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Trade activity lifts outlook in maritime sector

Updated: 2013-10-30 07:33
By Zhong Nan ( China Daily)

Meng Lingru, an industry analyst with Shanxi Securities Co, said demand for shipping commodities and raw materials should rise at a fast pace, especially in developing countries.

"Countries in Southeast Asia and Africa are planning to launch more infrastructure and urbanization projects, so the dry bulk shipping market should see decent growth over the next three years or even longer," Meng said. "Dry bulk tonnage will definitely grow faster than in 2012."

Meng said diversified development in the China (Shanghai) Pilot Free Trade Zone also will boost China's shipping sector amid a slow regional economic recovery in other parts of world. Transit trade and near-sea shipping will share a large proportion of the freight volume.

Even as demand rises, Chinese shipping companies continue to grapple with overcapacity and high operating costs. They have slowed container and bulk ship investments after years of losses, and many are scrapping high-cost vessels and selling off assets to improve their financial position.

In August, China Cosco Holdings Co decided to sell some of its assets to its parent company, China Ocean Shipping (Group) Co, for 3.73 billion yuan ($605 million).

China Shipping Container Lines Co, the nation's second-largest shipping company by capacity, put in a $700 million order to purchase five container vessels, each with a carrying capacity of 18,400 20-foot containers, from South Korea's Hyundai Heavy Industries Co.

Liu Bin, a professor at Dalian Maritime University in Liaoning province, said that both Chinese and foreign shipping companies are bowing to current conditions by ordering larger vessels with low-carbon-emission engines.

"As vessel sizes grow, transport costs of these mega carriers are dropping," Liu said.

"This will put huge pressure on small and medium-sized shippers," he added.

Aggressive moves already are being made: Cosco Shipping, a listed company within China's Cosco Group, is developing new routes to capture market share and save fuel costs. In September, a multipurpose vessel completed its maiden journey in 22 days, using a new shortcut to Europe and North America via the Arctic Northeast Passage.

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