Choppy winds ahead for COSCO

Falling business and a gross misjudgment of freight rate movements have dealt a double blow to China's COSCO Holdings (COSCO), threatening to plunge the world's largest dry bulk carrier deep into the red.

The company's outlook for 2009 seems bleak as the global shipping industry is expected to remain in the doldrums for most of the year, if not longer.

Shortly after COSCO announced a surge in profit for third-quarter 2008, it posted a chilling statement on Dec 16 on the Shanghai and Hong Kong bourses disclosing a 3.95 billion yuan potential loss arising from "misjudgment" in Forward Freight Agreements (FFA). In the disclosure, the company conceded that the situation was "serious", setting off a wave of selling of its shares.