Cosco helps trade route to Africa become well-traveled

The freighter Pride berths at port of Rotterdam, the Netherlands, April 20, 2013. [Photo/Xinhua]

As world shipping industry lies in choppy waters, the Chinese company is finding new market growth points

For Cosco Shipping, the world's largest fleet of specialized carriers and multipurpose vessels, which is owned by China Ocean Shipping (Group) Co, a new leg in its pan-African journey has begun.

With tons of cement shipped to Lagos, Nigeria, hydropower equipment delivered to the port of Luanda in Angola and construction machinery bound for Addis Ababa through the port of Djibouti, the Chinese company's footprint has expanded to more than 33 African countries this year. Han Guomin, Cosco Shipping's general manager, said the continent's hunger for trade opportunities, infrastructure improvement, appliances and electronics has pushed eager manufacturers from the United States, Europe and China to load their products onto vessels for Africa.

The driving force behind this is Africa's rising economy, which is fueled by an abundance of natural resources and commodity products, and its growing need for infrastructure improvement, energy, communications, manufacturing and agricultural development.

Cosco Shipping's entry into the African market began in the 1960s, when it transported engineering equipment, materials and workers to build the Tanzania-Zambia Railway.

With more than 100 ships, including asphalt tankers, lumber carriers and heavy lift vessels in operation, Cosco Shipping has been helping Chinese companies to do business in Africa for more than four decades. The company expects its 2013 profit to reach 31 million yuan ($5 million)； it will release its financial report by the end of this month.

So far, it has deployed 25 vessels between China and Africa, with six ships operated on this route each month. It also serves clients in South Korea and Japan, helping them deliver their goods to the African market.

To improve local service, the company works with various representatives employed by its mother company, Cosco Group to take care of its local business such as sales, customs clearance and business promotion.

With foreign and domestic investment in Africa's infrastructure development, such as roads and the expansion of towns, growing over the past few years, Beijing-based China Chamber of International Commerce in January predicted favorable conditions to boost shipping in this developing but dynamic market into the next decade.

Luo Renjian, a researcher at the Institute of Transportation Research under China's National Development and Reform Commission, said that as the world shipping market is in choppy waters, offering flexible services and cost-saving solutions to Chinese companies will help carriers find new market growth points.

Cosco Shipping has provided long-term services to China National Petroleum Co, China Machinery Engineering Co and Power Construction Corp of China to send goods and production materials as well as transport aid materials to Africa.

One of Cosco's biggest shipping assignments was transporting 400,000 metric tons of construction material and project equipment to Sudan for Africa's huge hydropower project, the Merowe Dam, from 2003 to 2008. Today, the structure provides water to 4 million people and facilitates Sudan's agricultural irrigation system.

With Africa entering a new round of development, many Chinese companies are now looking to participate in more societal projects.

"Although there are roads, dams, bridges, railway lines and various other government buildings that serve as testimony to Chinese capabilities, companies now are gearing up to participate in projects such as urban facilities, modern transportation and manufacturing," according to Han, the shipping company's general manager.

To rebalance its economic development model, China is adjusting its industrial structure and encouraging domestic companies to carry out projects such as power generation, high-speed rail, oil refining and other projects in emerging markets, especially in Africa and South America.

"This means that when it comes to buying and building things, they usually turn to China for inexpensive but reliable building materials, bulldozers, technical solutions and project contractors," Han said.

"The demand for specialized carriers and multipurpose vessel transport has become an indispensable part of the 'going global' strategy supported by a large number of Chinese companies," he said.

Cosco organizes its vessels based on the amount of goods shipped in a bid to optimize capacity. If necessary, the company also will charter vessels from other companies to meet customers' needs.

In comparison with China, most African ports and harbors are relatively undeveloped and short of proper vessel yards. Bureaucracy and infrastructure issues make it difficult for many Chinese companies to carry out construction projects in Africa.

Cosco helps trade route to Africa become well-traveled

In view of these problems, Cosco Shipping is building a good relationship with port authorities, local agencies and companies to coordinate timely pickups.

"Being supported by capable local partners not only will accelerate customs clearance, it can also help us to discharge cargos quickly by using their cranes, trucks and workers," Han said. "In the meantime, their employees also are working with us to monitor goods and containers unloaded from ships to ensure freight quality."

Eager to build sustainable trade relations with its African counterparts, China has reduced timber imports from such African countries as Gabon, Cameroon and Republic of Congo, where illegal logging has become rampant in recent years, and has provided funds to help certain countries to crack down on the illegal timber trade.

"Cosco Shipping is taking illegal timber seriously," Han said. "We need to make sure our African clients have authentic documents before shipping the timber. The authorities are called when needed to halt possible illegal activities."

Although the amount of African timber imported to China has declined in recent years, Cosco Shipping's work ethics are helping to win popularity with local communities and clients.

Han said its market share is gradually increasing, along with the trust of local timber businessmen. The company's market share for timber ocean transportation reached 60 percent in Cameroon, Equatorial Guinea, Republic of Congo and the Democratic Republic of Congo in 2013.