27
Annual Report 2014
DRY BULK SHIPPING
AND OTHERS
Operations and Financial Review
Over the year in review, we secured repeat orders for 8
platformsupply vessels. This comes on the back of orders
for 10 similar vessels secured a year before. Likewise,
following the successful delivery of two livestock carriers
in 2013, and another two in 2014, COSCO secured an
order valued at about US$57 million from a European
buyer to build two more livestock carriers scheduled for
delivery in the second half of 2015.
Dry Bulk Shipping and Others
COSCO has an established presence in the dry bulk
shipping business. Currently comprising a fleet of 10 dry
bulk carriers with a total carrying capacity of 550,900
DWT, our ships ply global trading routes, transporting
cargo such as iron ore, coal, steel, cement and fertiliser
to major ports worldwide. These dry bulk carriers are
chartered out to other ship owners and operators, and
serve our large client base of shipping companies from
Germany, Norway, Denmark, Greece, Switzerland, UK,
USA and others.
The Baltic Dry Index (BDI), a key measure of shipping
costs for commodities, averaged 1,105 points over the
year in review, a decrease of 8.4%, year-on-year. The
Baltic Exchange Handysize Index (BHSI) averaged 524
points, a decrease of 6.8% over the year. Meanwhile,
the Baltic Exchange Supramax Index (BSI) averaged
939 points, which was a 4.5% decrease compared
with 2013. Currently, the Group’s dry bulk shipping fleet
comprises Panamax and Handymax carriers.
Over the year under review, our dry bulk shipping and
other businesses decreased marginally by 5.6% in
turnover from $55.6 million in 2013 to S$52.5 million in
2014. This was due to lower short-term charter rates
compared to the prior year. As a percentage of Group
turnover, this segment comprised 1.2%.
We remain aware of the persistent global glut in the
dry bulk carrier fleet, and note that any rebound in the
BDI may be short-lived or subdued as expansion in the
global bulk carrier fleet continues to outpace demand.
This surplus fleet capacity may impact our dry bulk
shipping business as well as our bulk carrier shipbuilding
operations. Against this challenging environment and
lacklustre global economic conditions, we maintain a
cautious outlook. Going forward, we will have to remain
agile and leverage on our strengths and competitive
advantages.
