COSCO Launches World's Largest Tanker Company
On Monday, China COSCO Shipping officially launched the world's largest tanker company with a ceremony in Shanghai. COSCO Shipping Energy Transportation will be the top tanker firm both by tonnage and by ship count, with 105 vessels of a combined 17 million dwt, valued at about one tenth of China COSCO's assets. It boasts some 200 domestic and overseas customers in oil and gas.
State-owned China COSCO chairman Xu Lirong said that the move would help "ensure China's energy security," and that it would serve as an example to other state-owned enterprises of the benefits of large-scale restructuring – a priority for the Chinese government given the domestic overcapacity in steel, coal, shipbuilding and shipping.
As recently as 2014, COSCO Dalian and China Shipping Development Corporation – merged the beginning of the year as part of the COSCO-China Shipping tie-up – ranked as the number 11 and number 12 tanker companies, with 8.3 million dwt each. The number one operator was MOL with 15.8 million dwt. COSCO said that the newly formed entity will be investing in as many as 25 new LNG carriers, expanding its tonnage total.
"COSCO's new step will transform its businesses into a more diversified operation model that can take full advantage of the opportunities likely to come from the Belt and Road Initiative and the development of the Yangtze River Economic Belt," said Wang Mingzhi, an official with China's Ministry of Transport. Wang referred to Xi Jinping's "One Belt, One Road" project, a continent-spanning infrastructure investment plan designed to link China with Central Asia and Europe; the Yangtze River Economic Belt is an economic development plan for the river drainage, which is home to forty percent of China's population but varies markedly in economic vitality between its western and eastern halves.
COSCO posted a loss of $14 million in the first quarter of the year, led by poor activity in shipbuilding, marine engineering and bulk chartering, and it projected that business conditions would worsen. The firm is making moves outside of vessel construction and operation: it has consolidated a financial arm in Hong Kong; diversified into offshore wind in a joint venture with DEME subsidiary GeoSea; and its ports division has been quite active, acquiring a lease to Greece's Piraeus Port and buying a 35 percent stake in the Euromax terminal in Rotterdam.