China Shipping plans to invest 14.9 billion yuan in building very large containers to stimulate its container shipping business in the coming years.
Huang Xiaowen, managing director of China Shipping Container Lines Company Ltd (CSCL), said yesterday the heavy investment would sharpen its competitive edge in the world market.
"Half of the funds will be collected from financial institutions, but that's not a problem," Huang said.
He said the company's strategic development program is designed to compete with rivals at home and abroad.
With the investment, CSCL is expected to operate a fleet of more than 180 ships with a combined carrying capacity of 630,000 20-foot equivalent unit (TEU) containers by 2011, Huang said.
"By then, the company is expected to occupy about 6 percent of the world's container market," he said.
CSCL has prepared 4.3 billion yuan to build four 8500 TEU container vessels and four 4200 TEU models to be delivered before 2009.
It has also signed a contract with Samsung Heavy Industries to build eight 13300 TEU container vessels, which will be put into use by 2011.
"Without large vessels, it's impossible for CSCL to sustain development," Huang said.
Local shipping insiders said CSCL's investment demonstrates foresight and the company has seized the opportunity to build more container vessels before other shipping companies catch on.
Traditionally, shipping companies would order construction of new ships when the container business is at a low ebb.
"But history won't repeat itself, and we can't copy what we have done in the past. Otherwise, we will suffer losses," Huang said.
"It is very difficult to predict when the low ebb is coming and when a shipping company should order new ships."
CSCL now has assets worth more than 30 billion yuan, including 152 ships with a combined capacity of 450,000 TEU containers. Its profits grew 13-fold year-on-year in the first half of this year.
Huang expects profits earned between July and September of this year would be much more than the same period last year.
(China Daily November 15, 2007)
