Cosco arm may dip toe into leasing

Cosco International, the marine fuels, paints and ship trading offshoot of China's largest shipping company, is mulling entering the ship leasing market as part of a range of options to expand its operations, industry insiders said.

One person said the proposal was "still at the study stage" and could involve leasing newly ordered ships or those that have been completed but not delivered, possibly because the owners cannot get financing.

Several banks, including ICBC and Standard Chartered, have launched ship leasing businesses where they retain ownership of vessels and charter them to operators at a daily rate, while the operator is responsible for repairs and crew costs.

Standard Chartered has more than 20 ships on these bareboat charter contracts, including vessels operated by Wah Kwong Maritime Transport and commodities group Noble.

Asked if Cosco International planned to deal exclusively with shipyards owned by its parent, China Ocean Shipping (Group), in offering ships on bareboat charters to Chinese and foreign operators, the person said: "In the long term, there is a definite focus on developing non-Cosco customers." He said Beijing had policies to help with vessel financing, including tax breaks.

Cosco International may also consider expanding its ship trading operation from the sale and purchase of Cosco vessels to cover ship chartering, where vessels are leased to commodity firms and traders. Cosco's existing chartering activities are done by several offices, including Hong Kong, Qingdao and Tianjin, but they could be brought under the control of Cosco International.