China Shipping sees 2.3 bln yuan loss in 2013

China Shipping Development Co Ltd saw a loss of 2.3 billion yuan ($371.3 million) in 2013, according to its financial report filed Wednesday.

This comes at a time when experts see the shipping industry as still facing dim prospects.

China Shipping, a State-owned enterprise under China Shipping Group Co, earned revenue of 11.39 billion yuan in 2013, a 2.1 percent year-on-year increase, but still made a loss of 2.3 billion yuan in 2013 after gaining 73.74 million yuan in 2012, according to its financial report.

China Shipping attributed the loss to weak demand from major economies and oversupply in the shipping industry, according to the report.

China Shipping's major business contains oil tanker shipping and dry bulk cargo shipping. The weak oil tanker shipping demand led to lower prices, the report said, noting oil shipping price index Baltic Dirty Tanker Index (BDTI) in 2013 dropped 10.7 percent year-on-year.

But the global dry bulk cargo shipping market is better than 2012, with a 32 percent year-on-year increase of price index Baltic Dry Index (BDI), according to the report.

The global economy, which is still in the middle of a recovery, had a negative impact on the shipping industry, Qian Xinnan, deputy director of the China Association of the National Shipbuilding Industry, told the Global Times Wednesday.

Wu Minghua, an independent analyst of the shipping industry, agreed with Qian, and said more than 60 percent of shipping companies in the world are facing deficits now.

China Shipping Container Lines Co Ltd, another subsidiary of China Shipping Group, filed a forecast report on January 28, predicting a 2.63 billion yuan deficit in 2013.

China COSCO Holdings Co Ltd, China's largest bulk shipping company, forecasted on January 17 that it would return to profit in 2013 after having suffered losses for two years consecutively.

Compared with 2011, which was the hardest time for the shipping industry, the industry has begun recovering slowly, Wu said.

Another reason for the industry slump is overcapacity as oversupply forces down prices, said Wu.

Media reports said the second half of 2014 may be a turning point for the global shipping industry, but Wu said the first three months of this year have dampened optimistic predictions.

Some shipping companies planned to raise shipping prices in March but now they have chosen to hold back on this due to weak demand, Wu said.

The shipping industry has realized the problem of oversupply, which is serious in China, Zhang Yongfeng, an analyst at Shanghai International Shipping Institute, told the Global Times Wednesday.

Eliminating old ships and cutting shipping capacity can help reduce oversupply, Zhang said.

On February 20, five leading shipping companies, COSCO Container Lines Co Ltd, Japan's Kawasaki Kisen Kaisha Ltd, Taiwan-based Yang Ming Marine Transport Corp and Evergreen Marine Corp, and South Korea's Hanjin Shipping Co Ltd formed a shipping alliance called CKYHE.

In June 2013, Maersk Line, Mediterranean Shipping Company S.A. and CMA-CGM, the top three companies in the global container shipping industry, made an alliance called P3 Network.

Making alliances and cooperating with each other is the future trend of the industry, but it will also intensify the competition, Zhang said.