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Beijing tells shipping lines to streamline further or be liquidated

Beijing tells shipping lines to streamline further or be liquidated

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China’s state-run shipping scene, already massively different from 18 months ago, could be set for a further period of restructuring and streamlining.

China’s State Council released a guideline yesterday to push for further restructuring of the nation’s state-owned enterprises (SOEs), in a bid to boost the state sector’s competitiveness and reduce industrial overcapacity.

Sectors the State Council is looking to coerce further change in include shipping, equipment manufacturing, power, steel, non-ferrous metal, construction materials, tourism and aviation services. The State Council said it was keen to reduce disorderly competition and resolve overcapacity issues.

The council – China’s de facto cabinet – also urged SOEs to streamline resources and assets via asset restructuring and swaps, and establishing strategic alliances.

Companies that record losses for three straight years and fail to follow government guidelines risk being liquidated, the State Council warned.

China’s shipping scene has seen massive contraction in the past 18 months with mergers between Cosco and China Shipping as well as between Sinotrans&CSC and China Merchants Energy Shipping.

Commenting on the news veteran China watcher and Splash contributor Paul French cautioned as to how firmly the authorities would follow through with their pronouncements.

“Any move from China’s powerful State Council to reform and restructure the country’s SOEs is welcome. However, we should remember, similar announcements have been made over the last two and half decades and rarely been followed through,” French said.

Dr Martin Stopford, meanwhile, applauded the move, saying it was high time China upped its shipping game. “It’s a mega job and tricky timing, but it needs to be done. China’s still punching below its weight in sea transport,” said the president of Clarksons Research.

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Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.

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