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April 16 2018

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36 The Journal of Commerce | April 16 2018 Container Shipping Special Report which is expected to report a collec- tive profit. China's flagship acquired Hong Kong-based Orient Overseas (Inter- national) Ltd., the parent of OOCL, in 2017, and although the $6.3 billion deal has yet to be final- ized, most of the regulatory hurdles have been cleared. Hapag-Lloyd reported a 2017 net profit of $34 million, turning around a 2016 loss of $118 million. The Hamburg-based carrier is expecting a much improved operating result in 2018 as it derives the full-year benefits of its merger with United Arab Shipping Co. "Given the market environment, Container shipping industry's profitability improves, but danger lurks JOC Staff Back in black Aer six consecutive years of losses, the container shipping industry reported a combined profit of $7 million for 2017. Georgia Ports Authority/ Stephen B. Morton CONTAINER LINES ARE basking in strong profitability in 2017, although a potential trade war between the United States and the Canada and lingering overcapacity will challenge carriers' strengthened bottom lines. Tit-for-tat trade actions are rattling US ports and shippers alike. Following six straight years of losses, the container shipping indus- try ended 2017 with a total profit of roughly $7 billion, according to Drewry. SeaIntel Maritime Analysis said the financial reports of the 13 carriers do show improvement but don't yet reflect a full recovery. "All reporting carriers recorded a two-year streak in volume growth, with CMA CGM and Hapag-Lloyd having grown their global volumes 141 percent and 111 percent, respec- tively, over the past eight years," SeaIntel said. "While CMA CGM and Hapag-Lloyd will have seen their 2016 and 2017 volumes positively impacted by their acquisitions, the long-term strong volume growth of these two carriers cannot be explained by acqui- sitions alone, but must also be driven by strong organic growth." In the last eight years, Maersk Line, OOCL and Zim Integrated Shipping Services have grown their volumes between 46 percent to 59 percent. "K" Line's global volume has been flat in the same period. Cosco Shipping Holdings steamed back to profitability in 2017 with a recovering market and freight rates driving up revenue by 22 percent year over year to $14.3 billion and generous government subsidies leading the company to a $423 million net profit. The group reported a significant improvement in volume carried by liner arm Cosco Shipping and handled by its terminal-operating division, Cosco Shipping Ports. Even though its state subsidies amounted to $184 million for 2017, including $80 million in subsidies for demolishing older vessels, the group produced some solid opera- tional numbers. Container volume carried by Cosco Shipping increased 23.7 percent year over year to 20.9 million TEU, while Cosco Shipping Ports handled more than 100 million TEU during the year. Its overseas terminals handled almost 19 million TEU, an increase of 38.7 percent. "In 2017, with a broad-based recovery of the global economy and increased demand for container shipping services, the landscape of the container shipping industry was reshuffled, and the service quality and stability of liner companies improved significantly," Cosco Ship- ping said in its earnings statement. By the end of 2017, the company owned and operated 360 container vessels with a total capacity of 1.8 million TEU, up 10.3 percent year over year and ranking the carrier the world's fourth-largest. The shipping company is busy with a share issue that is expected to raise $2 billion that will be used to pay for 20 me- ga-ships under construction. Cosco Shipping Holdings reported a $1.4 billion loss in 2016, one of the worst container shipping years on record. But freight rates and demand grew significantly through 2017, lifting the entire industry,

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