Cosco Pacific will increase service charges in the south and the Bohai Rim area as it bets on an upswing in the nation's economy. The world's fifth-largest port operator, which owns stakes in 17 terminals from Dalian to Hong Kong and three overseas ports, forecasts domestic trade will recover more vigorously than global trade this year. Clarksons, an international shipping consultant, predicts container trade worldwide will increase 5 per cent this year while on the mainland it will grow 8 per cent. Although the mainland's export-import trade rose for the first time last year, up 10 per cent in November from a year earlier, the uncertainty in the recovery in the United States and Europe still clouds the upswing in global trade. International trade is still more profitable than domestic trade. The premium for international containers over domestic boxes is as much as 50 per cent in Dalian but shrinks to just 20 per cent in Shanghai. 'We have started to negotiate with shipping lines about restoring the handling fees for domestic containers,' said Yin Weiyu, a deputy managing director of the company. Cosco Pacific intended to raise rates in Dalian, Qingdao, Tianjin and Guangzhou's Nansha, Yin said. A final adjustment was yet to be announced, he said. On average, domestic trade accounts for 35 per cent of total throughput at mainland ports while at some ports such as Nansha it is as much as 60 per cent. By raising handling fees in domestic trade, Cosco Pacific was 'cutting off its nose to spite its face', said Geoffrey Cheng, an analyst at Daiwa Securities SMBC. The domestic shipping business is dominated by mainland players, including Cosco Container Lines, China Shipping Container Lines and Sinotrans Shipping. 'The room for increases is relatively small, given that shipping companies manage only single-digit gross margins in domestic trade,' said Jimmy Lam, a transport analyst at BOCI. Port operators nationwide, however, manage to get at least 40 per cent in gross margin even though throughput is under stress. Operations at Cosco's port in Piraeus, Greece, were suspended for three weeks in October last year as dock workers went on strike. The company said it would start to recruit 100 to 200 workers to replace those used to be employed by the Piraeus Port Authority with a lower salary package, said Ken Chan Hang, a deputy managing director at Cosco Pacific. Separately, sister company Cosco International Holdings said the recovery in the shipping industry would continue this year and it would seek acquisition opportunities in the shipping service industry, including shipping painting, manning and shipping bunker supply.
