Early stage Development (1961 - 1977)
In the early years since the founding of the People’s Republic of China, under the direct care of Premier Zhou Enlai, China conducted shipping cooperation with Poland, Czechoslovakia and some other countries. Chinese-Polish Joint Stock Shipping Company (CHIPOLBROK) and Czechoslovakia International Ocean Shipping Company were founded in 1951 and 1959, respectively. This kind of cooperation helped train many professionals badly-needed for building China Ocean Shipping Company and its fleet.
In the mid 1950s, Chairman Mao Zedong put forward the idea of establishing and developing China’s ocean shipping fleet.
In 1958, the Ocean Shipping Bureau was founded under the Ministry of Transport with a branch office in Guangzhou. The process of establishing China Ocean Shipping Company and its fleet had accelerated.
In 1959, the Chinese government decided to rent ships to carry Chinese compatriots in Indonesia who wished to return to China. For this purpose, the Ocean Shipping Bureau and its Guangzhou Office first organized, commanded and dispatched a dozen ships at that time. It was a rehearsal prior to the establishment of China Ocean Shipping Company.
Meanwhile, Premier Zhou Enlai authorized the procurement of oceangoing ships from Greece with foreign exchange earnings which was quite few then.
On April 27, 1961, China Ocean Shipping Company was founded as the first international ocean shipping company of the PRC. COSCO Guangzhou Branch (hereinafter referred to as the Guangzhou Branch) was established on the same day. When COSCO was founded, Mr. Feng Yujiu, Director of the Ocean Shipping Bureau, concurrently served as its head. The company was located in the former building of the Ministry of Transport at Jiaodaokou, Beijing. The former site of its Guangzhou branch was No. 28 Zhujiang Road, Shamian, Guangzhou. Mr. Guo Yujun assumed the post of the first manager of Guangzhou Branch.
On the very next day after COSCO was founded, its first passenger liner “Guang Hua” set sail from Huangpu Port, Guangzhou to Jakarta, Indonesia, with the great trust from the whole Chinese nation. It not only signifies that the ocean shipping fleet of China with the national flag was born and reached out to the world, but also symbolizes that China’s ocean shipping industry which had declined in civil strife and foreign invasion embarked on the road of rejuvenation.
M.V. Guang Hua received much attention and care from Premier Zhou Enlai and other Party and state leaders who met with her crew on many occasions. In the early days of COSCO, state leaders such as Mr. Chen Yi and Mr. Ye Jianying boarded the ship to make an inspection.
In the founding year of COSCO, M.V. Guang Hua was introduced, alongside with M.V. Xin Hua, M.V. He Ping, and M.V. You Yi.
In December 1964, COSCO bought a cargo carrier called M.V. Li Ming by way of bank-financing. This was the first of its kind in China running S&P business in accordance with international practice. Since then, COSCO expanded its business by following the mode of “Buying Ships with Bank Loans and Returning Loans with Profits.”
On April 1, 1964, as COSCO’s second branch, COSCO Shanghai Branch (hereinafter referred to as the Shanghai Branch) was incorporated at No. 5 Zhongshan Dongyi Road, Shanghai (former site), with Song Tao serving as its first manager.
On June 12, 1964, M.V. He Ping 60 owned by the Shanghai Branch launched her maiden voyage from Shanghai to the Port of Nampo of the Democratic People’s Republic of Korea, receiving a warm welcome from the North Korean government and local people.
On June 18, 1964, with the great trust from her motherland and the goodwill of the Chinese people toward the Japanese people, M.V. Liao Yuan made her maiden voyage from the Port of Qingdao to the Ports of Moji, Tokyo and Kobe in Japan, and was kindly received by the Japanese people and Chinese expatriates there.
The opening of China-DPRK and China-Japan shipping routes deepened the friendship between the Chinese people and the people in North Korea and Japan, and enhanced their economic and cultural exchanges.
In May 1967, M.V. Dun Huang owned by the Guangzhou Branch set out from the Port of Huangpu on its maiden voyage to Western Europe, making the beginning of the first international liner service in China.
On April 15, 1968, M.V. Li Ming headed northward from the Port of Zhanjiang and opened up the first south-north route. After the successful trial voyage, M.V. Jiu Jiang owned by the Guangzhou Branch made the second trial trip. In December 1969, with the approval from Premier Zhou Enlai, this sea route which links the south and north parts of the country was formally opened.
On October 1, 1970, COSCO Tianjin Branch (hereinafter referred to as the Tianjin Branch) was founded and led by Zhou Ji. During the early days after its foundation, the Tianjin Branch mainly ran shipping routes from Tianjin to Europe and Japan. With an increase in fleet scale and ship type, it started to engage in liner transport and expanded its coverage from Europe, Japan to East Africa, the Red Sea coast, North America, the Persian Gulf, the Bay of Bengal, Southeast Asia, and Australia.
In September 1972, the Ministry of Transport issued the Notice on the Reestablishment of China Ocean Shipping Group to guide the reestablishment of China Ocean Shipping Group (hereinafter referred to as COSCO).
In 1975, COSCO’s fleet capacity in terms of DWT surpassed “FIVE MILLIONS”, indicating an average annual increase of one million DWT. The fact immediately attracted the attention from the international shipping community.
On July 1, 1976, COSCO founded another branch dedicated to bulk cargo transportation – COSCO Qingdao Branch (hereinafter referred to as the Qingdao Branch), with Chen Huaming acting as its first manager.
Along with the rapid growth of its fleets, COSCO’s international shipping services had been broadened. From 1971 to 1978, it had opened more sea routes from China to many other countries and regions around the world based on its precious services. The new destinations included Mauritania, Sierra Leone, Chile, Bahrain, the Philippines, Equatorial Guinea, Tunisia, Madagascar, Malta, Malaysia, the United Arab Emirates, Iran, Zaire, Mexico, Spain, Peru, Benin, Qatar, Saudi Arabia, Denmark, Cuba, Panama, Jamaica, Argentina, Mozambique, Cameroon, Guinea-Bissau, Gabon, Iceland, Thailand, Papua New Guinea, New Zealand, Nicaragua, Cyprus, Cape Verde, Togo, Sao Tome and Principe, Guyana, Guatemala, Seychelles, Brazil, Ecuador and Sweden.
Transformation (1978 - 2004)
After the Third Plenary Session of the 11th CPC Central Committee, China adopted the reform and opening-up policy, injecting vitality into COSCO which had gradually globalized and modernized its operation and management.
On September 26, 1978, M.V. Ping Xiang Cheng sailed from Shanghai with 162 TEU, heralding the start of China’s container ocean shipping business. On October 25 of that year, M.V. Xiong Yue Cheng set out from the Port of Shanghai to Australia, providing monthly liner service with a single-vessel round-trip time of 60 days. It marks that international container liner business came into operation in China. On April 18, 1979, M.V. Liu Lin Hai arrived at the Port of Seattle. This is the first Chinese ship with a national flag ever arrived in a US port. It symbolizes that the ice in China-U.S. relations over the past three decades began to thaw. On June 25, 1979, COSCO signed a crew labor cooperation agreement with Iino Kaiun Kaisha Ltd. (IINO Lines) in Beijing. For the first time ever, a 29-member crew team including First Mate and Second Engineer was dispatched to a 60,000-ton tanker owned by IINO Lines. This was the first international manning cooperation ever happened in China.
On May 1, 1979, approved by the Ministry of Transport, COSCO’s branches were renamed the ocean shipping company of the local area. For example, the Guangzhou Branch was renamed Guangzhou Ocean Shipping Company (hereinafter referred to as COSCO Guangzhou).
On January 1, 1980, COSCO founded its fifth subsidiary Dalian Ocean Shipping Company (hereinafter referred to as COSCO Dalian). The first manager was Fang Zhenliu, captain of M.V. Hai Liao from the China Merchants Group formerly controlled by the KMT. Under his leadership, the crew first upheld the banner of righteousness and returned to the embrace of the People’s Republic of China. By that time, COSCO had developed five powerful forces engaging in ocean shipping.
In the 1980s, COSCO reconsidered and repositioned its corporate functions and development concept. Instead of continuing with the traditional practice of “large and all-inclusive/small and all-inclusive” and blind pursuit of regional expansion, it redefined the market positioning of its five affiliates in Guangzhou, Shanghai, Qingdao, Tianjin and Dalian. In light of their fleet characteristics, previous business scope and traditional services, COSCO Qingdao and COSCO Dalian were positioned as specialized companies that mainly operate bulk and tanker fleets for transporting petroleum, food, ore sand, fertilizer, steel, etc.; while COSCO Guangzhou, COSCO Shanghai and COSCO Tianjin were positioned as comprehensive companies which own various types of ships and operate by route and port based on their fleet characteristics and geographic positions.
After the reform and opening-up policy was adopted, COSCO dispatched shipping representatives to Japan, Singapore, Hong Kong, Pakistan, Australia, Egypt, France, Italy, Romania, Belgium, Germany, the UK, the Soviet Union, DPRK, Canada, Panama, New Zealand, Thailand, etc. In 1980, COSCO and Holland Parker Boat Group established Holland Transocean Company, an agent service provider, in Rotterdam. This was the first overseas joint venture created by COSCO. On November 29, 1988, COSCO purchased the shares of Zhonghao Shipping Agency Co., Ltd. held by its UK partner and made it a wholly-owned subsidiary in the UK. With the approval from the Ministry of Transport, the company was renamed COSCO (UK) Ltd. on August 18, 1989. As the first overseas company wholly owned by COSCO, it marks the beginning of COSCO’s transnational business operations in the international arena. In the wake of that, COSCO Europe and COSCO Hamburg Technical Service Center were set up. There were 22 JVs distributing in Norway, the Netherlands, Belgium, West Germany, Australia, the US, Kenya, Thailand, Japan, Hong Kong, and other places. Therefore, an overseas shipping network was created with Beijing as its center, domestic market as its basis, and five regions including Europe, North America, Japan, Southeast Asia and Hong Kong as its operation areas.
On February 16, 1993, China Ocean Shipping Company (the core enterprise), PENAVICO, China Automobile Transportation Company and China Ship Fuel Supply Company co-founded China Ocean Shipping (Group) Company (hereinafter referred to as COSCO Group or COSCO). The new group defined a diversified development strategy covering maritime, land and air transportation. After rapid expansion in a few years, it developed into a shipping-based enterprise pursuing diversified development in a dozen industries including ocean shipping, ship and freight forwarding, offshore fuel supply, ship repair, labor output, real estate, import and export trade, tourism, and finance. To survive in an increasingly competitive international shipping market, COSCO Group made multiple sweeping reforms in the shipping system, particularly in fleet operation and management. Moreover, it successively established shipping companies specializing in container transportation, bulk cargo transportation and general cargo transportation, and onshore companies engaging in international freight, industry and trade, in addition to a batch of regional companies abroad.
In light of the shift from specialization to intensive operation and management in the shipping world, COSCO launched the second wave of reform in its fleet system and set up professional fleets. On January 1, 1994, COSCO Container Operation Headquarters was set up to conduct “centralized operation and decentralized management” of the container fleets of COSCO Guangzhou, COSCO Shanghai and COSCO Tianjin. At the end of 1995, COSCO Bulk Carrier Co., Ltd. was founded to conduct centralized operation and management of the bulk fleets of COSCO Guangzhou and COSCO Tianjin. As a result of the reform, COSCO Guangzhou became a specialized company operating general and special cargo ships, while COSCO Dalian turned to a specialized tanker company. This reform, which involved 470 ships and over 50,000 employees, fundamentally changed COSCO’s fleet operation structure and paved the way for its global expansion.
On October 5, 1993, COSCO Corporation (Singapore) Ltd. listed on the Singapore Stock Exchange. It was COSCO’s first overseas-listed company, and also the first Chinese SOE listed in the foreign capital market. In the years that followed, COSCO Pacific, COSCO International successively went public in Hong Kong.
From 1999 to 2004, following the international shipping trend and China’s strategy for promoting enterprises to “go global”, COSCO Group proposed “two shifts” - “shift from a global shipping operator to a shipping-based logistics operator, and shift from transnational operations to a multinational corporation.”According to this strategy, it adjusted the shipping structure, expanded the fleet size and maintained it in a reasonable range, improved fleet profitability and cemented the shipping industry. It also integrated shipping-related industries and vigorously developed modern logistics while optimizing onshore industries. Therefore, it created an industrial development pattern featuring “one core industry, two key industries, and five pillar industries” and enabled “moderately correlative diversified operation” of three key segments, namely, shipping, logistics, and ship building and repair. In addition, it made great endeavors to build a “capitalized COSCO” underpinned by diversified business segments and information technology. It also integrated and optimized overseas resources, established nine regional companies, and practiced the model of “professional operation and regional management.”
In 2002, COSCO Logistics Co., Ltd. was founded in Beijing. It was a key step in the shift from a global carrier to a shipping-based global logistics operator. While comprehensively advancing the modern enterprise system, COSCO gave a big boost to the shareholding reform. 130 million A shares of COSCO Shipping (SSE: 600428) were traded on the stock market. It marks that COSCO’s shipping business which enjoyed reputation both at home and abroad officially entered China’s capital market.
In 2003, SASAC defined COSCO’s three major segments – shipping, logistics and ship building/repair.
In 2004, COSCO over-fulfilled the 2004 performance evaluation targets set by SASAC. With a fleet capacity of over 35 million DWT, COSCO became China’s largest and the world’s second biggest shipping enterprise. Its total profits exceeded RMB 12 billion, thus becoming one of the major profit contributors among central SOEs. In that year, COSCO’s revenue first surged past the 10 billion mark since its foundation.
Global Development (2005 - 2015)
At a COSCO work meeting in early 2005, the goal of “creating an annual revenue of RMB 10 billion and building a century-old brand” was brought forward, which signifies that COSCO had stepped into a new stage of globalization. During this period, COSCO’s fleet size experienced a drastic rise from 615 ships (owned and controlled by COSCO) and 35 million DWT in 2005 to nearly 800 ships (owned and controlled by COSCO) and over 57 million DWT. Of the 800 ships, 481 were owned by COSCO with a capacity of 30.069 million DWT, accounting for 52.1% of the total; and 316 were rent, accounting for 47.9% of the total. COSCO had been the world’s second largest shipping company for many years. Additionally, the Group’s production size reached a higher level. Its seaborne volume surpassed 300 million tons in 2015, broke the record of 400 million tons in 2007, and reached another record high of 436 million tons in 2010. Moreover, its asset size also witnessed a significant increase of 130.67% from RMB 135.452 billion in year-end 2000 to RMB 312.443 in late 2010. What’s more, its economic benefit was on the rise. Since the RMB 10 billion mark was first exceeded in 2004, COSCO had maintained its revenue above this level for five consecutive years. In July 2007, COSCO was for the first time listed in Fortune Global 500 and ranked No. 488. In 2008 and 2009, it reappeared on the list and ranked No. 405 and No. 327 with revenue of USD 20.84 billion and USD 27.4303 billion, respectively.
In March 2005, China Ocean Shipping Tally Company joined COSCO as a wholly-owned subsidiary. In late 2005, COSCO was officially assigned with a 99.375% stake of Hainan COSCO Development Boao Development Co., Ltd. from COSCO Development. Consequently, it changed its name into Hainan COSCO Boao Co., Ltd. and became a secondary unit directly subordinate to COSCO. As a quality conference services provider for the annual Boao Forum for Asia, Hainan COSCO Boao Co., Ltd. functioned as a window for displaying COSCO’s brand image. On December 16, 2010, COSCO sold its stake in Sino-Ocean Land at a premium and withdrew from the real estate business.
In the new phase for globalization, COSCO quickened its pace of “going global” based on its global framework with Beijing in the center and spreading over nine regional companies in Hong Kong, the Americas, Europe, Singapore, Japan, Australia, South Korea, West Asia and Africa. In November 2008, COSCO successfully obtained the concession to operate the terminal business at the Port of Piraeus in Greece for 35 years, and took over its Terminals No. 2 and No. 3 on June 1, 2010. COSCO Taiwan Representative Office was set up in October 2010. Currently, COSCO’s assets and income in foreign countries take up nearly half of their totals, and the major international operation indicators approach the UN criteria on “Top 100 MNCs Worldwide.”
COSCO has actively facilitated the exchanges and cooperation in the international shipping field. From 2004, it has led Drewry Shipping- a world-renowned shipping consultancy- and mainstream shipping media outlets both at home and abroad to host the World Shipping (China) Summit. Due to its growing influence, this summit has become a premier annual event in the shipping world.
COSCO aims to be a capitalized group driven by two wheels, i.e., production and capital management. On June 30, 2005, the shares of China COSCO Holdings Company Limited (China COSCO: 1919 HK) began trading on the main board of the Hong Kong Stock Exchange. On June 26, 2007, China COSCO launched an A-share IPO at the Shanghai Stock Exchange. On December 26 that year, it injected its bulk cargo assets into China COSCO and became the integrated shipping company with the maximum market value in the world. On May 30, 2011, China COSCO ranked 450th on the FT Global 500 List organized by Financial Times of Britain. It was the third straight year that the company had been listed since 2008.