COSCO’s profits in the first half of 2018 fell by 97.8% compared to the same time last year, despite its TEU volume increasing by 12.3%, according to its second quarter figures.
The Chinese ocean carrier blamed its fall in profits on pressure from the market freight rate and the falling value of the Yuan against the US dollar due to the tariff war.
Revenue in its terminal division rose by 11.6%, with the Bohai Rim Region seeing an increase in TEU of nearly 75%.
However, a direct result of this increase in volume was a boost in business costs, which rose by 12%.
The company was also affected by its $6.3 billion acquisition of Orient Overseas International Ltd (OOIL) in July 2018, which was approved by US Homeland Security after it agreed to sell its Long Beach container terminal to a third party.
That purchase saw the company leapfrog Hapag-Lloyd and CMA CGM to become the third biggest container shipping line in the world.
Despite the US-China trade war, the company says it expects the world economy to continue its recovery and consequently help the container shipping industry.
In its financial report for January – June 2018, it says: “Looking forward to the second half of 2018, world economy will remain on the path of recovery.
“Although trade protectionism is on the rise and Sino-US trade frictions may inhibit the growth of the global economy to a certain extent, it is expected that the global economy will continue its growth since 2017, thus providing guarantee for the growth of container shipping volume.
“In terms of shipping capacity, currently orders of container vessels are at a historically low level and the pressure on capacity delivery has slowed down.”