SHANGHAI, Aug 30 (Reuters) - China’s COSCO Shipping Holdings Co Ltd on Thursday said first-half profits fell 97.8 percent as it grappled with higher costs and a slide in freight rates.
China’s largest shipping group, which has bought a Hong Kong peer to become the world’s third-largest container liner, said January-June net profit was 40.8 million yuan ($6 million), down from 1.86 billion yuan in the same period last year.
After a prolonged slump, the global container shipping industry entered a period of recovery last year. However, COSCO said the delivery of a number of new large ships had worsened the industry’s current oversupply of vessels, pressuring rates.
In July, a key U.S. review body cleared COSCO’s $6.3 billion acquisition of shipping firm Orient Overseas International Ltd (OOIL) on security issues after it agreed to sell the Long Beach container terminal business to a third party.
There had been concerns an ongoing trade fight between Beijing and Washington might end up hampering major deals by U.S. or Chinese firms seeking regulatory approval.
In April, COSCO said there was little evidence at the time that the tensions were affecting cargo volumes but added it was ready to take “appropriate action” to protect its market should it start to see an impact.
Earlier this month, German shipping company Hapag Lloyd forecast that business could be impacted in 2019 and thereafter if the U.S.-China trade spat escalates.
$1 = 6.8312 Chinese yuan renminbi Reporting by Brenda Goh; Editing by Mark Potter