Research On Cost Management Of COSCO Shipping Specialized Carriers Co.,Ltd

Since the US financial crisis in 2008,the global economic began to fall into recession,and International trade business declined sharply.Meanwhile the oil prices fluctuated frequently,and global transportation became stagnant.And the development of the global transportation businesses slowed down and started losing profits.During the ASEAN conference in 2013,Chairman Xi proposed the idea of 21 century “Maritime Silk Road”,which marks the turning point of the shipping industry.Cost management becomes the main focus in order for the shipping industry to seize this opportunity to develop.Shipping is a capital intensive、technology intensive and labor-intensive industry,and the costs of every element is huge as well.COSCO SHIPPING Specialized Carriers Co.,Ltd is a company that primarily utilizes the specialized carriers for transportations.Due to the global recession,the growth of the company has slowed down.The cost of human resources,financing costs,management costs,and other expenses have risen,which result in a decrease in profits.Therefore,cost management becomes a main issue to be resolved.This article(paper)focus on the cost management aspect of the business.First,the paper uses COSCO Shipping Specilized Carries Co.LTD.as a study subject to understand the correlation between the cost management and overall success of the business based on the financial data collected.The causes of ineffective cost management are analyzed and a resolution is proposed to resolve the concerns associated with the cost management.The globalization of shipping business is a crucial part of the global economic growth.It is a network that connects China with the rest of the world.It plays an important role in developing the nation into a “MARITIME POWER” strategy.The development of the shipping/trade relations can maintain the steady growth of our country’s economic.This paper used COSCO SHIPPING Specialized Carriers Co.,Ltd as a case study to focus on the cost management aspect of the business and to provide recommendations to improve the business profits.After research,some conclusions as following:Firstly,overall,in 2012-2016,the total cost of COSCO Hite decline,cost control has achieved a certain effect.COSCO Hite cost gives priority to with the project cost in the total cost accounted for more than 86%.Administrative expenses and financial expenses of second and third.COSCO costs accounted for the segment in 7% and 4.5%;the cost of sales accounted for less than 1%.Secondly,some problems also exist in the cost management of COSCO Hite mainly includes: the high proportion of personnel expenses in the cost of the project;rent levels drop,the financial costs of excessive growth etc..The cause of these problems mainly include: COSCO,irrational allocation of human resources,the existing problems and the outsourcing business enterprises carry out redundancy mechanism;the global market competition is intense,the cost of sales is strictly controlled,with the world’s major shipping enterprise strategic path selection phase deviation;risk assessment mechanism is not perfect,resulting in excessive investment,interest expense increased.At the same time,the quality of exchange rate risk management is poor,and the loss of exchange rate is increased.Finally,the research found the problem and reasons,puts forward corresponding suggestions on cost management of COSCO.These proposals include: optimizing the allocation of human resources,increase the proportion of outsourcing,and further promote the enterprise institutional reform,improve the efficiency of human resources;to actively adapt to the global shipping status,change the traditional concept of cost management not only reduced growth,increased marketing expenses;pay attention to risk management,optimize the investment activities,and strengthen the exchange rate risk management.