Two people were missing on Monday after two cargo ships collided in waters south of Sweden in the early morning hours, the Swedish Maritime Administration said.

The ships collided in the Baltic Sea between the Swedish city of Ystad and the Danish island of Bornholm, the head of press at the Swedish Maritime Administration, told AFP.

"Shortly after half past 3 am (0230GMT), we received an alert through our sea and flight rescue central that two freight vessels have collided," Carl-Johan Linde said. 

"One of the ships has capsized and is upside down," Linde said, adding that two people from that vessel had ended up in the water as a result of the collision.

Nine boats as well as a rescue helicopter were searching for the missing sailors in the cold water, Linde said.

The ships were sailing under British and Danish flags.

Soren Hoj, manager for the Danish shipping company operating one of the vessels, told AFP that there were two people in the crew and they were believed to be the ones missing.