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COSCO Shipping posted a net profit of $264m in 2017, reversing a loss of $1.1bn in the previous year, as it targets a June date for closing the $6.3bn takeover of Orient Overseas International Lines (OOIL) and its container line arm, OOCL.
Turnover at the Chinese state-owned carrier leapt 30%, compared with the previous year, to $12.8bn, although revenue from the merger of Chinese Shipping Container Line (CSCL) was not consolidated until March 2016.
Similarly COSCO’s liftings were up by 24% on the previous year at 20.9m teu, but Alphaliner notes that if CSCL’s volumes had been included from January 2016, this would still have represented an impressive well-above industry growth of 16%.
Interestingly, the consultant noted that more than 30% of COSCO’s total liftings in 2017 came from its domestic shipping volumes, with intra-Asia making up just under 30% and the combined Asia-Europe and transpacific tradelanes accounting for around the same.
The emphasis on domestic and regional trade explains COSCO’s low average rate of approximately $580 per teu, compared with Maersk Line and other peers of some $1,000 per teu across all trades.
Alphaliner also noted that the carrier’s results were boosted by some $173m during a year of Chinese government state handouts for vessel scrapping and other subsidies.
Meanwhile, the takeover of OOCL, currently the world’s eighth-largest carrier, is on track to be completed by 30 June, according to COSCO’s vice-chairman, Huang Xiaowen.
In a press briefing yesterday in Shanghai, Reuters reported Mr Huang giving a positive message on the deal: “Up to now we are quite confident to push forward this acquisition…it’s progressing normally.”
The takeover is still awaiting the final approval of US and Chinese regulators, having already been cleared by the EU and other jurisdictions, but Mr Huang said the company was still answering questions from the US Committee on Foreign Investment related to assets that OOCL owns in America.
Once the transaction is complete, COSCO will have 90.1% of the shares in OOCL, with compatriot Shanghai International Port Group (SIPG) holding the balance.
COSCO/OOCL will have a combined capacity of 2,587,000 teu (according to Alphaliner data) which will lift it above CMA CGM’s 2,527,286 teu into the position of third-ranked container line.
Moreover, COSCO has an orderbook of 443,000 teu, compared with CMA CGM’s 277,000 teu.
As the larger carrier it will also take over lead line status of the Ocean Alliance vessel-sharing agreement.
COSCO said it was expecting further growth in demand due to the continued global recovery, but Mr Huang said that it was closely monitoring the increased trade tensions between the US and China which has resulted in a raft of tit-for-tat tariffs in the past days.