The President of China Shipping Development Li Shaode pointed out on February 29 that the oversupply situation in the shipping industry has not been improved significantly, and during his communication with the Chairman of COSCO Wei Jiafu, both of them believed that there are structural problems within the shipping industry, and the ship owners and cargo owners need further communication.

 

China Shipping Group pointed out in its performance report that, uncertainty exists in the recovery of global economy, world trade growth will remain low, and the oversupply of shipping capacity in the market is difficult to be improved in a short term. It is predicted that the international market of international oil shipping and dry bulk shipping will still at the bottom. Plus the remaining high international bunker price, the pressure of operation cost of shipping enterprises will continue to increase.

 

China Shipping’s oil shipping business earned 60% less last year.

 

Last year, the growth rate of global shipping needs of iron ores, coals and grains and other bulk cargos declined rapidly, which has led to the serious imbalance of supply and demand in the international dry bulk shipping market. As a result, the performance of China Shipping Group’s dry bulk shipping business dropped by 12% to 1.058 billion RMB, but the oil shipping business suffered the most, declined by 60% to 0.463 billion RMB.

 

Li Shaode pointed out that the oil price will remain high, and it’s predictable that the proportion of the fuel cost this year in the total transportation costs will rise to over 50%, which may drag the gross profit rate down by 1-2%. He expected to reduce the pressure of rising cost by adding new fleets and adjusting freights. He releases that the group will buy 4-6 LNG carriers this year.

 

He also pointed out that the Group\'s capital expenditures will be carried out in accordance with the shipbuilding plans, and will not be stopped suddenly due to poor industry environment. This year, the Group saved approximately 9.3 billion RMB in capital expenditures, and it will take loans and bond issuance as the major means of financing. However, it has not considered issuing bonds in Hong Kong yet. He also believed that the shipping market is facing structural problems.