China’s shipping giants are bracing for a harsh new reality of persistent global volatility, as the closure of the Strait of Hormuz shifts from being a problem of transit delays to a hard volume shock.
With the crucial energy corridor still paralysed as the US-Israel war on Iran drags on with no clear end in sight, China’s state-backed shipping majors are doubling down on long-term contracts and creating new multimodal routes in an attempt to hedge against future shocks.
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Cosco Shipping Holdings, the Shanghai and Hong Kong-listed container giant, noted in its first-quarter earnings report that it was optimising global networks and accelerating digital integration to maintain service stability amid the ongoing crisis.
The company currently bypasses the chokepoint using longer routes that require the use of several vessels or multiple modes of transport.
In a briefing with investors early last month, the firm’s general manager, Tao Weidong, played down the financial blow dealt by the war, noting that Middle East routes account for a relatively small portion of Cosco Shipping Holdings’ total revenue.
“The company is not currently considering resuming passage through the Strait of Hormuz,” Tao said, adding they remained on high alert.
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