COSCO SHIPPING International is mainly engaged in the provision of shipping services. Our key customers include ship owners and operators, ship yards and container manufacturers. Shipping services refer to the provision of comprehensive services for vessels, including both tangible products such as marine equipment and spare parts, marine coatings; intangible services such as consultancy services for buying ships, marine insurance, ship financing and related information support, as well as provision of value-added support services for vessels operation such as supply of marine equipment, marine fuel and ship supplies, and ship management.

The increase in world trade volume has led to steady growth in the shipping industry as well as increasing demand for efficient vessel operations. A “one-stop shop”, standardised and thorough shipping services supply system is a key element for enhancing core competencies of the fleets around the world.

Business Model

Shipping services are beneficiaries of shipping capacity

Demand for shipping services is mainly driven by shipping capacity growth and ship owners’ fleet restructuring activity. As distinct from shipping companies, revenues of our shipping services are either the direct or indirect costs of shipowners or ship operators, and are not affected by short-term fluctuation of freight rate.

COSCO SHIPPING International has a diversified business mix of shipping services, which are complementary to each other without obvious cycle.

1. Prolonged trough of shipping market resulted in tightened cost control measures and deferral in the replacement of obsolete vessels by ship owners, which reduced the demand for shipping services, e.g. during the period from 2011 to 2013.

2. In 2016, the shipping services PBT declined year-on-year was mainly attributable to the marked decline in gross profit of container coatings resulted from a lower demand in new container boxes, and keen competition.

Looking forward, the Group will continue to pursue the objective of maximising the return of the Shareholders. By seizing the opportunity presented by the business reorganisation of China COSCO Shipping Corporation Limited, the Group will accelerate the building of shipping services industrial cluster to provide reliable support services for the fleets transportation, in order to maximize the return to Shareholders.