China Shipping Container Line feel victim to its container operation, suffering a Rmb834.57m (US$124.96m) net loss despite disposing of a raft of its container line subsidiaries earlier in the period under review.
CSCL had made a profit of Rmb 831.12m in the six months to 30 June in 2015, but attributed much of this year’s loss so far to significant losses January through February 2006 to the downturn of the shipping market prior to the completion of the restructuring,” which came about during the merger of CSCL’s parent, China Shipping Group and China Cosco Group – now China Cosco Shipping Corp.
CSCL’s net loss was made off the back of a 49.7% fall in revenue to Rmb8.38bn.
Following the restructuring CSCL is now focusing on integrated financial services including vessel leasing, container leasing and non-ship finance leasing. Under the new arrangements CSCL claims its new container leasing busines is already ranked number 2 in the world, assisted presumably by vessel leasing services provided to China Cosco.
As at 30 June 2016, the Company operated a container fleet of 115 vessels, with a total capacity of 842,000 teu, among which, 74 vessels were owned by the Company, with a total capacity of 582,000 teu. In addition, the Company had 16 vessels under construction or to be delivered under charter.
Commenting on prospects for its container leasing business CSCL said: “During the first half of 2016, the overall operating environment of the container leasing industry appeared more challenging due to the downbeat business climate of the container shipping market, with prices and rental rates of new containers, leasing rates of dry cargo containers, and prices of used containers constantly declining on weak demand.
“Furthermore, an accelerated increase in the number of returned containers due to feeble demand has led to lower container lease rates among major container leasing companies, resulting in reduced revenue, while the sharp increase in container inventory also led to a substantial increase in operating costs.
“The situation is expected to remain grim in the remainder of 2016 as the oversupply of containers is unlikely be reversed in the short term, especially given the gradual emergence of consolidation among vessel owners and container leasing companies, respectively,” the company concluded.
CSCL will go under the name Cosco Shipping Development Co to reflect its new businesses.