Attempts by China Cosco Holdings to renegotiate ship chartering contracts agreed prior to the global economic recession have highlighted the difficulties faced by some shipping firms following a collapse in charter rates.

Cosco, which last month announced a RMB2.76bn (USD432m) interim loss, has reportedly suspended charter payments to some ship owners as it bids to cut costs. It is believed that the contracts per vessel are worth between USD80,000-USD230,000 per day. However since the global economic downturn, ship chartering fees have fallen drastically, to as low as USD16,000 per day.

As a result, the company has seen some of its vessels seized in port, including one by Swiss company Bunge SA, for fees outstanding believed to amount to around USD300,000. But Cosco President, Zhang Liang, has defended his company's actions, saying that withholding charter payments was normal practice in the industry when contracts are being renegotiated. Out of its 200-strong fleet of leased dry bulk vessels, there are disputes regarding payment on only a handful of them, according to the company.

However, in its weekly credit outlook report, Moody's, the international ratings agency, voiced concerns that a bad precedent for the industry could be set if companies with contracts with Cosco agreed to lower rates.

"Charter rates are currently much lower than they were in 2008," the credit ratings agency said. "Renegotiation of contracts could set a precedent that spurs other Chinese shipping companies to seek more favorable terms in their existing agreements” with ramifications for the creditworthiness of the dry-bulk industry globally, Moody's said.