China Shipping Container Lines (CSCL), the world's sixth largest container shipping company by operating capacity, said its net profit dropped 76 percent last year as excessive transport capacity and rising operational costs bit into margins.

The company, a subsidiary of China Shipping Group, said Tuesday evening that its net profit totaled 859 million yuan (111 million U.S. dollars) in 2006, down from 3.6 billion yuan (465 million U.S. dollars) in 2005.

Suffering from a slump in demand and rising fuel prices, other Chinese container shipping companies have also felt the sting. China COSCO Holdings Co. announced earlier this year a 64 percent dip in its net profit.

The company plans to raise its transport capacity by 13 percent in 2007 and cut operational costs in a bid to expand its market share.

The firm's results so far this year are superior to the same period last year but CSCL is wary of making any judgement about this year's container shipping market.

The company plans to raise its shipping capacity to 450,000 twenty-foot standard containers and increase its fleet of large ships -- ships that can transport 4,000 standard containers. These vessels will account for 80 percent of its total transport capacity, said the report.

Last month the parent company reached an agreement with the Ministry of Railways to establish a strategic alliance, bringing hopes for a revenue rebound through railway transport in the coming years.

The company said the alignment will help expand its business into inland areas and improve the quality of its service on the Chinese mainland.

Industrial experts said China's railway transport network has yet to be connected with cargo terminals.

However, the country has pledged to invest heavily in railway construction to improve the network in the near future.