20110830 cosco
Cargo containers are stacked aboard the Cosco-owned Chinese ship Dahe at the Massport cargo terminal December 10, 2003 in Boston. - 

Steve Chiotakis: Shipping rates have dropped big time in the few years since raw demand for Chinese materials was booming. Back in 2008, the Chinese shipping giant Cosco -- which by the way is not the wholesale chain -- agreed to rent freighters for as much as $80,000 a day per ship, and locked in the rate for years. But now, the company says
it's not going to pay the old rate because costs have dropped so low.

Sally Herships reports.

Sally Herships: Imagine if you could renegotiate a contract, years after you signed it. That's what China Ocean Shipping Company, or Cosco, wants to do. Freighter owners locked in high prices when Cosco was scrambling to fill orders from Chinese factories for coal and iron ore.

Ted Prince: People had to go out and move cargo so they went out and signed charter rates for whatever the market demanded.

Ted Prince is a transportation industry consultant. In 2008, there was a shortage of the type of ship that Cosco needed. Now with lower manufacturing demand, Cosco only wants to pay today's going shipping rate -- $16,000 a day per freighter.

Prince: If you were a ship owner, you'd be pretty concerned right now. If they're not honoring their contracts, why should I be a chump and honor mine?

Ship owners are threatening to seize vessels owned by Cosco as collateral. But is that legal? Martin Davis, director of Tulane's Maritime Law Center.

Martin Davis: Yes, is the short answer to that. Although it may seem a little outlandish to you that this can be done, it's sort of everyday practice in the shipping business.

But ship owners are hoping to work this out on land. Even on the high seas, no one wants to go to war with a customer.

In New York, I'm Sally Herships for Marketplace.