The top executive of China Ocean Shipping Co. said recovery of the container shipping trade depends on revival of U.S. and European consumer spending, and Cosco is slowing its expansion program in the face of extreme overcapacity in the shipping industry.
Capt. Wei Jiafu, Cosco's president and CEO, said the company has canceled ship orders, returned chartered ships to their owners and laid up ships.
Wei spoke March 25 before receiving the Commodore award from the Connecticut Maritime Association at its annual conference in Stamford, Conn. He said he is confident in the long-term future of global trade and the shipping industry, but that carriers face difficult times.
"Unless these (rate) levels come back to compensatory levels, we will see casualties in the carrier side, and the competitive situation could be altered significantly," Wei said.
Cosco has taken steps to deal with the economic crisis by adopting a "cash is king" strategy that includes managing debt and holding down costs, Wei said. But he said a rebound in the market won't happen until U.S. consumer confidence returns.
He said the indicators he watches most closely are U.S. employment statistics, a key component of consumer confidence, and Chinese electricity consumption, a barometer of manufacturing activity in Cosco's home country.