Chinese shipping companies don’t want Brazilian company Vale SA to expand its own iron ore fleet. Vale has plans to spend $2.3 billion on building the largest iron ore carriers in the world that will help them haul steel making materials to China.
The China Ship Owners Association is however against this and is lobbying the Chinese government to stop Vale from building its own ships. The executive vice chairman of the association, Zhang Shouguo said Vale is seeking to control the freight market as it has done with iron ore prices. He added let the shipping industry do the transport thing.
Zhang is against the 19 ships of 400,000 ton that Vale wants to build not to mention the 16 others that it will control under long term contracts. Zhang Shouguo was a former deputy director of the water transport division of China’s Ministry of Transport.
He said that many shipping companies may incur losses because of the monopoly on the route. He added that they had made it clear to the government that we object to the major cargo owners building their own fleets.
Another point of contention is that Chinese regulators haven’t approved any of its ports to increase accommodation capability to more than 300,000 dead- weight tons for dry bulk carriers because of safety and environmental concerns. Chinese ports of Dalian, Dongjiakou and Majishan have the capacity to receive the carriers that are able to haul 400,000 ton cargoes, Vale Chief Executive Officer Murilo Ferreira said.