Singapore has impounded a vessel operated by China COSCO Holdings because of a payment dispute, the company said on Wednesday, reigniting concerns over China's relationship with the global maritime industry, Reuters reports.
The 74,000-tonne bulk carrier, Song Shan Hai, is the third vessel to be seized by authorities this year as China's top shipping conglomerate struggles with a severe downturn in the freight market.
"Our company chartered out this vessel to another company. The company did not abide by the contract and did not pay us," said a Hong Kong-based COSCO Holdings official. "We will get it back soon."
He said the incident was not related to lease disputes with shipowners earlier this year.
COSCO had at least two other vessels briefly seized this year after it halted payments to several ship owners to force better terms, a move that has hurt its relationship with some maritime companies.
COSCO, operator of the world's largest bulk cargo fleet and a major global container shipper, has resolved most of its lease disputes with ship owners, managing to successfully reduce a "large portion" of its charter costs, its chairman told Reuters last week.
UNPAID BILL
In the Singapore case, the COSCO official said the unidentified company failed to pay it around $1 million for usage of the vessel, prompting COSCO to seek its immediate return.
Wendy Leong of Asia Legal, representing COSCO's unidentified client, said the sheriff's department of Singapore's Supreme Court seized the ship on Friday and will hold it until the dispute is resolved. She declined to comment on the case.
Many of COSCO's shipping contracts were struck during the 2008 shipping boom, when the industry's largest capesize vessels were being rented by COSCO and others for around $100,000 a day.
The dry bulk market has since plummeted due to the economic downturn and an oversupply of vessels, leaving COSCO paying 2008 prices for ships that now rent for $23,000 a day.
COSCO made a net loss of 2.07 billion yuan ($325.81 million at the time) in the third quarter, hit by sliding freight rates and overcapacity in the industry. Its Hong Kong-listed shares have lost half their value since the start of the year, underperforming a 13 percent drop in the Hang Seng Index .
"I would have to think COSCO's reputation has taken a hit by all of this," said Janet Lewis, an analyst at Macquarie Securities.
"But it sounds like this dispute in Singapore is a little bit different, so it is hard to say if this is the same situation or just a typical industry dispute."
The 74,000-tonne bulk carrier, Song Shan Hai, is the third vessel to be seized by authorities this year as China's top shipping conglomerate struggles with a severe downturn in the freight market.
"Our company chartered out this vessel to another company. The company did not abide by the contract and did not pay us," said a Hong Kong-based COSCO Holdings official. "We will get it back soon."
He said the incident was not related to lease disputes with shipowners earlier this year.
COSCO had at least two other vessels briefly seized this year after it halted payments to several ship owners to force better terms, a move that has hurt its relationship with some maritime companies.
COSCO, operator of the world's largest bulk cargo fleet and a major global container shipper, has resolved most of its lease disputes with ship owners, managing to successfully reduce a "large portion" of its charter costs, its chairman told Reuters last week.
UNPAID BILL
In the Singapore case, the COSCO official said the unidentified company failed to pay it around $1 million for usage of the vessel, prompting COSCO to seek its immediate return.
Wendy Leong of Asia Legal, representing COSCO's unidentified client, said the sheriff's department of Singapore's Supreme Court seized the ship on Friday and will hold it until the dispute is resolved. She declined to comment on the case.
Many of COSCO's shipping contracts were struck during the 2008 shipping boom, when the industry's largest capesize vessels were being rented by COSCO and others for around $100,000 a day.
The dry bulk market has since plummeted due to the economic downturn and an oversupply of vessels, leaving COSCO paying 2008 prices for ships that now rent for $23,000 a day.
COSCO made a net loss of 2.07 billion yuan ($325.81 million at the time) in the third quarter, hit by sliding freight rates and overcapacity in the industry. Its Hong Kong-listed shares have lost half their value since the start of the year, underperforming a 13 percent drop in the Hang Seng Index .
"I would have to think COSCO's reputation has taken a hit by all of this," said Janet Lewis, an analyst at Macquarie Securities.
"But it sounds like this dispute in Singapore is a little bit different, so it is hard to say if this is the same situation or just a typical industry dispute."