Taiwan: A Gate Opens in the North

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

31 Oct 2009

The atmosphere at the Port of Taipei was more vibrant than usual on the cool morning of February 18 this year. Port officials looked on expectantly as a large freighter drew near to load containers at a newly opened wharf and a small boat approached the giant guest, spraying water in a show of welcome. The freighter, owned by Taiwan-based Evergreen Marine Corp., made history because it was the first container ship to call at the port, which officially opened its container terminals in March.
Located in Bali Township, which faces the Taiwan Strait near the mouth of the Danshui River, the port, which was formerly named the Port of Danshui, started to take shape in 1993. With an area of 3,102 hectares, which includes 200 hectares of land reclaimed from the sea, it was renamed the Port of Taipei in 1999. Operating under the Keelung Harbor Bureau (KHB), the port began to offer services to ships carrying bulk cargo, such as gravel shipped from Hualien Harbor in eastern Taiwan, to northern Taiwan. When Keelung Harbor, which is still the most active port in northern Taiwan in terms of container volume, began to find it difficult to handle ever-bigger container ships because it is not deep enough and its area for container storage is not large enough, the KHB decided to look elsewhere in the region to build large deep-water wharfs for container ships. So in 2003, the KHB reached the decision to update the Port of Taipei to service such ships, and new construction began later that year.
Developing deep-water port capacity in northern Taiwan became a pressing issue because 60 percent of all the shipping containers on the island pass through the populous, commercially bustling region at some point. With Keelung Harbor unable to accommodate larger container ships, more and more containers were transported by truck to and from southern Taiwan’s Kaohsiung Harbor, a deepwater port that is also the largest container port on the island. “This had a very negative impact on Taiwan’s traffic and environment,” says Lin Chang-huei, director of KHB’s Taipei Branch Bureau. Before the Port of Taipei began operating, Lin estimates that trucks carrying containers made more than 570,000 trips annually on the freeways linking northern and southern Taiwan. As the number of such trips has dropped drastically after the new wharfs opened at the Port of Taipei, freeway congestion and pollution have been reduced, and Lin estimates that NT$3.4 billion (US$103 million) will be saved each year that was previously spent on transporting containers by truck.
As 70 percent of the Port of Taipei’s present total container volume was formerly handled by Kaohsiung Harbor, the gains for the northern port represent significant losses for its counterpart in the south. However, Lin believes that Kaohsiung Harbor, which handled 9.68 million twenty-foot-equivalent units (TEU) in 2008, will remain the biggest port in Taiwan because many international shipping companies have long-established operational bases there.
Private Investment
Instead of depending on government funding to build the deepwater facility, KHB turned to private investment via the build-operate-transfer model. Taiwan’s three biggest shipping companies—Evergreen Marine Corp., Wan Hai Lines and Yang Ming Marine Transport Corp.—invested a combined NT$20.3 billion (US$615 million) in the project, with Evergreen accounting for 50 percent of the investment, Wan Hai 40 percent and Yang Ming 10 percent. According to the agreement with KHB, the Taipei Port Container Terminal Corp. jointly established by the three shipping companies has the right to manage the container wharfs at the port for 50 years, but has to pay the government an annual fee of NT$60 million (US$1.8 million) for each wharf in operation. KHB will assume ownership after the 50 years are up.
Aside from the Port of Taipei’s 12 older wharfs, which have depths ranging from nine to 14 meters and handle bulk cargo such as gravel, two 16-meter-deep container wharfs capable of handling 13,000-TEU ships have been built since 2003. However, ships with capacities of more than 8,000 TEU still cannot call at the port, as dredging is required to deepen navigation channels. This work is expected to be completed by 2011. Plans call for a total of seven new container wharfs to be completed and operational by 2014 with a combined capability of handling more than 4 million TEUs every year. Currently positioned as an auxiliary port of Keelung Harbor, Lin predicts that the Port of Taipei will surpass the older port, which handled 2.05 million TEUs last year, as the second-largest container port in Taiwan within several years.
Such growth has looked increasingly likely as more and more world-class shipping companies have chosen to call at the port. In early August this year, a 3,000-TEU ship owned by American President Lines (APL), the fifth-largest shipping company in the world, stopped at the Port of Taipei for the first time, and APL ships have done so twice a week since then. APL is the third large foreign shipping operator to regularly use the port after Maersk Line from Denmark and CMA CGM from France, which are ranked as the largest and the third largest in the world respectively. To date, six shipping companies including Evergreen Marine have used the port, four of which are among the top five in the world.
“The port has great potential for development because it’s deep and the road network connecting to it is convenient,” Lin says, referring to two road construction projects that have enhanced the port’s accessibility. Completed in December 2008, one project broadened a part of the expressway connecting the port with Taiwan Taoyuan International Airport, 27 kilometers to the south. The second project is the newly built expressway that opened in January this year linking the port and the Sun Yat-sen Freeway, the major artery running through the populous western part of Taiwan. The proximity and easy access to Taiwan’s biggest international airport have certainly aided the Port of Taipei’s development as a regional transportation hub because it gives local importers and exporters the option to mix and match transportation methods, which helps them achieve greater efficiency and reduce costs.
According to Chen, the port is also known for its environmentally friendly features. For example, while gantries at other container ports in Taiwan are diesel-powered, those at the Port of Taipei are driven by electricity. Furthermore, bulk cargo like coal and gravel has traditionally been offloaded from ships in the open air, while at the Port of Taipei such cargo is unloaded through an enclosed conveyor belt and then passed into enclosed warehousing facilities.
“It has the most sophisticated equipment in Taiwan,” says Chen Hau-gi, chairman of Taipei Port Container Terminal, referring to the port’s highly automated operations that run around the clock. “It’s certainly more costly to build a wharf now than in the past, so we must counter that greater expense by enhancing efficiency,” he explains, adding that thanks to measures minimizing the need for human labor at the new wharfs, accidents and mistakes in loading, unloading and transferring cargo can be greatly reduced.
Looking Ahead
Despite the port’s new facilities and advanced equipment, however, the global recession has had the effect of dampening its prospects, at least in the short term. Chen says Taipei Port Container Terminal initially estimated that the port would handle 650,000 TEUs this year, but now that number has been revised downward to 500,000 at most. “At the moment, about 1,000 container ships around the world are at anchor,” he says. “It doesn’t pay to move them around if they don’t carry enough containers.”
In the long term, however, there is reason for optimism about the port’s growth, mainly because of the elimination of trade barriers between Taiwan and mainland China. Since direct transportation links between Taiwan and mainland China were established in December 2008, the cost of transporting commodities between the two sides has been greatly reduced. More savings could be realized with the promulgation of the Executive Yuan’s proposed Economic Cooperation Framework Agreement (ECFA), which is meant to provide another boost to economic ties between Taiwan and mainland China by eliminating tariffs for cross-Strait trade.
Adam Hung, who concurrently serves as chairman of the Taiwan International Logistics Supply Chain Association, an industry group, and Tonglit Logistics Co., a company that started providing logistics services for the automobile industry at the Port of Taipei in 2004, estimates that with the world economy recovering, 60,000 cars could be imported and exported via the port next year, up from 30,000 this year. If ECFA were implemented, he says, the number could be much higher.
As car and auto parts makers in Taiwan are mostly concentrated in the north, KHB’s Lin Chang-huei says he expects that automobile distribution services in the area will constitute the bulk of the Port of Taipei’s shipping volume. He predicts that the annual volume of the exports of finished autos to mainland China through the port will reach 100,000 once cross-strait tariffs are eliminated.
While automobile transport could play a big role at the Port of Taipei, its long-term future is also likely to depend on its attractiveness as a transshipment point. Chen Hau-gi of Taipei Port Container Terminal observes that as the manufacturing sector on the island has dwindled and Taiwan’s export volume has leveled off, transshipment, which currently accounts for 55 percent of the container volume handled in the Port of Taipei, will become the basis of future growth for local ports. Much of the transshipment business will likely involve adding value to commodities destined for mainland China, which is both the world’s manufacturing center and an ever-growing market.
Logistics Gateway
“Taiwan can be the logistics gateway to mainland China,” Adam Hung says. For example, commodities from around the world can be shipped to the Port of Taipei, where local distributors can sort the items in the port’s free trade zone according to the different requirements of large retailers in the mainland. Free trade zones, which offer benefits including exemption from tariffs and time-consuming customs procedures, were established in Taiwan in 2003 with the promulgation of the Act for the Establishment and Management of Free Ports. There are now such zones at Taiwan Taoyuan International Airport and four international ports, including the Port of Taipei’s 79-hectare service area.
The opening up of free trade zone ports and direct cross-strait links has resulted in more possibilities for businesses to explore. Today Taiwanese-run businesses may be more willing to ship products they make in the mainland to Taiwan, where value can be added to them by installing additional components and labeling the resulting product as made in Taiwan before they are shipped to export markets. To fully develop its transshipment potential, the Port of Taipei has plans to reclaim an additional 800 hectares of land from the sea, including room for a 338-hectare free trade zone scheduled for completion around 2017 for operators in commodity processing and other logistics services.
Passenger transport between the Port of Taipei and mainland Chinese cities such as Fuzhou, which is only about 220 kilometers west of Bali Township, could also figure in the port’s future. It is still too early to predict when tourists and businesspeople on both sides of the Taiwan Strait will be able to travel the Taipei-Fuzhou sea route, mainly because presently there are no facilities at the Port of Taipei for passenger ships and no public transportation linking the port and downtown Taipei.
Once again, however, the port’s location makes it an obvious choice for launching such services. “In fact, the Port of Taipei is the most ideal spot in Taiwan for ferry transportation businesses,” the KHB’s Lin Chang-huei says. “It’s so close to mainland China and the northern part of Taiwan is more populous than Taiwan’s other regions.” In view of the port’s prime location near Taiwan’s biggest city and commercial center, its deep harbor and the opening up of cross-strait travel and transportation routes, Lin and others involved with the development of the Port of Taipei appear to have every justification for their view of its future prospects.

Source: Taiwan Review