Cosco and China Shipping seek closer business ties
Mainland giants Cosco and China Shipping can no longer go it alone and are looking for more ways to weather lower freight rate environment
The mainland's two largest shipping companies, China Ocean Shipping (Group) and China Shipping, are exploring ways to deepen their business relationship, Cosco president Ma Zehua confirmed yesterday.
He said the two sides would "conduct more dialogue and research" to strengthen their co-operation across various shipping sectors and not just the container shipping business.
"Working on our own can no longer work," he told about 600 shipping executives at the Journal of Commerce transpacific maritime conference in Shenzhen.
He indicated the co-operation would go further than the deal a week ago when Cosco Container Lines and China Shipping Container Lines said they would operate joint services between northern China and provinces in the east and south. The two carriers have a combined 80 per cent of the domestic container shipping market.
Ma said there was speculation about how the two shipping giants would deal with the massive losses the firms had posted as a result of the downturn in global shipping. "I can't give you a satisfactory answer," he said before confirming the two sides were exploring options.
Some insiders have suggested there could be a merger between the two. Another alternative being suggested is that China Shipping Container Lines could take over Cosco Container Lines, especially as CSCL chairman Li Shaode is seen as a rising star. Yet another option is that China Cosco Holdings, Cosco's Hong Kong- and Shanghai-listed container and dry bulk shipping subsidiary, would sell its loss-making dry cargo business to its parent.