Cosco Corporation (Singapore) will keep a reign on costs and grow its focus on the offshore sector if it is to ride out the shipping downturn, according to its vice-chairman and president.
The company, which owns seven shipyards in China, is facing pressure from rising interest rates and labour costs, Captain Wu Zi Heng says in an interview published in Cosco’s annual report.
Combined with a slowdown in orders for bulk carriers, Cosco is predicting a tough year.
"Most of the world’s major shipping companies have reported lower profit or loss for 2011, and projections for the shipping business have not been encouraging so far," says Wu.
"Although the bulk shipping market has been expected to recover, we do not foresee a strong up-tick because of the continuing over-supply of new ships."
Cosco has evolved from a ship repair company five years ago to an outfit that includes ship conversion, shipbuilding and marine engineering in its portfolio.
It benefitted from the ordering bonanza a few years back, delivering 43 vessels in 2011 of which 34 were bulk carriers. However, it also handed over two car carriers, a pair of wind turbine installation vessels, three shuttle tankers and two heavy-lift carriers.
And now the company is looking to make greater inroads into the burgeoning offshore sector.
"Global oil companies have made announcements to increase their budgets for offshore exploration," Wu says.
"The daily rates for jack-up vessels and semi-submersible platforms have been rising, which is encouraging for the offshore marine engineering market.
"In addition, we expect rising demand for floating production installations such as FPSO, wind turbine installation vessels and offshore vessels.
"As a result of the expansion of our ship repair and conversion capability into the offshore marine field, we have acquired the technology, skills competency, professional management and the necessary infrastructure to position ourselves for a sustainable future."
Cosco pulled in $2bn worth of fresh orders in 2011 and its orderbook stood at $6.2bn at the turn of the year.
$300m in new orders have been secured year-to-date. This is still running short of management’s expectation to secure some $2b in orders for 2012.
Cosco’s net profit dropped 44% in 2011 despite an 8% pickup in revenue.
Published : April 6, 2012