The impressive losses being posted by the world’s container lines in 2009 were helped along by China’s two main carriers this week.
Just when you thought the worst was over for the container shipping business, along comes China Cosco Holdings and China Shipping Container Lines announcing that they lost US$1 billion dollars each last year.
Why the results are released four months after their financial year ended is anyone’s guess, but maybe the ugly numbers had something to do with it.
The granddaddy of losses were those posted by China Cosco that managed to turn a net profit of US$1.6 billion in 2008 into a net loss of US$1.1 billion in 2009. Losing US$2.7 billion in 12 months! That's impressive. It should come with a press release.
How can a company remain afloat with losses of that size, you ask. Well, China Cosco is the listed flagship of state-owned China Ocean Shipping (Group). So the company belongs to Beijing and Hong Kong has a better chance of achieving universal suffrage than China allowing its biggest shipping company to fail.
Not to be outdone, CSCL this week turned in its own set of losses. China’s second biggest container line converted a profit of $20 million in 2008 into a $950 million loss by the end of last year. That’s about $30 million short of a billion, which may be a big deal for Maritime Professionals like us but it is chump change for the world’s No 9 container line.
Like all the other big carriers, the box-carrying arms of China Shipping and Cosco saw cargo volumes and rates racing each other to the bottom while bunker fuel prices maintained a steady climb upwards.
But life in the boardrooms should improve for the directors of China’s carriers, at least for the time being. Mainland manufacturing is beginning to rumble back into life, and this is good news for all shipping lines.
China’s two main carriers may even manage to steam their way out of the billion dollar club this year. It is not the sort of place anyone wants to spend too much time, you know. Those red ink stains are a devil to get out.