COSCO SHIPPING Energy Transportation, the tanker and gas shipping arm of COSCO SHIPPING Group, reported net profit attributable to shareholders of RMB7.389 billion (approximately US$1.10 billion) for the first nine months of 2026, up 171.90% year on year, as stronger international tanker earnings outweighed lower cargo volumes. The results show how recovering cargo flows, geopolitical risk premiums and slower vessel turnaround can lift tanker profitability, while generating cash to support fleet renewal.

Nine-Month Profits Exceed the Previous Full Year

The company generated revenue of RMB25.243 billion (US$3.76 billion) in January–September, an increase of 47.03%. Its nine-month attributable profit substantially exceeded the RMB4.037 billion (US$601 million) earned during the whole of 2025. Momentum strengthened in the third quarter, when revenue rose 82.89% to RMB10.097 billion (US$1.50 billion), while attributable profit reached RMB2.844 billion (US$424 million), up 235.04% year on year and 19.9% from the second quarter.

Recurring earnings accounted for almost all reported profit. Attributable profit excluding non-recurring items reached RMB7.272 billion (US$1.08 billion) in the first nine months, up 192.81% and equivalent to approximately 98.4% of attributable net profit. The third-quarter figure was RMB2.823 billion (US$420 million), an increase of 297.51%. COSCO SHIPPING Energy attributed the growth in revenue, earnings and operating cash flow primarily to stronger conditions in the international tanker market.

International Tanker Earnings Outweigh Lower Volumes

The clearest feature of the results is the divergence between transport activity and financial performance. Deployed tanker capacity, measured in deadweight tonne-days, fell 14.3%, cargo volumes declined 10.2%, and transport work in tonne-miles dropped 14.9%. Tanker revenue nevertheless rose 51.5% to RMB22.324 billion (US$3.33 billion), while operating costs increased by 10.5% to RMB13.185 billion (US$1.96 billion). Tanker gross profit reached RMB9.139 billion (US$1.36 billion), of which international operations contributed RMB8.083 billion (US$1.20 billion), or approximately 88.4%.

The international crude tanker business illustrates the scale of the improvement. Cargo volumes fell 17.00%, but revenue increased 97.07% to RMB14.901 billion (US$2.22 billion). Its gross margin rose by 31.06 percentage points to 44.02%. Across the wider international tanker division, revenue increased 73.10% to RMB18.389 billion (US$2.74 billion), with the gross margin reaching 43.96%, up 27.17 percentage points.

These figures demonstrate the earnings sensitivity of a large tanker fleet to freight market conditions. Cargo volume is one part of the revenue equation; route deployment, operating time and the rates attached to those voyages also matter. When available vessels command substantially higher freight earnings, a smaller volume of cargo can generate more revenue and profit. COSCO SHIPPING Energy’s results provide a clear example of that relationship.

Cargo Recovery and Slower Turnarounds Lift Rates

The company’s quarterly report describes distinct phases in this year’s tanker market. In the first quarter, resilient demand and tight availability of compliant tonnage supported high VLCC earnings. In the second, conflict in the Middle East severely restricted navigation and oil shipments through the Strait of Hormuz. Exports from the Red Sea and Atlantic regions partly filled the gap and lengthened some voyages, but the loss of core Middle Eastern cargo volumes still weighed on freight rates. By the third quarter, shipments through Hormuz were gradually recovering, while strong refining margins encouraged oil traders to rebuild stocks and arrange transport.

That recovery occurred alongside a less efficient shipping system. More diversions and ship-to-ship transfers increased the vessel time required to move cargo. Waiting, additional handling and coordination between ships extended voyage cycles and reduced the number of vessels available for their next employment. In the company’s assessment, recovering demand, continuing geopolitical risk premiums and persistent losses in logistical efficiency combined to lift VLCC rates. The implication for market analysis is that oil export volumes and vessel turnaround times need to be considered together.

The market benchmarks cited in the report show the magnitude of the rate increases. Average time-charter equivalent earnings on the West Africa–China TD15 route reached approximately US$153,000 per day in the first nine months, up about 250% year on year. The US Gulf–China TD22 route averaged approximately US$138,000 per day, an increase of 224%. In the third quarter, the Oman–China TD34 route averaged around US$320,000 per day. During September, that benchmark climbed from approximately US$200,000 per day to above US$800,000 per day, reflecting the speed at which freight rates can rise when available tonnage becomes scarce.

New Orders Rise as the Existing Fleet Ages

Higher earnings are encouraging investment in new ships, and future supply is building. Citing Clarksons data, COSCO SHIPPING Energy’s investor presentation put the global VLCC fleet at 936 vessels, with 306 on order, equivalent to approximately 33% of the existing fleet. Delivery timing is important: 230 of those orders are scheduled for 2028 or later, concentrating most of the additional capacity in subsequent years.

The existing fleet also faces substantial ageing. The presentation identified 417 VLCCs aged more than 15 years, approximately 45% of the fleet, including 188 vessels over 20 years old, or around 20%. It projected that the number exceeding 20 years of age would reach 437 by 2030, compared with 306 vessels in the current orderbook scheduled for delivery by then. The company uses this comparison to highlight the scale of potential replacement demand.

Ageing creates pressure for renewal, while actual retirement dates remain dependent on freight earnings, vessel condition, survey and repair costs, and charterer requirements. Strong returns may keep some older ships trading for longer, while concentrated newbuilding deliveries could intensify competition later. Assessing the duration of the current market strength therefore requires attention to deliveries, vessel exits and transport efficiency. COSCO SHIPPING Energy also identifies potential inventory replenishment as a demand catalyst, arguing that greater emphasis on energy security could extend the restocking cycle.

Fleet Renewal Combines Market Exposure with Longer Contracts

At the end of September, COSCO SHIPPING Energy owned and controlled 151 tankers with approximately 22.23 million dwt of capacity, including 49 VLCCs: 41 owned and eight chartered in. It also had 37 tankers under construction. Its fleet spans crude and product trades across several vessel sizes, allowing deployment across different regions and between domestic and international markets. As Xinde Marine News noted in its coverage of the company’s 2025 results, eastbound routes from West Africa accounted for 23% of the VLCC fleet’s operating days that year, while eastbound routes from Brazil and North America accounted for a combined 25%.

Renewal continued alongside stronger earnings. During the first nine months, the company signed orders for two Aframaxes, two LR2s, four Panamaxes and 14 MR tankers, a total of 22 vessels. It sold one 20-year-old VLCC, seven MRs and two small product tankers, while taking delivery of two Panamaxes and one MR. The combination of new orders, deliveries and disposals is reshaping the fleet’s age and vessel mix.

Domestic tanker and LNG operations continued to provide relatively stable earnings alongside the international tanker upswing. Domestic oil transport generated gross profit of RMB1.056 billion (US$157 million), while LNG shipping contributed attributable net profit of RMB670 million (US$99.8 million), broadly unchanged year on year. The company’s subsidiary and joint-venture platforms operated 70 LNG carriers at the end of September, with another 27 under construction. Most LNG vessels are tied to long-term charter projects, providing a different earnings profile from spot tanker employment.

One example is the four-ship LNG project disclosed in June. Through its LNG investment platform and wholly owned project companies, COSCO SHIPPING Energy arranged the construction of four 175,000-cbm LNG carriers at Jiangnan Shipyard for a total investment of RMB6.445 billion (US$960 million). Delivery is scheduled for 2029–2030, with the vessels to be time-chartered to a Shell subsidiary. Linking vessel investment with charter arrangements provides a contractual foundation for their future employment.

Cash Generation Supports a Larger Investment Programme

The earnings improvement was accompanied by stronger cash generation. Net operating cash flow reached RMB10.368 billion (US$1.54 billion) in the first nine months, up 114.96%. Net investing cash outflow was RMB8.375 billion (US$1.25 billion), including RMB8.242 billion (US$1.23 billion) spent on property, plant, equipment, intangible assets and other long-term assets. These figures show that a substantial investment programme is already under way.

The investor presentation sets out planned capital expenditure of RMB11.487 billion (US$1.71 billion) in 2027 and RMB10.976 billion (US$1.63 billion) in 2028. Shipbuilding payments account for RMB9.991 billion (US$1.49 billion) and RMB10.094 billion (US$1.50 billion), respectively. Stronger operating cash flow helps support those commitments, while the concentration of payments makes coordination between deliveries, financing and operating receipts increasingly important. The company’s liabilities-to-assets ratio stood at 47.7% at the end of September, compared with 45.5% at the previous year-end.

For the global tanker market, the next phase will depend on how far Middle Eastern cargo flows recover, how efficiently ships can move those cargoes, and how newbuilding deliveries interact with the retirement of older tonnage. COSCO SHIPPING Energy’s results demonstrate the profitability available when freight earnings rise sharply. Its growing investment commitments also show how today’s cash generation is being committed to ships that will enter a potentially different market several years from now.

US dollar equivalents are approximate and use the 30 October 2026 central parity rate of US$1 = RMB6.7138. safe.gov.cn