China's largest container shipping operator, China Ocean Shipping Co (Cosco), is presently ranked as the third largest in the world with 123 ships in service totalling some 210,330 teu capacity. Its capacity has gradually increased in recent years, with figures for the end of 1999 showing the fleet to be 114 ships of some 196,000 teu.
By the end of 2002, the fleet will have grown by 13 new ships totalling 43,170 teu, indicating a trend towards the construction of much larger container ships beyond the panamax design limits. Indeed, seven new 5,250 teu ships will be delivered during the next 18 months and all of these will be introduced into the China/Europe trades, where Cosco operates as a vessel and slot-sharing partner with Japan's Kawasaki Kisen Kaisha and Yangming Marine of Taiwan.
On the `China-Europe Express' service, the new buildings will replace eight ships, each around 3,500 teu, which will either be transferred to the trans-Pacific trades or slot into a new-,look Asia/Mediterranean service. With increased service speeds, the seven new ships will offer improved transit times on the China/Europe route, and Cosco is discussing the possibility of streamlining the service, possibly by dropping a port in northern Europe.
Importantly, two of the new ships are being built at Nantong Shipyard in Shanghai under a sub-contract from Kawasaki Heavy Industries in Japan, where the remaining five are under order. For Nantong, these ships will be among the largest container carriers ever built by a domestic shipyard.
A recent trend in the closely related shipping and ports/terminal industry has been for shipping lines to become increasingly involved either in investments or managements of container-handling terminals. For Cosco, the big attraction is in the Mediterranean, where the company sees the potential of operating its own hub port to serve the bustling southern Europe marketplace.
In recent weeks, officials from Shanghai have visited Taranto in Italy with a view to setting up the company's own terminal and berthing facilities for large container ships. At present, Naples is as an important centre for Cosco's southern European business, but larger ships mean the need for increased water depth in the port – something that Naples lacks.
At Taranto, Cosco could find itself working alongside Taiwan giant Evergreen, which on June 1 opened its own terminal under the Taranto Container Terminal. Ever-green owns 90 percent of the new facility.
The growth of China Shipping Group (CSG), and its liner shipping arm China Shipping Container Lines, has been well documented. This company hopes to become one of the top five shipping lines within the next two years. Its present fleet consists mainly of chartered tonnage, and totals some 200,000 teu capacity.
In the volatile charter market, some analysts believe the future of CSG is too susceptible to rate fluctuations, but the company argues that long-term agreements put together for most of the fleet dispel such concerns.
CSG has more than 20 large container ships due in service during the next two years, and all of them are being chartered under long-term agreements ranging up to 10 years. Until now, the company has preferred to take on shorter term deals with the maxi-mum time frame around two years.
CSG's service portfolio has been increased in June with the introduction of a new pendulum service linking Asia, the Mediterranean and the US east coast. This has been achieved by combining the existing Asia/Mediterranean service with a recently introduced Mediterranean/US east coast service. The two services operated separately and deployed 12 ships. By combining them, the fleet deployed can be reduced to 11, and save around US$10m a year in operating costs.
CSG still has plans to enter the North Atlantic trades, but this is not likely to hap-pen at least until 2002.
Together with French line CMA-CGM, CSG also has tentative plans to order ships of around 9,800 teu capacity. Letters of intent have been agreed with South Korean ship-builder Samsung Heavy Industries for the construction of three such ships that wouldoperate a shuttle service between Hong Kong and Long Beach. If the ships are built, they could be in service by 2004 as the world's largest container ships.
In May, CSG formed its own terminal operating company under China Terminal Development Co, based in Shanghai. This new entity has been briefed with developing global container-handling facilities. At Long Beach, a disused US Navy area has been set aside for terminal expansion, and CSG sources concede interest has been shown in investing in the location. Such a move would not be easy to accomplish, as Cosco found out several years ago in the US.
Sinotrans has always been regarded as the minnow of China's container shipping business but, if recent developments are anything to go by, the label may not last for long. It has ambitions to expand in the US trades, with particular emphasis on the trans-Pacific and trans-Atlantic markets.
Sinotrans presently has a slot arrangement with Korean line Hanjin Shipping to serve the China/US west coast trade. The allocation from Hanjin is comparatively small, but plans are in place to expand the agreement, and even start a new service with Sinotrans' chartered tonnage.
At Long Beach, Sinotrans Container Lines has set up its own liner shipping agency under the name of Sinotrans Shipping Agency (North America) Inc. This replaces Inchcape Shipping Services that had represented Sinotrans for many years on the trans-Pacific trades.
The new agency, which also has a sales office in San Francisco, is the first fully-owned Sinotrans structure ever opened in the US. It officially became operational on May 29 and holds responsibility for marketing and customer services on the China America Express run with Hanjin. According to senior sources at the new agency, generating new business is a major priority, and expansion in the liner trades could follow.
The focal point for such expansion will be between China and the US west coast, but the company is not ruling out establishing offices on the US east coast, where the trade potential would link up with Europe and the Mediterranean.
The main base for the Sinotrans deep-sea cargo route is the China/Europe trade, where it has a vessel sharing agreement with Hanjin under the China/Europe Express of the United Alliance. This service was originally operated by vessels of around 2,700 teu capacity, but in early 2001 Sinotrans chartered in three new 4,000 teu ships as replacements for three 2,700 teu ships it had previously operated. The increased capacity caters for market upturns, particularly in westbound trade from China, and Hanjin has plans to follow with its own larger ships in 2002.
There have been rumours that Sinotrans could be a merger contender for expansion-minded CSG. There has also been talk of a possible merger between CSG and Cosco. So far, nothing has materialised and according to sources in all three companies, is unlikely to happen, certainly in the near future.
Hong Kong's OOCL is embarking on a new intra-Europe trade initiative that will take the company for the first time into the Iberian trades. OOCL, which has achieved success in its service linking North Europe, the Baltic and Scandinavia, is understood to be close to launching a new service that will link north Europe with Spain and Portugal. Few big carriers have yet to get involved in this trade through their own direct services.