Bloomberg News

Baltic Exchange Is Taking No Action Against China Cosco

September 12, 2011

(Updates with exchange chief executive’s comments starting in second paragraph.)

Sept. 12 (Bloomberg) -- The Baltic Exchange, the world’s biggest shipping bourse, is taking no action against China Cosco Holdings Co. after the shipowner resumed charter payments for vessels it hired.

An exchange committee held a “round-table discussion” on Sept. 7 at a regularly scheduled meeting regarding concerns raised by “key shipowners” about Cosco, Jeremy Penn, the bourse’s chief executive officer, said by phone today. Cosco, the Chinese government-controlled owner of the world’s third- largest dry-bulk fleet, had three vessels arrested in July and August as owners sought late charter payments, court documents showed.

“It appeared that Cosco was making the appropriate payments and there was no need to take further action at the moment,” Penn said. The exchange has the power to suspend companies’ membership, depriving them of its freight-rate assessments.

Cosco said Aug. 26 it reached agreements covering 18 different ships, without providing further details. DryShips Inc. and Jinhui Shipping & Transportation Ltd. were among owners that said the Tianjin, China-based company repaid money owed.

The dry-bulk unit of Cosco is one of the exchange’s 593 global members, according to a list from the bourse.

The last company to be suspended by the exchange was Perth- based Fortescue Metals Group in 2009.

Cosco was operating 201 chartered commodity ships as of June 30, according to a first-half earnings statement released Aug. 25. That’s 21 fewer than at the end of last year. The shipping line was also operating 234 self-owned dry-bulk vessels at the end of June, along with 153 container vessels.

--Editors: Dan Weeks, John Deane.

To contact the reporter on this story: Michelle Wiese Bockmann in London at mwiesebockma@bloomberg.net

To contact the editor responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net


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