dell supply head's green goals

UST webinar on managing supply risk available on-demand

Global CPO David Loseby and UST's Jonathan Colehower share insight on using technology, both to mitigate supply chain risk and to gain supply visibility

Global land, sea and air logistics news round-up


Comfort zones the enemy of sustainability - CIPS economist


Women in supply fare better in large firms - Gartner report

Digital Supply Chain