China Cosco Holdings, the world's largest bulk vessel operator, said it will add fewer ships to its fleet than rivals and cut capital expenditure as it seeks to recover from a sea of red ink suffered last year. The shipping line saw 7.47 billion yuan (HK$8.48 billion) of net losses in 2009 as opposed to a restated net profit of 11.6 billion yuan a year earlier. Sales dropped 48 per cent to 68.46 billion yuan on plunging freight rates. Cosco's woes add to growing concerns that the global fleet that transports dry bulk - products ranging from iron ore and coal to agricultural products - may be growing too fast despite signs of economic recovery. The shipping conglomerate is scheduled to take delivery of 13 bulk vessels with 1.9 million deadweight tonnes this year, translating to 5 per cent of its fleet size as of the end of last year. 'The net increase in capacity will be even less than that, taking into account the disposal and scrapping of vessels this year,' said executive director Zhang Liang at a press conference yesterday. Marsoft, a shipping consultancy, said the capacity of dry bulk vessels increased 12.5 per cent year on year, outstripping the 10.5 per cent increase in demand. There are some positive signs for Cosco. Freight rates for dry bulk commodities would be higher this year, chairman Wei Jiafu said. The company predicted that the Baltic Dry Index, which tracks the average charter rates for bulk vessels, will trade at around 3,000 points this year, compared with 2,000 points last year. Geoffrey Cheng, a transport analyst at Daiwa Capital Markets, said the company will post a turnaround in the first quarter, helped by the rebound in dry bulk freight rates. He forecasts the company's bulk shipping division will make a profit of 500 million yuan at most while the container shipping division will post at least 300 million yuan in losses. Quarterly earnings will be released on April 30. Cosco's board approved a proposed issue of 10 billion yuan five-year note to finance ship deliveries as well as repaying bank loans and settling fixed-asset investment expenses. Capital expenditure is expected to drop 11.6 per cent in the year to 10.2 billion yuan as the company remains cautious about the pace of the global economic recovery. Cosco Container Lines has raised freight rates on the Asia-Europe routes, intra-Asia routes and transpacific routes this year. It is confident that it will be able to raise freight rates by US$800 and US$1,000 per box to the west coast and east coast of the United States in the annual contract negotiations which end next month. Sales from its container shipping division dipped 38 per cent to 27.5 billion yuan last year while Asia-Europe trade was the hardest hit, posting a 54.6 per cent decline in sales. The outstanding order book of the shipping company amounted to 54 container vessels with a total capacity of 414,926 20-foot equivalent units, representing 73 per cent of the existing fleet size. Nine vessels with 46,000 teu capacity are scheduled to be delivered in the year while six vessels will be chartered.