China's Cosco Shipping Holdings, the world's fourth-largest container shipping line, has reported a loss of US$1.44 billion in 2016 due to weak freight rates and restructuring costs.
The company’s revenue came in at $10.3 billion. Shares in Cosco closed 0.28% higher in Hong Kong on Thursday (March 30, 2017) before the results.
Cosco has forecasted that 2017 will be a better year for the overall market than 2016 due to seeing positive signals in demand.
Many other carrier lines have forecasted freight rates to increase in 2017.
However, the market is still proving volatile as recent events have seen Orient Overseas (International) Limited (OOIL), the Hong Kong-listed parent of carrier line OOCL, announce its worst full year results since 2009 and Hanjin Shipping declared bankruptcy due to a prolonged downturn in rates caused by overcapacity and a slowdown in global trade.
COSCO has gone through restructuring, selling units at a loss and prioritising container shipping since becoming a new company last year, born out of the merger of two major domestic shipping firms, making year-on-year comparisons difficult.
Considered one of the most complicated deals in the history of China’s capital market, Cosco was formed last year following a $8.7bn merger between Cosco and China Shipping – two of the biggest state-owned shipping conglomerates.
Cosco will become part of the Ocean alliance with France's CMA CGM, Taiwan's Evergreen Line and Hong Kong-based Orient Overseas Container starting from tomorrow April 1.
It will be the largest alliance in shipping history when it launches in April 2017, battling with THE Alliance and the 2M Alliance.
However, the new alliances will not guarantee security for ocean carriers as the market is experiencing lower demand.