Chinese container giant Cosco Shipping Holdings has logged a massive drop in profits.
It is also bracing for the impact of increased competition and a record number of newbuildings this year.
Net profit was CNY 28.3bn ($3.9bn) in 2023, down 78% from CNY 131bn in the previous year, when the company reported its best-ever result.
Revenue dropped 55% in 2023 to CNY 175.4bn.
The Shanghai and Hong Kong-listed company blamed a slowdown in demand for container shipping services amid tepid global economic growth.
Cosco Shipping Holdings, which is majority-owned by state-owned China Cosco Shipping, operates in container shipping through two brands: wholly owned Cosco Shipping Lines; and Orient Overseas Container Line (OOCL), which it controls through holding subsidiary Orient Overseas International.
These brands will be affected by continued moderate growth and a surge in the delivery of newbuildings, the company warned.
“In 2024, the market delivery capacity is expected to be about 3m teu, hitting a record high, while the mismatch between supply and demand persists,” it said.
Intense competition
Cosco expects changes to global container shipping alliances over the next year mean competition in the market “will become more intense”.
Liner groupings are undergoing a shake-up following German carrier Hapag-Lloyd’s shock announcement in January that it will leave THE Alliance next year to form a new partnership with Denmark’s AP Moller-Maersk.
Cosco’s dual container brands Cosco Shipping Lines and OOCL are members of the rival Ocean Alliance along with France’s CMA CGM and Taiwanese liner operator Evergreen.
The Ocean Alliance was launched in 2017 and claims to be the world’s largest operational shipping network.
The four partners recently extended their cooperation for a further five years until 2032, and last month launched their Day8 route product.
The new East-West network to be implemented this month includes 35 liner services.
It will be staffed by 355 ships with a combined capacity of 4.82m teu.
Cosco Shipping Holdings also controls Cosco Shipping Ports, which operates 220 container berths at 36 ports worldwide.
