China's Navigation Cost Increases Sharply for Iraq War

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Last updated at: (Beijing Time) Wednesday, March 26, 2003

China's Navigation Cost Increases Sharply for Iraq War

After the eruption of the war in Iraq, it has effected a great impact on China's navigation cost though for the moment not too great an influence on China's domestic shipping lines.

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After the eruption of the war in Iraq, it has effected a great impact on China's navigation cost though for the moment not too great an influence on China's domestic shipping lines.

Last week, China's Ministry of Communications released an urgent notice, requesting all Chinese ships to go away from the dangerous navigation lines. As the reporter learned on Mar.22, at present China has 18 container-vessels go to and fro along the shipping line from the Persian Gulf to the US while those Chinese ships anchored formerly at the Persian Gulf ports have to be moored at other ports.

Along the other shipping lines in the Middle East, the Chinese oil tankers for the import of crude oil from the Western Africa and the 10 container-ships every week to Europe by way of the Persian Gulf have now to go round the Red Sea.

However, the reporter learned on Saturday from the China Shipping Group, the war in Iraq has already effected certain influence on the Chinese container traffic. The shipping line of the CSG was just started at the beginning of last year with a voyage once a week to the United Arab Emirates. Though the war hasn't so far affected the shipping-liner yet the amount of goods reduced greatly since the signs to show the outbreak of the war.

Though for the moment there is no change for the shipment of goods, keeping on the voyage for once a week the company has already been on the alert, especially to make unimpeded the satellite communications. Should the war is going to spread out the shipping line has to be cancelled.

The COSCO, the largest of its kind in China said to the reporter that the company has already worked out a set of measures to cope with the changing situation. It has not only laid aside quite a number of orders from Iraq but also shortened the shipping line into the Persian Gulf. And now it has on an average one ship sailing into the Persian Gulf once a week.

As person of the trade estimated, when the war comes to an end it will see a great boom of container ships sailing into the Persian Gulf region. Because the after-war construction will make the Middle East to have a great increase of clothes, caps, shoes, metal goods and household electric appliances from China.

Mar 21 also saw UBS Warburg, an investment bank lowered the investment appraisal of some large-sized international shipping companies, and suggested that investors reduce the stocks of shipping companies. The reason is that the war in Iraq will slash the shipping business of the world and further affect the achievements of the shipping companies.

Experts hold that the shipping business is a business, suffering from the war next only to airlines. Before the outbreak of the war the price increase was about USD5 - 7 per barrel of oil, so the oil price for the shipping business wavered around USD30 per barrel, and in the cost of shipping business as a whole about one fourth depends on the oil price.

By People's Daily Online

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