Domestic volumes were hit the hardest and weak demand was also a factor as COSCO Ship Holdings and China International Marine Containers both posted lower earnings for the first quarter of 2020, as the Covid-19 pandemic impacted on shipping demand during the period.
COSCO Ship Holdings, the COSCO group’s container shipping unit, announced that net profit for the first quarter of 2020 fell 57% to CNY292m (US$41 million), as container volumes fell 4% to 5.61 million TEU.
Chinese domestic routes saw the largest drop, with volumes falling 16% to 1.05 million TEU. Asia-Europe and intra-Asia volumes were fairly resilient, registering negligible drops of less than 1%, to 1.13 million TEU and 1.83 million TEU.
COSCO Ship Holdings’ terminal operating unit, COSCO Shipping Ports, also saw a 4% drop in throughput in Q1 2020, recording roughly 27.48 million TEU.
China International Marine Containers (CIMC), the world’s largest container manufacturer, said container and reefer sales for the first quarter of 2020 fell 28% and 23% to 164,500TEU and 25,200TEU, respectively, due to weaker demand. The company believes that demand will gradually recover as the situation normalises.
CIMC’s revenue fell 17% to CNY15.85 billion (US$2.23 billion). For the period, CIMC deteriorated to a net loss of CNY568.05 million (US$79.78 million), compared with a net profit of CNY500.19 million (US$74.54 million) in Q1 2019.
While CIMC tried to maintain container prices, this was not supported by the weak demand for new containers, as well as a slowdown in manufacturing operations due to government-imposed movement controls.
CIMC said, “The container market is expected to revert to its normal state in the future upon the stimulus of new fiscal policies of governments and the gradual recovery of economy.”
Shipping consultancy Drewry said that the disruption to shipping demand will keep container prices and rentals under pressure in 2020.
Drewry’s head of research products, Martin Dixon, noted that at the start of 2020, a 20ft standard container was priced around US$1,750, and rose to as much as US$2,150, before dropping to US$1,900 in late March.
Martina Li
Asia Correspondent
