Cosco boss warns of ‘vicious competition’
The chairman of Chinese shipping giant China Cosco Holdings urged the shipping industry to take action to avoid "vicious competition".
Speaking at a shipping conference in the Chinese city of Xiamen yesterday, Cosco Chairman Wei Jiafu called on shipping companies to avoid price wars and refrain from expanding shipping fleets, the Wall Street Journal reported.
He cited tough industry conditions that have seen freight rates fall sharply amid overcapacity and a slowdown in trade.
"No other parties should try to capitalize on the current situation in the shipping industry," Wei told industry executives. "We should cooperate and not be in conflict but compete fairly.
Cosco faces its own challenges. The state-controlled company posted a first-half net loss of US$771.7 million, its biggest first-half net loss since it listed on the Hong Kong bourse in 2005.
In a brief interview on the sidelines of the conference, Wei reiterated that Cosco was taking steps to cut costs and restructure divisions.
Wei, known in the industry as Captain Wei from his year helming a cargo vessel, told the gathering that some players wanted to take advantage of low costs for building ships.
"Some shipowners are not farsighted enough. They always try to lower prices to win market share," he said.
He described shippers' decisions to move toward building and operating their own fleets in an effort to cut costs – as opposed to chartering vessels from shipowners – as "not wise".
Wei said it was important to stay confident. "The upward curve is on the horizon," he said. "However, in the next two to three years we'll see the economy going down."
"It's impossible for us to enjoy a handsome margin at the moment. But if we work together to survive we can see happy days."