China Shipping (Group) Co (中國海運 集團), China’s second--largest container line, is looking to make acquisitions in areas including shipbuilding and port operations as the industry struggles to deal with persistent overcapacity and slowing economic growth, China Shipping chairman Li Shaode (李紹德) said.
The company has formed a team that has been tasked with searching for opportunities to take over companies throughout the industrial chain for shipping, Li told reporters yesterday during a meeting of the Chinese People’s Political Consultative Conference in Beijing.
“We will see if it is the best time for deals given the current situation for the shipping industry,” Li said.
Shipping lines, including the world’s largest, A.P. Moeller- Maersk A/S, have said they will increase rates to restore profitability after the industry lost money last year.
Copenhagen-based Maersk, which lost 2.88 billion kroner (US$521 million) last year, last month cut 9 percent of the capacity on its Asia-Europe trade routes to help ensure new rate increases stick and has said it could idle ships.
Li said he expected there to be more opportunities in the container shipping market than those for oil tankers and dry bulk this year. The company’s container shipping unit plans to raise prices starting from April 1 following increases imposed by rivals, he said.
“We will focus on large oil tankers and container ships,” Li said. “Dry bulk carriers won’t see great opportunities for two to three years.”
China Shipping has long-term contracts of 10 years to 15 years for its dry bulk vessels and long-term contracts for oil tankers, Li said.
The company does not rule out the possibility of expanding its shipbuilding business, Li said, though such a move would depend on the market, he added.
The order book for the company’s shipbuilding unit in Yangzhou, China, is full until the end of next year, Li said.
He also said that China Shipping had called on the Chinese government to introduce measures to support the industry, including policy changes to allow shipping lines to pay taxes based on shipping tonnage, instead of the current corporate income tax rate.
Vale SA, the world’s second-largest mining company, approached China Shipping about cooperation on so-called Valemax very large ore carriers through its China agency and brokers, Li said.
However, the company turned down any cooperative venture until Vale has Chinese approval for the ships, he said.
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