Cosco to cancel or delay orders

China’s Cosco plans to cancel or postpone some of its vast portfolio of ship orders, scotching speculation that the state-controlled shipping line might be forced to increase its orderbook to support China’s shipyards.

The company, the world’s biggest operator of dry bulk ships, recently announced its plans alongside results showing pre-tax profits fell from Rmb26.1bn in 2007 to Rmb15.7bn ($2.3bn) in 2008 on revenue of Rmb131bn, up from Rmb112bn.

Many observers had expected Cosco to take on some of the orders for ships placed at Chinese shipyards likely to be cancelled as shipping markets suffer a severe downturn. Most analysts believe owners ordered far too many dry bulk and container ships during the boom that ended last year.

The 58 ships that Cosco has on order would expand its dry bulk capacity by more than a fifth. In container shipping, the company said it wanted to delay delivery of the largest three of the nine ships it is due to receive this year until 2010. The lack of specifics on the dry bulk cancellations prompted scepticism from some shipping observers about whether Cosco would eventually be allowed to tear up the contracts.