The Straits Times / The Business Times News on Cosco

Cosco to expand fleet to handle rising traffic

SHANGHAI - CHINA Ocean Shipping (Group) Co, the country's biggest shipping company, said it will buy twice as many oil tankers and container vessels to carry materials and meet a government goal of doubling economic output by 2010.

The company, also known as Cosco, aims to have the capacity to ship 800,000 20-foot containers by the end of 2010, from 310,000 boxes as at Sept 30, said chief executive Wei Jiafu. The Beijing-based company, with 18 oil tankers, will have eight supertankers, each capable of hauling two million barrels of oil, by 2008.

Cosco's shipments 'look good because the Chinese government needs to invest more on building houses and roads, as well as meet energy needs', said Mr Glenford Tan, an analyst at CIMB-GK Research in Singapore.

China's economic growth in the past decade, which fuelled demand for space to ship the nation's surging textile exports and mineral imports, pushed haulage rates to records.

Cosco needs more vessels 'to meet China's oil imports' and 'the huge demand for world shipping', Captain Wei said on Monday, before the start of the two-day World Shipping Summit in Shanghai. 'We will consider second-hand tankers too.'

Cosco will increase its container shipping capacity by 18 per cent this year and 22 per cent next year. It will buy vessels from shipyards in China, South Korea and Japan, he said.

But it does not plan to buy another shipping line because the price of assets is 'too high'.

'It's not the right time for mergers and acquisitions,' Capt Wei said. The right time 'depends on opportunity'. \-- BLOOMBERG NEWS