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COSCO SHIPPING Holdings swings profit in 2017

COSCO SHIPPING Holdings Co., Ltd. turned a profit in 2017 and sharply increased revenues during the year amid higher volumes and improved freight rates.

   COSCO SHIPPING Holdings Co. Ltd. recorded a profit attributable to equity holders of 2.66 billion yuan renminbi (U.S. $422 million) in 2017, compared with a loss of 9.91 billion RMB in 2016.
   Revenues from continuing operations totaled 90.4 billion RMB in 2017, a 29 percent surge from the 69.8 billion RMB recorded in 2016.
   In 2017, 86.7 billion RMB in revenues came from container shipping. Broken down by trade lane, COSCO said 26 percent of the revenues came from the transpacific; 23 percent came from Asia-Europe; 19 percent came from intra-Asia, including Australia; 21 percent came from Chinese coastal trade; and 11 percent came from transatlantic or other miscellaneous trades.
   External revenues of 3.7 billion RMB came from the company’s terminal and related businesses, with 42 percent from Europe terminals and 58 percent from Chinese terminals.
   COSCO said the average value of the 2017 China Export Containerized Freight Index (CCFI), which tracks both spot and contract freight rates from China to destinations around the globe, stood at 820 points, representing an increase of 15.4 percent from 2016.
   COSCO saw an increase in both the volume of cargo it handled and average freight rates in 2017. The company shipped 20.9 million TEUs, a 23.7 percent boost from 2016. Average income hovered around 3,723 RMB (U.S. $590 per TEU), an increase of 11.1 percent as compared to 2016.
   COSCO said in 2017, it “made in-depth efforts to carry out China’s Belt and Road Initiative by actively participating in the construction of logistics channels and logistics nodes.” COSCO added how, “About 180 container vessels with a total capacity of 1,150,000 TEUs were deployed along the Belt and Road, accounting for approximately 62 percent of the company’s total container shipping capacity. By consolidating its global shipping route networks, the company not only enhanced its service frequency and efficiency along the 21st Century Maritime Silk Road, but also connected the shipping routes along the 21st Century Maritime Silk Road with other important emerging regional markets such as America, West Africa, Caribbean and North Europe to form a more comprehensive and balanced globalized network layout.”
   COSCO, the majority owner of the Port of Piraeus, said it is strengthening the Greek port as a transportation hub and has accelerated the development of a “China-European Sea-Rail Express” business.
   “In 2017, the freight volume completed by China-European Sea-Rail Express increased by 134 percent,” the company said.
   An article on the website of Foreign Policy magazine earlier this year said Chinese state firms, which once kept close to their home market, now control about one-tenth of all European port capacity.
   “A pair of deep-pocketed Chinese behemoths, Cosco SHIPPING Ports and China Merchants Port Holdings have gone on a buying binge of late, snapping up cargo terminals in the Indian Ocean, the Mediterranean Sea and the Atlantic rim,” the article said.
   COSCO said it “completed the acquisition of additional equity interests in APM Terminals Zeebrugge NV in Belgium and took full control of its operation” at the end of November.
   Foreign Policy said the entry into Zeebrugge marked “the Chinese firm’s first bridgehead in northwestern Europe. That deal followed a raft of other acquisitions in Spain, Italy and Greece in just the last couple of years.”
   On Jan. 5 of this year, the first regular train of the China Railway Express to Russia of COSCO SHIPPING Lines departed Tianjin and headed for Moscow. This was the first international regular train operated by the company.
   COSCO also revealed in a filing on the Hong Kong Stock Exchange that on March 29, it entered into a two-year “master vessel time charter services agreement” with the Singapore-based carrier Pacific International Lines. The agreement expires at the end of 2019.
   “To reduce operating costs and achieve complementary advantages, both parties plan to lease container vessels from the other party from time to time and put into operation in accordance with the terms and conditions stipulated” in the agreement, the filing said.
   Looking ahead, COSCO SHIPPING Vice Chairman Huang Xiaowen said Tuesday the company is on track to complete its acquisition of Orient Overseas Container Line (OOCL) by the end of June, according to a report from Reuters.
   “Up to now, we are quite confident to push forward this acquisition… it’s progressing normally,” he said.
   Speaking at a press conference, he said the deal is being reviewed by the Committee on Foreign Investment in the United States because of OOCL’s assets in America. OOCL’s Long Beach Container Terminal in California is viewed as one of the most sophisticated in the U.S.
   Xiaowen also said the deal is awaiting approvals from China.

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Chris Dupin

Chris Dupin has written about trade and transportation and other business subjects for a variety of publications before joining American Shipper and Freightwaves.