In recent years, the performance of China's state-owned shipping enterprises has raised concerns, as they face multiple challenges including delisting, restructuring, and mergers. However, these measures appear to have failed to bring substantial improvement. While mergers among state-owned enterprises (SOEs) continue, they raise a fundamental question: What is the strategic intent behind these consolidations? The inefficiencies often resulting from mergers, coupled with operational磨合 in container liner services, may leave these companies struggling to maintain competitive advantages.
During the planned economy era, the role of shipping SOEs was relatively clear-cut: their mission was to efficiently fulfill national transportation tasks. COSCO focused on import-export shipping, China Shipping specialized in coastal transport, while the Changjiang River Administration concentrated on Yangtze River shipping. During this period, SOEs aimed to complete state-assigned tasks with low costs and quality service. With economic reforms, shipping SOEs were introduced to market economics—a transition that coincided with an upward cycle in the shipping market. Despite the Asian financial crisis, the overall shipping industry developed rapidly, generating substantial profits for these SOEs.
However, treating this favorable market environment as normal led to disastrous consequences when the market eventually declined. Established shipping family businesses have survived market volatility by drawing on generational experience to quickly and decisively downsize and adjust assets. In contrast, shipping SOEs suffer from limited leadership tenures that foster short-term thinking. In the highly cyclical shipping industry, focusing only on immediate returns during one's tenure leaves SOEs' futures dependent on luck.
During market downturns, savvy shipowners restructure their fleets, but shipping SOEs face bureaucratic hurdles that prevent agile adaptation. For example, one European shipowner sold all vessels before a market slump and maintained high bank ratings, while a Chinese state bank deemed a vessel-less enterprise unrateable. This demonstrates how systemic constraints prevent Chinese shipping SOEs from responding flexibly to market changes. Their operations face restrictions—even basic hedging through derivatives requires layers of approvals.
Additional constraints in vessel registration, human resources, and financing methods further limit SOEs' ability to maximize profits like conventional companies. Under these circumstances, neither leadership changes nor mergers can resolve their fundamental challenges. Some might ask why other Chinese SOEs perform better—the answer lies in their monopolistic positions in sectors like telecommunications and oil. Shipping SOEs, however, must compete directly with private enterprises, particularly against port SOEs that enjoy superior advantages and consistently better performance.
Recently, shipping SOEs have attempted revitalization under the "National Cargo on National Ships" policy. However, without clear pricing mechanisms, this approach may prove ineffective. Implementing it under market principles could erode SOEs' profitability, while planned economy execution might simply transfer losses through state protection when costs exceed market levels—highlighting shipping SOEs' existential dilemma in a market economy.
While China maintains effective coastal shipping controls, SOEs face international market restrictions that hinder adaptation to global competition. This means all Chinese participants in international shipping must compete with global giants under pure market rules.
Unless shipping SOEs fundamentally transform into market-driven enterprises, they cannot survive in international shipping. China must redefine its national fleet's purpose—ensuring strategic material transport at minimal operating costs and maximum efficiency to generate reasonable income.
While safeguarding strategic transport needs, shipping SOEs should gradually withdraw from non-strategic sectors, ceasing to leverage state privileges against private competitors. Their income should derive from fair state management fees, with vessel downtime allocated to commercial leasing—transforming SOEs into neutral management intermediaries.
In summary, China's shipping SOEs must clarify their positioning and strategy during transformation, adapting to market changes to ensure survival and development in global shipping competition.
