Wuhan Iron & Steel (Group) Corp (WISCO), one of the nation's largest steel makers, signed a strategic framework agreement with the country’s leading shipping company, China Shipping (Group) Company last Friday, whereby the latter will be providing five large shipping vessels to ship iron ores to WISCO for 20 years, according to Wuhan Morning Post.

China Shipping Group will offer WISCO two vessels with a shipping capacity of 300,000 tons and three vessels with a shipping capacity of 230,000 tons. In total, the vessels will be able to ship 5 million tons of iron ore for WISCO. The shipping price will be fixed within 15 to20 years.

Overseas shipping fees are surging as fuel oil prices grow rapidly. The alliance will cut shipping costs of the steel maker, which imports 20 million tons of iron ore annually and the figure may hit 50 million tons in the future. The venture is also likely to reduce risks for the shipping company, as commented by insiders.

Prior to this agreement, WISCO signed a 5-year shipping contract with British company ZODIA, one of the world’s largest shipping companies, last month. Before partnering with ZODIA and China Shipping Group, WISCO has already signed long-term contracts with Brazilian and Japanese shipping carriers for the rental of ships for iron ores transportation.