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Andy Chen

China Shipping Container Lines, the country's second-largest container shipping company, plans to spend 4.1 billion yuan in the next three years to buy vessels and boost capacity after earnings last year plunged 76 per cent  due to falling freight rates.

The company from this year will also lock up oil prices earlier after rising fuel costs contributed to the fall in  last year's net profit to 859.2 million yuan, announced by the company on Tuesday.

Chairman Li Shaode said yesterday the company would spend 1.4 billion yuan buying vessels this year, 2.6 billion yuan next year and 100 million yuan in 2009.

The parent of China Shipping would inject 'good' assets into the Hong Kong-listed vehicle this year, Mr Li said.

The assets could be ports, logistics projects, containers and container leasing operations, he said without elaborating.

China Shipping plans to raise 1.8 billion yuan from a domestic bond sale to finance the purchase of a dozen vessels.

The company has hedged  the price of  60 per cent of the oil it will use this year at between US$53 and US$56 a barrel. That compares with a price lock-up on only 30 per cent of its annual oil use a year ago.

Mr Li dismissed concerns  about the prospects for growth this year after sales rose a lower than expected 7.5 per cent to 30.5 billion yuan last year.  'Our shipping volume rose 30 per cent in the first quarter this year,' he said.

China Shipping is benefiting from an increase in capacity last year and better scheduled freight times so that vessel usage improves  on the return journey.

The shipping line carried 5.65 million 20-foot equivalent units (teu) last year. Operating capacity reached 398,974 teu after the company added 57,000 teu of  capacity during the year. It is expected to expand  vessel capacity to 450,000 teu this year,  a 12.5 per cent increase.

The shares, which have gained 62 per cent this year compared with a 2.4 per cent increase in the benchmark Hang Seng Index, rose 4.29 per cent yesterday to HK$3.40.



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China Shipping Container Lines

China Shipping budgets 4.1b yuan for new  vessels to boost capacity