COSCO sells eight containerships for scrap

A China COSCO Shipping subsidiary has sent eight vessels with an aggregate capacity of 32,574 TEUs to the scrapyard for 212 million yuan renminbi (U.S. $30.8 million), resulting in a net loss of RMB638 million, according to a statement from the company.    COSCO SHIPPING Holdings Co., Ltd., a subsidiary of state-run ocean carrier China COSCO Shipping Corp., has sold eight containerships for scrap as part of its strategic integration with China Shipping (CSCL), according to a statement from the company.
   The company said it received 212 million yuan renminbi (U.S. $30.8 million) for the vessels, resulting in a book loss of RMB 638 million.
   According to ocean carrier schedule and capacity database BlueWater Reporting, the ships had an aggregate capacity of 32,574 TEUs.
   The boxships were mostly older, smaller vessels built in the late 1990s and early 2000s, with the youngest coming in at 15 years old. They include the 1998-built 3,400-TEU Luo Ba He, 1997-built 5,618-TEU Jun He, 1997-built 5,618-TEU COSCO Qingdao, 1997-built 5,618-TEU Wan He, 1997-built 5,618-TEU Yue He, 1997-built 5,618-TEU Lu He, 2001-built 542-TEU COSCO Ran, and 2001-built 542-TEU COSCO Sakura.
   The COSCO Ran and COSCO Sakura were previously owned by COSCO (Cayman) Mercury Co., Ltd., and the other six were previously owned by Shanghai Pan Asia Shipping Co. Ltd., also a subsidiary of China COSCO Shipping.
   The company said in a filing with the Hong Kong stock exchange the disposal of the ships would reduce the average age of its fleet as well as reduce its fuel consumption and environmental impact.
   “The board considers that the decommissioning of the vessels is conducive to enhancing the overall operational competitiveness of the shipping fleet of the company and is in the interest of the company and the shareholders as a whole,” it added.
   China COSCO recently secured a long-term loan agreement from China Development Bank to provide 180 billion yuan (U.S. $26 billion) in financing through 2021.
   The former COSCO merged with CSCL last February at the behest of the Chinese government, making it the fourth largest container shipping company by capacity, but the company is involved in many different segments of the shipping business – bulk shipping, port terminal operation, container leasing, offshore engineering manufacturing, and vessel agency – and it was not immediately clear how the capital will be deployed.