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  CHINA OCEAN SHIPPING COMPANY Lucky Tower 3 Dong San Huan Bei Road Chaoyang District Beijing 1000 Key Officials: Chen Zhongbiao, President; Zhang Duchan, Executive President and Chairman, Zhou Qifang, Executive Vice President; Du Baoming, Managing Director, Li Keling, General Manager, Containers; Li-Ka-Shing, President of Hutchinson Wampoa Group; and, C.H. Tung, Chairman/CEO Orient Overseas (International) Ltd., Senior Advisors, Song Rutoa, Wang Feng, and Yu Hok Chung, Directors. I. Corporate Information China Ocean Shipping Company ("Cosco") is a state -owned enterprise of the People's Republic of China ("China"). It was established in 1961 utilizing four ships with a combined tonnage of 30,000 deadweight tons. The company operates a worldwide network service with five operating branches: Guangzhou Ocean Shipping Company, Shanghai Ocean Shipping Company, Tianjin Shipping Company, Quindao and Dalin Shipping Companies. Cosco, now one of the world's largest shipping companies, was reorganized in 1993 through a merger of four companies, China Ocean Shipping Company, China Ocean Shipping Agency (Penavico), China Marine Bulker Supply Company, and China Road Transportation Company. The reorganized company was named China Ocean Shipping Companies Group and is known both as "Cosco" and "Cosco Group" (hereinafter "Cosco"). Cosco Container Lines ("COSCON"), formed from three container operating subsidiaries at Guangzhou, Shanghai, and Tianjin, operates Cosco's container shipping services. COSCON has three container services departments ("CTD"). CTD I serves the United States, CTD II serves Europe, and CTD III serves other countries. COSCON is responsible mainly for securing cargo, negotiating rates, and management of intermodal services. In 1995, Cosco established Cosco Bulk Transportation Ltd. ("COSCOB"). This subsidiary, the largest in the Cosco family of companies, is responsible for bulk cargo. It owns the world's largest bulk fleet, 113 ships, with a combined tonnage of 5.91 million deadweight tons. Cosco International Freighting Company ("COSCOI") manages Cosco's freight forwarding business. Formed in December 1995, it is one of 12 home based specialized subsidiaries, each responsible for a specific domestic business activity. The other companies will be organized by 2000 as part of Cosco's ninth five-year plan. Cosco now has more than 300 subsidiaries locally and abroad. Ocean shipping is its main business, although it has expanded into other areas such as road and air transportation, freight forwarding, finance, trade, real estate, heavy industry, tourism and advertising. The company offers 340 liner services of which 320 are for container shipping. It also provides about 1,168 sailings a year for breakbulk transportation. Its fleet now numbers more than 600 ships which call at 1,100 ports in 150 countries. Cosco continues to expand its fleet by investing more than US$825 million in 13 new vessels, six of which will have capacity of 5,250 TEUs each. All are expected to be deployed toward the end of 1999. In addition, Cosco received a loan guarantee of $138 million from the U.S. Maritime Administration. Four containerships, each with a capacity of 1,432 TEUs, are to be built by the Alabama Shipyard in Mobile. Cosco has not published a financial statement of its income and expenditure. However, in 1995, its Singapore-based subsidiary disclosed a 109 percent increase in its pretax profits, earning S$8.9 million, compared with S$4.2 million in 1994. Cosco Pacific (formerly Florens Group) also had a profitable year in 1995, reporting an increase of 15 percent over 1994 (the latest available information). Cosco Pacific reported a profit of US$75.5 million in 1996. II. Fleet and Service Pattern Cosco operates four services in the United States trades:
Cosco's vessels make direct calls at ports on the East and West Coast of North America, and are linked with Shanghai, Qingdao and Xingang in China. Also, Cosco provides one of the fastest services between Israel and the United States -- 14 days between Charleston and Haifa. Cosco has upgraded its service on many routes by deploying larger and more modern vessels. Eight new vessels were used to replace a fleet of 1,200-1,900 TEU vessels in the North Europe/Asia/China service. Cosco also has deployed bigger ships in its Asia/South Africa/East Coast South American service. Cosco offers a variety of intermodal services under one bill of lading. It has the capability to serve locations in the U.S. and Canada. It utilizes 59 transportation hubs strategically located throughout North America. These hubs rely on the services of seven ports, 34 depots, 68 rail ramps, and 22 agency offices. As part of its increasing development as a multimodal carrier, Cosco has a long- term plan to operate its own rail service in the U.S. In China, it is evaluating the prospects of moving its containers inland on the country's rail system. III. Market Share in Key Trades Cosco's market share in its U.S. trades for 1996 is shown in the following table. This data, and the other market share data used in this report, come from the Port Import/Export Reporting Service ("PIERS") of The Journal of Commerce. The following was published in the PIERS US Global Container Report, 1996 Annual Issue. It shows that Cosco ranked ninth among the top 100 carriers in the U.S. containerized trade.
IV. Agreement/Tariff/Service Contract Activity Cosco is not a party to any conference agreement. It is, however, a member of the following agreements: (a) The Trans-Pacific Policing Agreement (FMC No. 202-011452); (b) The International Council of Containership Operators (FMC No. 203-010099); (C) The Israel Discussion Agreement (FMC No. 203-011547); (d) COSCO/KL Transatlantic Vessel Sharing Agreement (FMC NO. 232-011561); (e) KL/YM Transatlantic Vessel Sharing Agreement (FMC No. 232-011562); (f) Transatlantic Bridge Agreement (FMC No. 203-011560) which bridges FMC Agreements 232-011561 and 232-011562 specified in (d) and (e) above. Cosco has the following active tariffs in the U.S. trades:
In 1995 Cosco filed 343 service contracts. This represented an increase over 1994 when the carrier filed 285. However, this was well below Cosco's all-time high of 725 contracts in 1993. At the end of the first quarter of 1997, Cosco had 719 active service contracts on file. COSCO's VESSEL FLEET IN U.S. TRADES
Note: FC = Fully Containerized, BC = Bulk Cargo, CC = Container Cargo Click here to return to the full report.
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