Persistent overcapacity and weak demand will slow global shipping industry growth for the next two years, according to the head of China’s largest state-run shipping group, Cosco.
Cosco chairman Ma Zehua told bignewsnetwork.com that the outlook for the shipping industry will remain challenging in spite of US and European economic recovery.
'There are many speculative investments in the market with shipowners and leasing firms making orders for new ships,' said Ma, adding that existing orders for new ships from all shipping companies have exceeded 10 per cent of the current global fleet.
According to Ma, this fleet is already in excess, with a flux of shipping capacity continuing to put pressure on freight rates.
Ma said that according to Cosco's analysis, demand growth for shipments is expected to be around 5 per cent this year, much less than the average annual double-digit growth rate experienced during the previous shipping boom, before the onset of the 2008 global financial crisis.
Ma's comments follow Cosco's announcement last week that it made a third-quarter net profit of 1.62bn yuan (US$265m), compared with a net loss of 1.04bn yuan in the same period last year. The Shanghai and Hong Kong-listed company's growth was largely thanks to government subsidies and strict cost control.
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