Despite a brief upturn after the financial crisis in 2008, China's shipping industry has seen sluggish performances since the latter half of 2009, said He Jianzhong, spokesman for the Ministry of Transport (MOT) Friday.

The inbalance between supply and demand, created by growing capacity and dwindling appetite due to the global economic downturn, was the major factor dragging the industry down, He said.

He said shipping businesses have been squeezed by the rising cost of fuel and labor, as well as slumping freight due to fierce market competitions, leading some to widen losses.

To mitigate the damage, the MOT is working on measures to guide and help the companies to better face the challenges, according to He.

He said shipping businesses should step up efforts to optimize shipping structure and modernize their ships.

Meanwhile, the MOT will work with other relevant departments to phase in a tax rebate scheme in the ports of departure, as well as to push forward a shipping taxation policy that is in accordance with the international standard, in a bid to reduce tax burdens in China's shipping sector.

He also urged the ports to adjust structures to enhance efficiency in resource utilization.