Chinese shipping giant hit hard by unsteady economy

Asia – China Shipping Container Lines, the second largest shipping line on the Chinese mainland, has reported a half-yearly net loss of US$ 200 million – almost the same as its loss for the first six months of 2012.

According to the company, demand on major trade routes saw a seasonal rebound in the third quarter and freight rates bottomed out in July, but the industry outlook for the second half of 2013 is still murky. The company moved 3.9 million 20-foot equivalent units (TEUs) – down 1.6% year on year in the six months to June.

Meanwhile, slow trading conditions have had a dramatic impact on container manufacturers. China International Marine Containers (CIMC), the world’s largest producer, reported a 41% plunge in net profits to US$ 90 million for the first half of this year. The slow economic recovery and high inventory levels will limit any near-term rebound in the container market, it warns.

CIMC’s sales increased 4.5% and container production climbed 15% but box prices slipped because of lukewarm demand and overcapacity, slashing the company’s operating profit by 22.4%. ‘During bad times, shipping lines are reluctant to invest in new boxes while they will continue to stretch the lifespan of old boxes,’ explains CIMC’s executive director and president Mai Boliang.

Up to 20% of the existing 30 million container boxes worldwide are older than 20 years even though the average lifespan is 15 years.

Source: South China Morning Post