Coscos Charismatic Captain Wei Jiafu Weighs In

Cosco’s chief executive upbeat and optimistic about future despite lingering sub-par market conditions. Cosco and China well-positioned for recovery to come, he says.

The National Press Club, Washington: Against a backdrop of sharply reduced profits, wide exposure to a dismal container shipping market and a slowly recovering bulk sector, China Ocean Shipping’s Chief Executive told a packed house at the National Press Club on Monday that “the recession is over.” The upbeat, almost jovial Wei Jiafu charmed a room full of maritime and financial journalists and interested industry stakeholders with tales of his experiences and future prognostications, but the hard questions went mostly unanswered.

Cosco’s CEO spent much of his time on Monday explaining that U.S.-China trade had increased to a level that was as much as 130 times the volume being experienced just three decades ago. His trip to the United States, to a large extent, centered around improving upon that metric and he reminded the gathered throng that both China and the United States remained each other’s second largest trading partner. Wei Jiafu also insisted that U.S. ports had to improve their infrastructure quickly, in order to accept and handle the world’s increasingly large container ships. Only then, he said, could the U.S. fully take advantage of global trading economies of scale.

Politely warning against the “not sensible” U.S. tariffs being imposed on Chinese-made tires that would, in the long run, “harm U.S. consumers,” he also welcomed U.S. companies to China. He finished those thoughts with a bold prediction of a strong global economic recovery that would mirror the rapid dip into recession that had preceded it, without providing many details as to how that might happen. He did point to China’s 8.9 percent growth in gross domestic product in the third quarter as a leading economic indicator.

Meanwhile, Cosco Pacific, one of Asia’s largest container-terminal operators, recorded a 49 percent drop in third-quarter profit. The numbers, not surprising given that as much as 10 percent of the world container fleet still remains idled, raised doubts as to when Wei Jiafu’s recovery would begin. COSCO’s ocean fleet, although well diversified into virtually every sector of the market, is also heavily leveraged in the container and bulk trades. But he told MarEx emphatically on Monday, “We are experiencing better than break even bulk shipping rates at this time.”

After his speech, Wei Jiafu provided some insight into Cosco’s plans for the immediate future. In response to MarEx questions about the potential opportunity to pick up new tonnage from Asian shipyards that had experienced a sharp increase in newbuild cancellations, he launched into a long but entertaining story about buying expensive fish in the morning and cheap fish in the afternoon. Later, he simplified that answer by saying simply, “Yes.” Beyond that, he asserted – claiming billions in cash reserves – that the credit crisis would not affect his future shipbuilding plans.