The Chinese shipping industry hit bottom again in the first quarter, with China Shipping Prosperity Index (CSPI) registering 85.47 points, according to Shanghai International Shipping Institute (SISI).

The index is at its lowest since the fourth quarter of 2012, SISI said in its latest China Shipping Prosperity Report.

Ship utilisation and freight rates saw sharp declines of 22.85 points and 26.09 points respectively, accelerating the downturn, according to CSPI, and shipping companies' profits were squeezed as a result.

The overall performance of dry bulk companies continued to deteriorate. In the first quarter of 2015, the prosperity index for dry bulk shipping companies stood at 65.09 points, according to SISI, and the confidence index for dry bulk shipping companies was 17.01 points, deep into extremely stagnant interval.

Although the prosperity index of port companies fell 11.53 points to 94.10 points from the forth quarter of 2014, hitting a historic low, port entrepreneurs were still optimistic about future.

SISI projected that China's shipping companies will fare better in the second quarter. CSPI is expected to reach 101.83 points, while China Shipping Confidence Index is expected to reach 79.64 points.

Container shipping companies will see a strong recovery in the second quarter of 2015, and port companies will resume prosperity. However, it cannot be optimistic in predicting the prosperity index for dry bulk shipping companies.

SISI warned that the Chinese economy has stepped into a new stage, which will be unable to support long-term high-speed growth of shipping demand. Against the backdrop of severe oversupply in the shipping market, companies need to lay emphasis on lean management and cost control as well as assured cash flow.