China COSCO Shipping: A New Mega-Shipping-Company Is Being Born

The story of China and trade dated back centuries. They have always tried to sustain their relevance in the global trade cycle. Despite being a communist state, the country, since 1948, has developed a novel idea of creating state owned enterprises to take care of diverse business interests both home and abroad. This has led to a long list of public corporations that are optimized for both trade and service.

One of the most popular among these enterprises is China COSCO Shipping Corporation Limited or simply COSCO. It is a group company that is engaged in various business sectors which include logistics, shipping, financial services and equipment manufacturing. It was formed out of the the merger between the COSCO Group and the China Shipping Group in January 2016.

COSCO owns a container carrier fleet with a capacity of 1,580,000 twenty-foot equivalent units (TEU) among other dry bulk and tanker fleet. This configuration allows the company’s vessel’s to call at most ports in the world. By volume, COSCO ranks fourth largest in the number of container ships and container volume handled around the world.

In the recent decade, COSCO has been at the forefront of the implementation of the Chinese grand plan of further expansion of world trade in the form of the Belt & Road Initiative (BRI). The company had been making numerous shipping and logistics acquisitions around the world. The list is endless:

  • 51% stake in Piraeus Port Authority, Greece
  • $6.3 billion bid to buy Hong Kong Orient Overseas (International) Limited (This will make it the world’s third largest container shipping company with a fleet of over 400 vessels).
  • 49% stake in Kazakhstan’s Khorgos Gateway Dry Port in conjunction with the Port of Lianyungang.

With its strategic acquisitions within the global cargo logisitics chain, it is a matter of time before COSCO overtakes the top three Container carriers; Maesk Line, Mediterranean Shipping, CMA-CGM; to become the number one container carrying liner in the world. It is of note that early 2019, the company received a $26.1 billion chit from China Development Bank towards strengthening it for further investments in the Belt and Road Initiatives.

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