Cosco's chairman says 40% of ship orders may be delayed, canceled

Global shipping lines may cancel or delay about 40 percent of new vessel orders this year and next because of overcapacity concerns, according to China Cosco Holdings Co. Chairman Wei Jiafu. “The financial crisis has struck hard on the world economy and brought serious challenges to international shipping,” Wei, head of China’s biggest shipping group, said yesterday at a conference in Shanghai. His forecast covered all types of ships.
The cancellations and delays may not be enough to prevent capacity growth outpacing demand next year, Wei said, as shipyards work through orders placed during a trade boom that ended last year. Chinese shipyards have had orders for 88 vessels canceled this year through October, as lines, including Cosco, pare growth because of the global recession.
To cut costs, Cosco’s container arm is also slowing vessels, which will reduce fuel usage by 180,000 tons a year, Wei said at the International Maritime Conference. Other vessels within the group, including dry-bulk ships, will also begin to operate at slower speeds, he added.
Global shipyards hold bulk-ship orders equal to 60 percent of the capacity of the existing fleet, according to data compiled by Bloomberg. For container ships, the figure is 36 percent.