Cosco mulls leasing venture amid low prices for vessels
Mainland firm should diversify into sector soon or it will lose golden opportunity, analysts say
Shipping services company Cosco International may miss a golden opportunity to enter the leasing business if it does not strike a deal soon with its parent China Ocean Shipping (Group), since a recovery in global trade is likely to push ship prices up next year, say analysts.
The marine fuels, paints and ship-trading offshoot of the country's largest shipping company has planned for some time to expand into parts manufacturing and bareboat chartering - the leasing of ships to operators exclusive of repair and crew costs.
To do so, Cosco International has to first clear the decks for such a move with other companies within the group - including China Cosco, the group's container shipping and freight forwarding arm - to avoid inter-company competition.
Until now, the attention of the group has been focused on trying to keep China Cosco from reporting a third consecutive annual loss for this year, since that would get the company delisted from the Shanghai Stock Exchange.
Xu Zhengjun, the managing director of Cosco International, said at the group's interim results briefing yesterday that now was the best time to venture into the leasing business.
"When the industry is at a low it's the best time for ship leasing because ships are cheap. But there's a process for putting an idea (venturing into ship leasing) to work," Xu said.