China COSCO Holdings Co. said it had a loss of 8.1 billion Chinese Yuan Renminbi ($1.3 billion) in 2012 down from a loss of 8.9 billion RMB in 2011.
Revenues were up 88.3 billion RMB compared to 84.6 billion RMB in 2011 and the operating loss for 2012 was 7.5 billion RMB compared to 10.3 billion RMB in 2011.
"2012 was 2012 was a challenging year for China COSCO," the company noted. COSCO said it responded to the market by implementing "measures to boost incomes and reduce expenses, such as reforming marketing system, strengthening coordination among internal departments, centralizing procurement and enhancing benchmarking management. The above measures have yet to be proven successful. We are disappointed to record a significant loss in 2012 as a result of oversupply in the market, low freight rate, high cost and imbalanced fleet composition."
COSCO saw increases in revenue from container shipping, logistics, container terminal oprations and container leasing, management, and sale, but realized a 31 percent decrease in revenues from dry bulk shipping.
Container shipping revenues were 47.4 billion RMB in 2012 compared to 40.2 billion RMB in 2011. Revenues from container shipping to the Americas were 14.9 billion RMB in 2012 compared to 12.3 billion in 2011, and in the Asia-Europe trade lane rose to 12.3 billion RMB compared to 9.6 billion RMB in 2011.
In the Asia-Pacific trades, revenues for COSCO were 7.6 billion RMB in 2012 compared to 6.7 billion RMB in 2011, while revenue from domestic Chinese shipping was was 11.9 billion RMB compared to 11.3 billion RMB in 2011.
The company said in 2012, container shipping volume amounted to 8,016,241 TEUs, representing an increase of 16.0 percent as compared to the corresponding period of the previous year. Average container freight rate amounted to 5,003.30 RMB per TEU, representing an increase of 4.2 percent as compared to the corresponding period of the previous year.
Higher capacity and average freight rate of Asia-Europe and trans-Pacific routes as compared to the corresponding period of the previous year boosted the increase in their revenue by 30.7 percent and 21.5 percent, respectively.
COSCO said the outlook for the container industry in 2013 "remains challenging."
"Despite the unsolved excessive shipping capacity, the gap between the demand and supply was narrowed. Although the demand and supply of market capacity remains imbalanced, it is expected that the market freight rates in 2013 are unlikely to drop significantly," the company said.
"The greatest uncertainty of the industry is whether the economic recovery of Europe and the U.S. will continue and whether the container shipping business," COSCO added.
Meanwhile, China Shipping Container Lines this week reported operating profits of $98.4 million in 2012.
That was a major recovery from the $398.6 million operating loss it suffered in 2011. China Shipping had net profit of $92.1 million in 2012, compared to a net loss of $429 million in 2011. Revenue was $5.2 billion in 2012, an increase of 15.2 percent over 2011, while container volume reached 8 million TEUs, an increase of 8 percent over 2011.
The carrier’s fleet capacity at the end of 2012 was 595,000 TEUs, 1.2 percent less than at the end of 2011. China Shipping said it offset the delivery of two 14,000-TEU ships and four 4,700-TEU ships in 2012 by returning older and smaller chartered vessels.
“In 2012, the container shipping market was trapped in a complicated situation caused by unstable global economy which was unseen before in past years and made market extremely volatile,” the line said in its financial report. “Container transportation demand gradually picked up from the doldrums at the beginning of the year. Freight rates recovered since the end of the first quarter and even temporarily moved upward, with freight rates of some trade lanes reaching historical heights in the third quarter, but ultimately lost momentum in the fourth quarter due to weak demand in European markets.
“On the negative side, new capacity kept entering the market, despite the supply-demand pressure on trade lanes was relieved to a certain extent due to container liners adopting such policies as slow steaming, idling transportation capacity and adjusting fleet structure, but in general the oversupply situation failed to reverse,” the carrier said. - Eric Johnson
and Chris Dupin