Cosco Pacific Ltd., the Hong Kong unit of state-controlled China Ocean Shipping (Group) Co., is moving into logistics with the purchase of 49 percent of Cosco Logistics Co. from its parent for 1.18 billion yuan ($142 million).
There will be additional payments if Cosco Logistics' net profit exceeds $24 million this year. Last year's figure was $22.2 million.
Cosco Logistics provides shipping agency, freight forwarding, third-party logistics and supporting services in regions -- Dalian, Beijing, Qingdao, Shanghai, Ningbo, Xiamen, Guangzhou and Wuhan.
Managing Director Sun Jia-kang said in three to five years, logistics will form one of Cosco Pacific's three core businesses.
Cosco Logistics has well-established brand names including Penavico, an existing customer base of domestic and multinational companies, and strong support from parent Cosco. The company has been undergoing a reorganization to streamline its businesses and operations.
Cosco Pacific reported a 5.4 percent increase rise in first-half earnings to $73.6 million from $69.8 million a year earlier. The interim results include a $2.2 million loss on the sale of its 10 percent holding in an inland ocean freight terminal based in Hong Kong.
Container leasing operations contributed $42.5 million to Cosco Pacific's profit, up 11.3 percent, and accounted for 58 percent of net profit.
Container utilization rose to 95 percent from 92 percent a year earlier.
The container fleet grew by over 85,778 earlier to 755,043, giving it a global market share of 9.3 percent, up from 8.8 percent.