COSCO chief sees bulk turnaround by year end
Wei Jaifu, chief executive officer of China Ocean Shipping Co., said Wednesday he still believes shipping's long-term outlook is positive because of globalization, despite the downturn in the global economy.
Wei said he was confident the bulk shipping industry would recover in the second half of this year, but health of the container industry will be dependent on what happens to global trade.
In printed remarks, he said the CKYH Alliance of shipping companies to which COSCO belongs is implementing a new rationalization plan for all water services from Asia to the U.S. East Coast, and has similar plans for the Asia/Europe trade where it will deploy 8,000-TEU ships.
“Even when the world is bad as a whole, some economies will grow faster than others. There are still opportunities. COSCO will deploy more resources to exploit regional markets with faster growth, like intra-Asia,” he said.
In a press conference prior to being presented with the Connecticut Maritime Association’s annual “Commodore Award,” Wei said he expected $4 trillion in economic stimulus spending by the Chinese government would help boost his country’s economy and the shipping industry.
He said the Chinese government still expects its gross domestic product to grow 8 percent in the coming year. To those who might question whether that was possible, he suggested they consider the country’s determination in tackling recent challenges ranging from the 2002-2003 SARS outbreak to last year’s earthquake in Sichuan Province.
Wei said that in early March, China was already beginning to see an increase in electric utilization, which he views as a good sign that manufacturing may be picking up.
A lively and sometimes humorous speaker, Wei described his pleasure when he learned of a recent Chinese government buying mission to Europe where $10 billion was spent — and his disappointment when he learned most of the money had been spent on computer chips, which would move by air and provide little container demand. That was good, he admitted, but he also said he suggested to Chinese commerce officials that next time they should also purchase more bulky goods that would move on containerships.
Wei made a pitch during his speech for countries to avoid protectionist policies that harm shipping. He suggested that lifting restrictions on high technology exports to China might create higher cargo volumes.
Stimulus spending planned by the Obama administration, was encouraging, said Wei, who views U.S. employment figures as an important indicator of what is likely to happen to the shipping industry.
Wei said his company is not being pressured by the government to order unneeded ships, and said his company had canceled orders for 126 ships in early 2008 because of concern about the global economy, even as many shipping markets were booming.
He said while COSCO still has the long-term goal of operating the world’s largest fleet, it has trimmed its order plans. He said as chairman of the China Shipowners Association, he has also called for more scrapping of older ships and a prohibition of single-hull tankers in Chinese waters to help stimulate the industry. ' Chris Dupin