Asia/Pacific News
China COSCO Expects 2 More Tough Years, Eyes Chinese Shipping Partnerships
Ma Zehua, Chairman of China COSCO Holdings Co. Ltd (China COSCO) Wednesday said the shipping industry should expect two more tough years before freight rates improve but China COSCO is eying alliances, Reuters reports.
"I don't think the market will recover within the next two years," said Ma.
"There are a lot of new building orders, which means the chances of the supply-demand imbalance improving soon are small."
Given overcapacity in the industry it has been difficult in recent years for companies to improve their freight rates, so increasing revenue is out of the question, said Ma.
"Everyone will compete on costs, because improving income is very difficult, if you want to increase the freight rate it's tough, it's not possible, the only way is to control costs," he added.
In August Ma said China COSCO may well post another loss for 2014 following only slim profit last year and losses in the preceding two.
But the Chinese Government is said to be focusing on consolidation of the country's shipping industry and Ma said China COSCO was set to announce partnerships with other large Chinese shipping firms soon.
Alliances such as 2M and Ocean Three are being seen by their members as a route to better cost control in the face of overcapacity on routes.
Chinese authorities are said to be planning to keep a keen watch on the new 2M alliance when it begins operating due to fears over a shipping lane monopoly.
