The Straits Times / The Business Times News on Cosco

Cosco shipyards wow the world

The group's yards in China outdo its rivals' in terms of size and capacity

A VISIT to the Cosco group's shipyard in the northern Chinese port city of Dalian is bound to be a rude awakening for rival shiprepairers, especially the Singapore yards.

The huge yard covering 35 hectares is jam-packed with very large crude carriers (VLCCs) and other vessels that at some berths they are parked three abreast. Everyone there talks in superlatives, including the fact that the yard recently launched the world's largest floating dock with a capacity of 300,000 deadweight tonnes.

Ji Hai Sheng, president and vice-chairman of Cosco Corporation (Singapore), pointed out that the floating dock was designed and built entirely in Dalian at a cost of some $60 million. 'If we had built it at a shipyard abroad, it would have cost at least US$100 million,' he added.

The Dalian yard has another floating dock of 180,000 dwt and one 80,000 dwt graving dock with nine berthing piers with a total length of 2,500 metres.

The shipyard, part of the Cosco Shipyard Group (CSG) in which SembCorp Marine has a 30 per cent stake and Singapore-listed Cosco Corp 51 per cent, can undertake shiprepair and conversion work on about 200 ocean-going vessels annually.

In comparison, the Singapore shipyards of Keppel Corporation, the world's largest offshore rig builder, cover an area of some 140 hectares and last year repaired about 500 vessels, both large and small. It also did conversions of four floating production storage and offloading (FPSO) facilities.

Rival SembMarine's yards here cover a total area of 70 hectares, and last year did repair or conversion work on over 300 vessels.

However, one has to take into account the fact that six other repair and conversion sites in Natong, Tianjin, Zhoushan, Guangzhou, Shanghai and Xiamen also form part of CSG.

These yards have the capacity to handle repair or conversion work for over 600 vessels annually. By the end of next year, total shipyard-docking facilities are expected to increase from 1.2 million dwt now to 1.73 million dwt.

More than 90 per cent of the work is accounted for by foreign vessels despite the Cosco group being the world's second largest shipping group with more than 600 vessels, with a total tonnage of some 38 million dwt under ownership or management.

'Remember also they (the yards) are all in one country and therefore have the advantage of being under one jurisdiction. The Keppel group and SembMarine have their shipyards spread all over the globe,' a Cosco Corp board member pointed out.

George Gratsos, chairman of the Hellenic Chamber of Commerce, which controls the world's largest fleet of tankers and bulk-carriers, said most Greek-owned vessels now prefer to repair or have them converted to double-hull in China. 'They have a significant cost advantage and in the last few years, the quality of their work has really improved,' he added.

' 'Cosco-Shipyard' is becoming the global brand of high quality and efficiency,' the Cosco group's president and chief executive Wei Jia Fu proudly proclaimed at the launch of the 300,000-dwt floating dock.

With the help of shareholder SembMarine, CSG also undertakes the repair and conversion of oil rigs, and plans soon to be building them in competition with the Singapore yards, which boast the world's largest shiprepair and oil rig-building facilities.

But as Captain Wei noted, in 1961 the Cosco group was just a small company with only four ships with a total tonnage of 22,600 dwt. Today, Cosco is a multinational company with total assets of well over $30 billion with core businesses in shipping, logistics as well as shipbuilding and shiprepair. Its Singapore unit, Cosco Corp, has seen turnover grow from $92 million in 2003 to $873 million last year, while net profits have risen from $24 million to $160 million in that period.