CSCL implements cost control measures

FACED with rapidly increasing operating costs, China Shipping Container Lines (CSCL) has implemented a series of measures to control costs and increase income.

The company sees opportunities to further lower costs by setting up new global service centres, by building transshipment centres and by introducing fixed price fuel arrangements. It also hopes that higher utilisation levels will enable it to lower unit costs. The increase in operating costs is the result of the relatively large growth in the carrier's capacity and the development of new services.

China domestic and North America inland sub-routes expenses increased in the course last year, according to a corporate presentation accompanying its 2005 annual results.

Measures being taken to control cost and improve efficiency include the company locking in 270,000 tons of low-priced fuel so far this year at an average price of US$302.7 per metric ton. Last year it managed to lock in 170,000 tons of such fuel at an average price of $244.7 per metric ton.

On the basis of the 75,800 tons that have been consumed, CSCL estimates that it has already made a saving of US$1.78 million. Calculating on the basis of the current price of oil, the company expects to save US$10 million in the whole of this year through hedging on oil prices. It intends to go on paying attention to the fluctuation of oil prices and to lock in fuel in a timely manner.

The company says that it is seeking to refill fuel in a more rational fashion. Apart from controlling fuel stock levels, it will select refilling ports and suppliers that offer lower prices.

Other measures that will be taken to save money include controlling the speed of sailing, refining the management of port charges, container costs and the costs of inland shipment and transshipment. For example, to cut inland expenses in North America the company will seek to ensure that the proportion of total cargo that it ships inland does not exceed 40 per cent.

May, 2, 2006