China’s Cosco to add 16 vessels

January 4, 2008 by SwizStick  
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The vessels aren’t huge by today’s standards, but this is a significant investment into extra capacity from one of the world’s largest container lines:

The company will ask Jiangsu Tianyuan Marine Import & Export Co and Jiangsu New Yangzi Shipbuilding Co to build the vessels, according to a statement filed to the Hong Kong Stock Exchange on Monday. The vessels will have a capacity for carrying 4,250 standard 20-foot-containers each, the statement said.

China Cosco, based in Tianjin, forecast on December 20 that its 2007 profit will probably jump nine-fold to 18 billion yuan (US$2.46 billion) on higher demand for shipping services in the world’s fastest-growing economy. The company’s shares, traded in Shanghai and Hong Kong, have surged five-fold last year.

The article states that Cosco’s Shanghai shares have risen 403% since June. No matter how profitable or how well run the company is, that screams bubble to me. Although the same could be said about most of the stocks on the Shanghai stock exchange – vastly overpriced.

As for shipping, I’m assuming Cosco has planned adequately to fill the extra capacity coming online. Certainly the China to Europe trade lanes are MASSIVE, and no matter what happens China’s economy will continue to be a growing and important market for years to come.

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