Cosco to spend US$1.5b on new fleet

PUBLISHED : Tuesday, 05 July, 2011, 12:00am
UPDATED : Tuesday, 05 July, 2011, 12:00am


Cosco Shipping, the heavy-lift and project cargo subsidiary of the mainland's largest shipping company, will spend about US$1.5 billion over the next four to five years buying up to 40 new ships to replace older vessels.

The fleet renewal programme will coincide with a revival in offshore oil and gas exploration by major energy companies, chief operating officer Guo Jin said.

The pace of offshore development was 'slowly picking up' this year while the outlook for 2012 was brighter, he said.

Offshore oil and gas exploration, wind farm development together with infrastructure and process engineering projects by mainland companies in developing countries are key markets for Cosco Shipping.

'Prospects are very good,' Guo said, but pointed out key Western economies were facing a slowdown while the banking system had still yet to fully recover from the global financial crisis. 'We are carrying more and more equipment for wind farms. We carry a lot of this type of equipment.'

Guo was speaking after the firm's latest ship, the 48,231-deadweight-tonne Xiang Rui Kou, was named last week at Guangzhou Shipyard International. The 216-metre vessel can be partially submerged to load and unload cargo such as drilling rigs and other offshore structures.

Guo said the ship, together with sister vessel Xiang Yun Kou that was delivered last year, were the largest vessels in the Cosco Shipping fleet and had been upgraded to operate in harsh environments including sea ice.

But pointing to the current state of the market for such vessels, Guo said the firm was in final negotiations to agree the Xiang Rui Kou's first commercial voyage when the ship was delivered later this month. Normally the first charter would already be finalised.

With the arrival of the two ships from GSI's Huangpu Shipyard, Guo said Cosco Shipping was considering 'even bigger' semi-submersible vessels of 80,000-100,000 dwt.

Cosco Shipping, which has about 80 multi-purpose, heavy-lift, semi-submersible and vehicle-carrying ships, will take delivery of two smaller 30,000 dwt semi-submersible ships in 2013.

The upgraded fleet will include eight 28,000 dwt heavy-lift ships that were ordered last October. Four ships will be built by Shanghai Shipyard and the remainder by Nantong Cosco KHI Ship Engineering.

The first ship should be delivered by the end of next year, followed by the remaining seven in 2013.

The shipping company is also in talks with the Shanghai Merchant Ship Design and Research Institute (SDARI), a subsidiary of China State Shipbuilding Corporation, for an order for several 36,000 dwt multipurpose ships that can carry a mix of cargoes including containers and bulk freight.

Fifty two multipurpose ships, built between 1979 and 2010, operate scheduled services from China, South Korea and Japan to Europe, the Middle East, Africa as well as the Americas.

The firm has 10 multipurpose vessels, of around 27,000 dwt on order for delivery this year and in 2012.

Overall there will be 30-40 new ships in the carrier's fleet by the end of 2014 or early 2015, which will reduce the average age of the Cosco Shipping flotilla from 17 years to between eight and 10 years.