New | China's shipping giants face oversupply and weak demand

China's shipping giants face strong headwinds from fleet oversupply and sluggish global demand, after reporting a weak performance for the first half.

China Cosco Holdings, the country's biggest shipping company, reported a 7.9 per cent year-on-year decline in revenue to 29.93 billion yuan.

Helped by 4 billion yuan in government subsidies on scrapping old vessels, the company made a net profit of 1.9 billion yuan, swinging from a loss of 2.28 billion yuan a year ago.

China Shipping Container Lines, the subsidiary of China Shipping, the country's second-largest shipping firm, posted a 97.5 per cent plunge in net profit to 10.64 million yuan.

Container and dry bulk freight rates dropped sharply in the first six months, with the Baltic Dry Index down 47 per cent year on year at an average 623 points, the lowest level since the global financial crisis.

"We expect the price to stay low as global overcapacity will persist due to weakness in the euro zone and emerging economies," said Ma Zehua, China Cosco's chairman.

"The slowdown in China plus the fact that we will not receive any government subsidies in the second half means we will face a lot of pressure," chief financial officer Tang Runjiang added.