Cosco Bags USD 638mln Subsidy to Modernize Fleet

China COSCO Holdings Company Limited has won a government subsidy worth approximately RMB 3.963 billion (USD 638.7 million) through China Ocean Shipping, the controlling shareholder of the company, for the decommissioning and upgrading of vessels.

“The subsidy was recognized as non-operating income and will be included in the profit and loss of the company for the year ending 31 December 2015 to compensate the losses suffered by the company due to the advanced disassembling of the vessels,” Cosco said in a stock exchange filing.

The shipping company was very active in decommissioning of its older tonnage over the past two years.

In 2014, the company offloaded a total of 56 bulk carriers and container ships at 3.1 million dwt for scrapping, which resulted in government subsidies of RMB 1.4 billion.

The scrapping spree resumed this year as well, with over 40 vessels dismantled, including 17 in January and 8 in February.

The shipping company said it would have made a loss of RMB 1.38 billion in 2014 if it had not been provided with state subsidies and money raised from a share sale.

In line with the government support of fleet modernization efforts, China COSCO placed orders for a total of 117,960 teu of new tonnage.

World Maritime News Staff