Shippers see slump for another 2 years

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CHINA'S two biggest shipowners said a market slump may continue for at least another two years as more vessels enter service and economic growth slows.

"I fear the future two to three years will still remain in a downtrend," Wei Jiafu, chairman of China Ocean Shipping Group Co (COSCO), said yesterday at a conference in Xiamen, Fujian Province. "Many people don't have confidence."

Operators of vessels used to carry commodities, containers and oil are all contending with a glut and an economic slowdown that has sapped rates. The Baltic Dry Index, a benchmark for commodities-shipment charges, has fallen 60 percent in the past year, while container lines are cutting Asia-Europe sailings because of a demand slump.

"In the coming two years, it's unlikely that the world shipping sector will bottom out," said Xu Lirong, general manager of China Shipping Group Co, the country's No. 2 shipper. Companies should boost cooperation to help ease the slump, he said.

COSCO may follow AP Moeller-Maersk A/S, the world's largest container-ship operator, by investing in areas outside of shipping, Wei said. The group is looking for "treasure" that would complement its sea-cargo businesses and strengthen the company, he said. An oil division has previously helped Maersk withstand losses at its container-shipping arm, he said.

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