by Kyunghee Park (Bloomberg) — China Cosco Holdings Co., Asia’s largest container shipping company after a government-led merger last year, posted a loss in the first half as excess capacity dragged down cargo rates.
The net loss was 7.21 billion yuan ($1.1 billion) in the six months to June, compared with a restated 1.97 billion yuan profit a year earlier, the Tianjin-based company said in a statement to the Shanghai stock exchange Thursday. Sales dropped 8.5 percent to 30.9 billion yuan. It’s the first earnings report since the merger.
China last year merged China Ocean Shipping Group and China Shipping Group to form China Cosco Shipping Corp. as part of the government’s efforts to shrink industries plagued by overcapacity while creating globally competitive businesses. China Cosco Holdings is a subsidiary of China Cosco Shipping.
Profit at container lines have declined or companies have posted losses amid a slump in global freight rates. The industry has been trying to consolidate through mergers as cargo charges stayed depressed in the past five years. A.P. Moeller-Maersk A/S, owner of the world’s biggest container shipping company, said earlier this month that it’s conducting a review that may lead to the breakup of the 112-year conglomerate.
Following the merger of the Chinese shipping groups, China Cosco Holdings is responsible for the container shipping and terminal operations. Bulk shipping operations have been transferred to its parent China Cosco Shipping.
Spot prices to move a 20-foot container to Europe from Asia fell to $932 in the week ended July 1, from $1,149 in the week ended Jan. 1, according to the Shanghai Shipping Exchange. Levies to the U.S. West Coast dropped to $1,166 per 40-foot box, from $1,518. The two routes are the busiest trade lanes.
CMA CGM SA, the world’s third-biggest container shipping company, bought Singapore’s Neptune Orient Lines Ltd. for S$3.38 billion ($2.5 billion) this year in the industry’s biggest acquisition since 2005. Hapag-Lloyd AG and United Arab Shipping Co. said in June they agreed to merge to become the fifth-largest container shipping company. That comes after the German company bought the container business from Chilean rival Cia. Sud Americana de Vapores SA in 2014.
© 2016 Bloomberg L.P