China's campaign to protect its maritime industry during a severe downturn will become more costly for foreign companies as Beijing grabs a bigger slice of the profits for shipping iron ore, coal and grains to the world's second largest economy. China's shipping sector -- led by state-owned COSCO Group -- has become one of the world's most influential with its fleet more than doubling over the last decade, matching the country's appetite for commodities and raw materials. The global economic slowdown, however, has led to an oversupply of vessels and low freight rates, forcing Chinese shipping companies to take audacious action to support their businesses. COSCO has demanded shipowners reduce the rental costs for their ships, while also piling on the political pressure for Beijing to stop competitors from entering the country. Being the key import country in the dry cargo business and almost everything else, they want to throw their weight around and secure more of the business themselves, said Anders Karlsen, analyst for Nordea Markets. COSCO, China's top maritime conglomerate, recently angered many in the freight community by unilaterally halting payments for vessels it had chartered, so it could renegotiate better terms. In response, shipowners threatened to seize COSCO-operated vessels. For any charterer not to pay hiring costs in an attempt to renegotiate charter rates is very bad business, said Arthur Bowring, managing director of Hong Kong Shipowners Association. If there are people out there doing that and COSCO is one of them, I do hope it will come back to bite them.
Date: 08 Sept 2011 Source: IndianExpress