Chairman Li Kelin said terminals would be a steady source of cashflow for the Shanghai-based company.

Its parent, China Shipping Group, owns 35 terminals and 300 logistics companies. Li said the parent's port holdings in China and Los Angeles are expected to achieve annual throughput of about 10 million 20-foot equivalent units by 2010.

The group and Modern Terminals, part of Hong Kong's Wharf Group, are also bidding jointly for the right to build berths at Shanghai's Yangshan port. Li denied that CSCL's ambitions to diversify were prompted by concerns about overcapacity in the industry and its possible impact on freight rates. He pointed out that many global shipping lines already had terminal businesses.

``We maintain our goal of becoming one of the world's top three container shipping firms by capacity by 2010.''

Li said CSCL's capital spending, not including terminal acquisitions, would be 6.42 billion yuan (HK$6.16 billion), 28.1 billion yuan and 25.8 billion yuan respectively in the next three years.

However, he expected some volatility in container freight rates next year. ``Trade is growing by 9 or 10 percent, while the capacity growth of the industry is expected to be 13 or 14 percent next year.''

While freight rates could fall slightly, he said, CSCL is well-placed to weather the storm as its operating costs are relatively low compared with those of its international peers. In the first six months of this year, its operating costs totaled 10.6 billion yuan, up 41.8 percent from a year earlier.

The firm said that by locking in oil prices, controlling fuel inventories and selecting refueling ports and suppliers with relatively lower prices, it had kept its fuel cost increases below the market average. Its average fuel price in the first half was US$219.01 (HK$1,708.28) per tonne, up 23.7 percent. alman.loong@singtaonewscorp.com