Chinese shipping companies report third quarter losses
COSCO ships moved fewer containers in the third quarter than it did in the same period last year and terminals run by subsidiary COSCO Pacific handled fewer boxes as well.China COSCO Holdings Co. Ltd. and China Shipping Container Lines Co. Ltd have reported third quarter losses.
COSCO said its container business saw a slowdown in the third quarter ending Sept. 30. During the third quarter, volumes for the group’s container shipping business reached 2,490,596 TEUs, a decrease of 0.5 percent as compared to the third quarter last year. The company posted a net loss of 1.4 billion Chinese yuan renminbi or RMB (U.S. $219 million) in the third quarter of 2015 compared with a profit of 1.6 billion RMB in the third quarter of 2014.
COSCO reported revenues of 14.1 billion RMB in the three months ending Sept. 30 compared with 17.5 billion RMB in the same 2014 period.
The results stand in stark contrast to the first three quarters of this year, when volumes totaled 7,284,542 TEUs in aggregate, representing an increase of 4.18 percent compared to the corresponding period in 2014.
COSCO has a fleet of 183 container vessels with aggregate capacity of 865,972 TEUs, and has 10 ships on order with capacity of 111,960 TEUs, according to the company.
The group’s container terminal business, run by subsidiary COSCO Pacific, had a throughput of 17,651,269 TEUs for the quarter, an increase of 0.3 percent compared to the same period the previous year.
That is also weaker than the first two quarters this year. In the first nine months of 2015, the total volumes of the group’s terminal business were up 2.8 percent to 51,483,104 TEUs compared to the first three quarters of 2014.
COSCO said container volumes at its Bohai Rim terminals grew 2.3 percent to 6.46 million TEU in the third quarter, and 1.2 percent at Pearl River and southeast coast terminals to 6.39 million TEUs. Volumes fell 4.3 percent at Yangtze River delta terminals to 2.42 million TEUs, however, and 2.7 million TEUs at its overseas terminals to 2.38 million TEUs.
COSCO’s dry bulk shipping business saw volumes drop 2 percent on international routes to 32.7 million tons and 28 percent on domestic coastal routes to 6.2 million tons.
The company’s container shipping arm is reported to be in merger talks with China’s other major container shipping company, China Shipping Container Lines (CSCL) and their stocks have been suspended since Aug. 10.
Neither COSCO nor CSCL Ltd., which also reported third quarter results Thursday, have supplied more than oblique references to those to those talks.
CSCL, for example, said in a filing with the Hong Kong Stock Exchange Thursday, “The relevant matters are still under intensive planning at this stage. However, due to the complicated nature of such matters, which may involve asset reorganization, they are currently still in the process of further study and discussion, including discussion with each intermediary about the details of the transaction and communication with regulatory authorities in respect of the relevant matters, among others.”
CSCL Ltd. posted a net loss of 1.05 billion RMB in the third quarter of 2015 compared with a profit of 209 million RMB in the same 2014 period. Revenues stood at 7.86 billion RMB in the third quarter 2015 compared with revenue of 9.21 billion RMB in the third quarter of 2014.
Meanwhile, a speech given by Xu Aisheng, described by London’s Financial Times newspaper as “director of the Communist party disciplinary inspection officer” at COSCO, has been widely publicized even as censors have ordered it deleted in China.
A report in the Financial Times said Xu “laid into Chinese mergers and acquisitions for failing to address politics alongside practicalities.”
During his speech, Xu “recounted how he had recently upbraided Ma Zehua, chairman of COSCO, and Xu Lirong, chairman of another large state-owned shipping company, China Shipping, during a meeting to discuss a possible merger,” according to the article.
“I asked Comrade Ma Zehua: ‘When you and Xu Lirong, these two big bosses, drafted this plan, did you remember that you have another identity as party secretary?! Did you remember?" Xu reportedly said. "The plan doesn’t have a single word about how to strengthen the leadership of party committees and party organizations. Not a single word. What kind of reform is this?’”
China Digital Times said an account of the leak was published on the “Capital news” WeChat account of Beijing Daily and that government authorities issued censorship instructions ordering its removal shortly thereafter.
Another account of the leak in the South China Post, said Xu complained “high rents of ships and other major investment mistakes had caused huge losses for the state-owned shipping operator, and made it party to illegal activities.”
Xu is also reported by the South China Morning Post to have railed against “golfing and unnecessary travel by company bosses, irregular hiring and delayed retirement.”
“Japanese dry bulk shipping lines are facing the same difficulties, yet they can make money, why can’t you?” Xu reportedly said at the meeting.