According to COSCO Shipping Ports Limited (hereinafter referred to as COSCO Shipping Ports, stock code: 1199.HK), as reported in its interim performance report for the first half of 2023, the company achieved a revenue of $689 million, representing a 2.2% decrease compared to the previous year. The profit attributable to equity holders of the company amounted to $150 million, showing a 15.4% decline year-on-year. In terms of container throughput, during the first half of the year, COSCO Shipping Ports achieved a total throughput of 64.5729 million standard containers, reflecting a 2.2% increase. Among these, the total throughput of controlled terminal companies reached 14.7315 million standard containers, marking a 6.0% decrease year-on-year, while the total throughput of non-controlled terminal companies amounted to 49.8414 million standard containers, showing a 4.9% increase year-on-year.
The scene at COSCO Shipping Ports’ 2023 Mid-Year Performance Presentation
Despite increased global economic instability, weakened trade dynamics, and shrinking demand in the first half of the year, COSCO Shipping Ports demonstrated resilience and multiple bright spots in its performance, highlighting its growth potential. The company stated in its performance report that the port throughput growth was under pressure due to the slowdown in China’s import and export growth rate. However, considering the industry backdrop, the company’s performance remained within expectations, maintaining a relatively strong profit level.
“COSCO Shipping Ports will continue to deepen lean operations, promote the enhancement of terminal quality and efficiency, and further strengthen value creation for the company, committed to achieving a more stable, higher-quality, and sustainable development path,” said Zhu Tao, Managing Director of COSCO Shipping Ports, during the performance presentation.
- Lean operations are the key to profitability
In 2023’s second quarter, the shipping market continued to experience declining cargo volumes and freight rates, leading to a decrease in revenue and profits for port enterprises. Achieving profitability and maintaining a lower decline rate than competitors during such a market downturn is no small feat. COSCO Shipping Ports recorded quarterly revenues of $689 million and a net profit of $194 million, positioning itself as a standout performer in the industry. Behind this profitability lies the effectiveness of the lean operations driving model.
Compared to the first quarter, the steady growth in second-quarter performance for COSCO Shipping Ports is particularly notable. Despite facing challenges such as a complex external environment, ongoing tightening of monetary policies in various countries, rising interest rates, and high inflation, COSCO Shipping Ports continued to deepen its lean operations strategy, emphasizing quality improvement and efficiency in terminal operations, thereby maintaining a robust performance.
Specifically, COSCO Shipping Ports achieved a 4.1% year-on-year increase in total throughput volume in the second quarter, reaching 34.27 million standard containers. This indicates a gradual recovery trend compared to the first quarter, and the improvement in terminal profits, which saw a 1.3% year-on-year increase in the second quarter, reflects a significant turnaround from the 6.3% year-on-year decline in the first quarter. Notably, Chinese terminals performed exceptionally well, with domestic terminal profits increasing by 3.8% year-on-year, and domestic holding terminals achieving a strong growth of 11% year-on-year.
Furthermore, the positive outcomes achieved by COSCO Shipping Ports in the first half of the year, particularly in terms of port and shipping synergy and the development of a comprehensive “port + shipping + logistics” integrated approach, were significant driving factors behind the steady growth in second-quarter performance.
In April, the company launched a digital platform for the automotive supply chain, positioning it as a benchmark product for end-to-end digital supply chain solutions. This platform is founded on a global comprehensive logistics supply chain service ecosystem, integrating data and business acceptance functions from ports, shipping, logistics, and terminals, providing customers with intelligent, visualized digital solutions and value-added services.
COSCO Shipping Ports Xiamen Ocean Gate Terminal Car Stacking Yard
- Expand the rights and interests of terminals at home and abroad
COSCO Shipping Ports has demonstrated its resilience and strategic vision in the face of challenging market conditions during the first half of 2023. The company’s mid-term performance report highlights its global port network expansion as a key driver of success. Despite ongoing economic uncertainties, including high inflation and reduced demand in major economies, COSCO Shipping Ports has strategically positioned its terminals in crucial locations, both domestically and internationally.
With investments in 47 terminals across 38 global ports, the company’s extensive reach and substantial processing capacity have solidified its position as a global leader in the industry. Their commitment to enhancing service quality and efficiency, particularly in emerging markets like Southeast Asia, the Middle East, and Africa, has allowed them to offer cost-effective, high-quality terminal services to shipping companies.
COSCO Shipping Ports’ pursuit of equity in various terminals, along with its continuous efforts to optimize the global port network, demonstrates a long-term approach to navigating market downturns. By actively participating in market consolidation and exploring opportunities in new markets, the company is positioning itself for sustainable growth and maintaining a competitive edge in the dynamic world of shipping and port operations.
COSCO Shipping Ports‘ mid-term performance report underscores its adaptability and forward-thinking strategy, showcasing its ability to thrive in challenging economic environments and its commitment to building a robust global port network for the future.
In June 2023, COSCO Shipping Ports completed the acquisition of the Hamburg Port CTT Terminal project in Germany.
- Accelerate the pace of transformation and upgrading
In the context of global port industry trends, port operators are undergoing a significant transformation characterized by automation, digitization, and smart upgrades. As the international maritime industry adapts to new environmental regulations in 2023 and the approaching 2050 deadline for decarbonization, the pace of industry transformation is accelerating, with major port operators increasing their investments in green and low-carbon initiatives.
However, this industry-wide green transformation also poses short-term challenges in the form of increased investment costs, as evidenced by COSCO Shipping Ports‘ second-quarter performance, which saw a rise in sales costs compared to the $238 million in the first quarter.
COSCO Shipping Ports has consistently embraced the trends of digitization and green and low-carbon development, using technological innovation to lead the transformation of port and shipping operations towards higher quality. Yang Zhijian, Chairman of the Board of COSCO Shipping Ports, emphasized, “Digitization, intelligence, and green and low-carbon transformation are essential engines for driving high-quality development.” Notably, the company has introduced various technological advancements, including the upgrade of inventory management modules in its EMA system, the deployment of unmanned container vehicles in its ports, the implementation of solar power generation, the use of shore power for vessels, and the adoption of digital invoices to facilitate financial and tax digitization.
COSCO Shipping Ports implemented the Middle East’s first unmanned container truck project at the Abu Dhabi Port.
Facing a complex and challenging external environment in the second half of the year, COSCO Shipping Ports is committed to accelerating its transformation and enhancing operational resilience, with the goal of becoming a world-class port. In their performance report, they explicitly state their commitment to integrating green and low-carbon principles into their operational management values, advancing digital transformation throughout the entire operational chain, promoting the construction of smart ports, focusing on the fusion of artificial intelligence with traditional port operations, and driving the adoption of green and low-carbon initiatives. They aim to build a benchmark for green ports.
The management team of COSCO Shipping Ports is confident that despite the subdued global economic growth outlook, strong domestic trade and cargo volumes from Southeast Asia will lead to an increase in container throughput in the second half of the year. They maintain an optimistic outlook for revenue and TEU growth.