Sinotrans Shipping seeks bigger fuel-efficient fleet despite profit slump

PUBLISHED : Friday, 24 August, 2012, 12:00am
UPDATED : Friday, 24 August, 2012, 2:47am

Senior executives from Sinotrans Shipping are likely to start negotiations with shipyards later this year for orders of new dry cargo ships to boost its fleet of more fuel-efficient and environmentally friendly vessels.

Deputy general manager Li Hua said the company had no more ships on order after it took delivery of two 75,500 dwt (deadweight tonne) Panamax dry bulk ships in the first half of this year.

"For the second half, we will be negotiating for new vessels. There will have to be a counterparty [with charterers] as well," Li said.

Shipowners such as Sinotrans typically order ships at shipyards against a lease agreement lasting several years, with a charterer to guarantee earnings and cash flow for the ship when it is delivered.

The firm had US$885.15 million in cash and bank balances at the end of June that it could earmark for new ship purchases. "We have a certain tempo towards new vessels," Li said.

He added the firm was looking at several different sizes of dry cargo ship, including 50,000-60,000 dwt Supramax and smaller Handysize vessels of 30,000-40,000 dwt.

"Capesize vessels [of around 180,000 dwt] are also on our radar," he said.

Li was commenting yesterday after Sinotrans Shipping reported a 63.6 per cent drop in net profit to US$20.1 million in the first half of this year, down from US$55.22 million a year earlier.

Chief financial controller Xie Shaohua said the slump in profit followed a drop in charter and freight income and increased operating costs after it expanded its owned fleet of dry bulk ships to 42 vessels.