Net profit plummeted 37% last year, far exceeding revenue decline! "King of Cycles" COSCO Shipping Holdings faces earnings pressure, yet still splurges 18.7 billion on shipbuilding

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On the evening of March 19, “The King of Cycles” COSCO SHIPPING Holdings (601919.SH/01919.HK) released its 2025 annual report. The annual report shows that last year, the company achieved revenue of 219.504 billion yuan, down 6.14% year-on-year; however, the company’s net profit attributable to shareholders dropped even more, decreasing by 37.13% to 30.868 billion yuan.

Despite the decline in performance, COSCO SHIPPING Holdings continued its tradition of high dividends. At the end of 2025, the company plans to distribute a cash dividend of RMB 0.44 per share (tax included) to all shareholders, totaling approximately RMB 6.738 billion (tax included). Including the interim dividend, the total cash dividends for 2025 are about RMB 15.412 billion.

After the annual report was disclosed, on March 20, COSCO SHIPPING Holdings’ stock price declined. By midday, its A-share price was 15.82 yuan per share, down 1%; its Hong Kong stock price also fell more than 2%.

Market freight rates declined in 2025, and gross profit margins in main businesses decreased

COSCO SHIPPING Holdings mainly operates container shipping and terminal businesses. Its performance in 2025 is directly related to the global container shipping market environment.

In 2025, demand for transportation in the container shipping market grew by 4%, but due to the supply capacity expanding faster than demand, market freight rates significantly declined compared to 2024. The Shanghai Export Container Freight Index (SCFI) and China Export Container Freight Index (CCFI) both averaged down by 37% and 23%, respectively, year-on-year.

By the end of 2025, COSCO SHIPPING Holdings’ self-operated container fleet reached 3.6 million TEUs, with the combined capacity of owned and leased ships accounting for 75%, maintaining its position in the top tier of the industry. However, due to sharp declines in freight rates and increased cost pressures, profitability for major container shipping companies was worse than in 2024, and COSCO SHIPPING Holdings was no exception.

In container shipping, in 2025, COSCO SHIPPING Holdings achieved revenue of RMB 210.731 billion, down 6.74% year-on-year; however, operating costs increased by 6.16% to RMB 169.768 billion, and gross profit margin decreased by 9.79 percentage points to 19.44%. Regionally, the largest declines in container shipping were in the Americas and Europe, with decreases of 16.04% and 15.33%, respectively.

In terms of terminal operations, COSCO SHIPPING Holdings mainly engages through COSCO Shipping Ports in loading and unloading of containers and bulk cargo. By the end of 2025, COSCO Shipping Ports operated and managed 387 berths across 40 ports worldwide, including 238 container berths, with an annual handling capacity of about 133 million TEUs.

However, compared to overall revenue, terminal business still accounts for a small proportion. Last year, this segment generated RMB 12.041 billion in revenue, an increase of 11.39% year-on-year, accounting for about 5% of total revenue; its gross profit margin also declined, down 2.77 percentage points to 25.91%.

Geopolitical conflicts add uncertainty; the company continues to invest heavily in shipbuilding

Looking ahead to 2026, COSCO SHIPPING Holdings mentioned in its annual report that geopolitical tensions persist, regional fragmentation continues, trade protectionism spreads, policy risks remain stubborn, and global economic growth momentum remains weak, making the external industry environment still severe.

Since late February, tensions in the Middle East have continued, with the March futures contracts for the European route index reaching a new high in over a year at 2,250 points, an increase of over 70%. As of the time of writing, the European route index futures have risen over 60% year-to-date.

Wang Xiang, General Manager of Veson Nautical Greater China, told Times Finance that the impact of the Middle East situation on the container shipping market is not just about freight rates rising; the key issue is that the entire transportation chain has become less certain.

“Currently, Middle Eastern routes are not completely blocked, but they are in a special state. Some shipping companies are restricting bookings and adding surcharges, and some cargoes are rerouted through other ports or connected via transshipment and land transport. The direct market impact is that goods can still be shipped, but routes are longer, costs are higher, and transit times are less stable,” Wang Xiang explained.

COSCO SHIPPING Holdings stated in its annual report that the tense situation in the Middle East has reduced the likelihood of full resumption of Red Sea shipping within the year, and the pace and strategy of returning ships to the Red Sea will be key factors in this year’s market.

Regarding the ongoing impact of Middle East tensions on the container shipping market, Wang Xiang believes this influence will persist in the short term, as geopolitical risks tend to have a delayed impact on shipping. However, he remains cautious about future freight rate trends.

“Short-term, the uncertainty caused by Middle East tensions will support freight rates; but in the medium term, the market will ultimately return to supply and demand fundamentals. Considering that recent years have seen high container ship delivery volumes, the additional capacity coming online in the next few years will accelerate, and freight rates may not continue to rise unilaterally. Instead, they will likely be highly volatile, with upward potential constrained by supply pressures,” Wang Xiang further noted.

Affected by this macro environment, according to third-party research institutions, the container shipping market demand growth in 2026 is forecasted at 2.5%, representing moderate to low growth. Although supply growth still exceeds demand, putting some downward pressure on freight rates, COSCO SHIPPING Holdings believes there are still certain structural opportunities in the market.

“On the demand side, China’s export diversification continues to strengthen, internal and external vitality in Southeast Asia accelerates, and nearshore free trade benefits in South America support growth. On the supply side, route network adjustments may lead to port congestion, combined with new ship deliveries reaching recent lows, which will help balance overall market supply and demand,” the company stated in its annual report.

In the face of a challenging market environment, COSCO SHIPPING Holdings continues to invest in the future. This year, it announced an investment of over RMB 18 billion in shipbuilding.

On January 13, COSCO SHIPPING Holdings announced two shipbuilding orders: 12 units of 18,000 TEU container ships and 6 units of 3,000 TEU container ships, with total transaction prices of RMB 16.788 billion and RMB 1.98 billion, respectively, totaling RMB 18.768 billion. As of the end of 2025, the company had 54 new ship orders, with a total capacity of over 820,000 TEUs.

COSCO SHIPPING Holdings stated that these new ships will be deployed on east-west main routes and international regional lines, aiming to strengthen its core competitiveness in the traditional trunk market and create favorable conditions for long-term development in emerging, regional, and third-country markets.