CSCL: freight rates set to rise on growth
By Sammy Chan (China Daily)
Updated: 2005-03-10 14:24

China's second largest container operator, China Shipping Container Lines (CSCL), expects its freight rates to rise 4-5 per cent this year, driven by robust growth in global trade and supply shortages.

"The rates will continue to increase steadily this year until stabilizing in 2006," Li Kelin, chairman at CSCL, said yesterday.

The shipping affiliate, controlled by the State-owned China Shipping Group, said its average freight rates soared 15.5 per cent last year.

Li projected China's robust economic development will keep driving up the demand for container shipping by 12.1 per cent this year while shipment supply is expected to rise 12.4 per cent with industrial players' heavy investment.

However, "as the growth rate of port expansion is falling behind the expansion of fleets, the shipping industry will continue to see a shortage of supply", Li said.

Li forecast supply shortages will still exist for international coastal ports and the principal East-West line haul routes, given the world trade volume is expected to grow 8 per cent this year.

The company, which inaugurated five new international trade routes last year, will bring another eight new international trade lanes into operation in 2005, adding the total to 83 globally.

CSCL's full-year net profit surged 1.9 times to 4.02 billion yuan (US$486 million), driven by the robust external trade and expansion in its fleet capacity.

The remarkable performance drove its shares up 6.4 per cent to HK$3.725 yesterday, about 17 per cent above their IPO price of HK$3.175.

The company, the world's 10th largest container shipper, saw its total operating capacity jump 28.1 per cent to 254,207 20-foot equivalent units (TEUs) last year, with 15 new large-scale vessels joining the operation. The company will spend 6.3 billion yuan (US$759 million) to add 21 new vessels this year, bringing its fleet to 135, with the aggregate capacity to 350,000 TEUs.

The Shanghai-based container carrier also said the removal of quotas on textile products contributed a 30 per cent rise in its shipping volume during the first two months of 2005.

"Although January and February are traditional low season, the abolition led to an upsurge of Chinese textile products and international trade," Li said.

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