Is it real cooperation for Chinese carriers?

Doubts have been raised as to what exactly the latest cooperation agreement, signed on 13 February 2014, between the two Chinese carriers, COSCO Container Lines (COSCON) and China Shipping Container Line (CSCL), really means as it fails to address the problems faced by the two group’s container shipping arms, according to Alphaliner.

Although the framework agreement outlined various areas of cooperation, it didn’t provide any indication on a consolidation of their competing container business units.  What’s more, both shipping lines continue to operate as two separate and competing units, while they both face earnings pressure and operate at a loss.  Their respective parent companies bailed each of them out, through an asset sale, in the last two years in order that the lines avoided reporting losses.

According to Alphaliner, they are likely to continue to record further operating losses in the next two years, as the container shipping market continues to face structural imbalances that will keep freight rates under pressure.