COSCO: Shipping Demand to Stay Strong in 2018
COSCO Shipping Holdings Co Ltd said it expects further growth in container shipping demand thanks to a continued recovery in global trade, after reporting it had swung to a net profit of $429.42 million for 2017. COSCO's optimism, which comes after Hong Kong peer Orient Overseas International Ltd (OOII) reported a profitable year, indicates that a recovery in the global container shipping industry could be here to stay.
Shipping saw signs of improvement in 2017 after enduring its longest ever slump wrought by overcapacity and slow economic growth, but a drop in freight rates in the second half raised concerns about the sustainability of the rebound. "Benefiting from the continual recovery trend of the global economy and trade, the growth of container shipping demand is expected to be strongly supported," COSCO said in a statement on Thursday.
The company cautioned, however, that the market would see the delivery of large vessels in 2018 and that overall growth might not be as strong as compared to last year given "a high base". The Chinese shipping giant said the jump in its annual profit from a net loss of 9.9 billion yuan in 2016 was helped by an overall recovery in the sector and subsidies received for demolition of ships.
Its earnings were in line with the estimate the company provided in January. COSCO recorded revenues of 90.4 billion yuan for the period, almost 30 percent higher than the previous year. OOIL, which is being acquired by COSCO for $6.3 billion to become the world's third-largest container shipping line, earlier this month reported full-year profit of $137.7 million, versus a loss of $219.2 million in 2016.
In February, the CEO of the world's largest container shipping firm, Denmark's AP Moeller Maersk A/S, said he was "very optimistic" on the fundamentals of the industry.
(Reporting by Brenda Goh Editing by Himani Sarkar and Matthew Mpoke Bigg)