Cosco Shipping Holdings, the main container arm of state giant China Cosco Shipping, has predicted a huge jump in its first-half net profits due to strong freight rates.
Preliminary results showed Cosco Holdings’ net profits reached CNY 37.1bn ($5.72bn) between January and June, up from CNY 1.14bn in the first half of 2020.
“The container shipping market continued to be strong in the reported period,” the Shanghai and Hong Kong-listed company said in a recent exchange filing.
“Our box volume and achieved rates were both moving higher.”
The Shanghai Containerized Freight Index averaged nearly 2,067 points in the first half of 2021, representing a 134% gain from the level seen in the same period of last year.
Healthy imports
Experts said freight rates were boosted to all-time highs by healthy imports by Europe and the US as well as port disruptions in China and elsewhere.
“We have managed to overcome the challenges from the Covid-19 pandemic,” Cosco Holdings said. “We managed to increase our shipping capacity, secure supply of boxes and enhance our services to the customers in the six-month period.”
The company is due to release the full half-year results on 31 August.
Cosco Holdings owns Cosco Shipping Lines and Orient Overseas Container Line (OOCL), two of the world’s largest box carriers, and terminal operator Cosco Shipping Ports.
OOCL said in a separate filing that its total cargo volume reached 3.93m teu for the first six months of this year, up 19.5% compared with the same period of 2020.
Revenue recorded a 108% growth to $6.5bn.
Looking forward, most analysts expect the container market to stay firm with healthy shipping demand and tight vessel supply.
“Rates could remain elevated or even continue to rise in the coming months and quarters,” investment bank Jefferies said in a note.
China Merchants Securities forecasts that Cosco Holdings’ net profits will amount to CNY 71bn in 2021 and CNY 41.5bn in 2022.
“Cosco are executing the freight contracts recently fetched at high rates, so there should be strong growth in its full-year earnings,” the Shenzhen-based securities brokerage said.
“Globally, the demand for all sorts of goods from end markets remains strong … And the market is short of vessels.”
