Shipping lines adrift in stormy economic seas

Given expectations of a further global slowdown in the second half, analysts don't expect the shipping sector to return to profitability in the short term. Most Chinese shipping lines hope to get government subsidies or aid.

Tan Li, general manager of strategic development at China Cosco Holding, said the company is looking more carefully at certain market segments to make a profit.

"Although the container and bulk cargo businesses are being squeezed, 60 percent of our capacity is concentrated in the multi-purpose heavy lift on board," Tan said.

"In addition, about 30 percent of our capacity is concentrated in special vessels. For the drilling-vessel business in 2014, in 2015, we see a rising trend," Tan said.

Rather than waiting for the government policy to stimulate the market, the management team of China Cosco Holdings plans to sell Cosco Logistics Co to State-backed parent company China Ocean Shipping (Group) Co for 6.74 billion yuan.

The sale will give China Cosco a pretax gain of about 1.96 billion yuan by the end of this year.

China Shipping Container Lines Co Ltd, another major shipping firm, is keen to invest $1.51 billion to equip six liquefied natural gas carriers from Shanghai-based Hudong-Zhonghua Shipbuilding (Group) Co Ltd.

Meng Lingru, an industry analyst with Shanxi Securities Co, said China's economy is still dominated to some extent by investment policies and packages, which could help big shipping companies find new market growth.

"China's urbanization means more buildings, roads and manufacturing facilities will be built in cities and towns, which could save its shipping industry as cities demand more grain, commodities, raw materials and energy," Meng said.

"Thus, any investment-based stimulus methods will shore up its shipping industry, which has been struggling with harsh market conditions in recent years."