Until now, cargo between Taiwan and China had to stop at a third party port, usually Japan’s Ishigaki, sometimes Busan or Hong Kong, before sailing to the other side of the Taiwan Strait.
The plan also involves a $558m investment in the new Taipei Port Container Terminal, a joint venture between Evergreen Marine, Yang Ming Marine Transport and Wan Hai Lines that opened at the beginning of the year.
However, this starting pistol might just shoot Taiwan in the foot. There are two factors that stand out. One is that while the country may be pleased at the cheaper, direct route to China, it may prove to be a double-edged sword as the route will also be open to Chinese carriers, who have, in the past, kept a very aggressive pricing policy, possibly making the trade uneconomic for the smaller Taiwanese companies.
The other point is that all this expansion might not so much attract new cargo as reshuffle existing traffic away from Keelung and the island’s biggest port, Kaohsiung, which handles about 10m teu per annum.
And Kaohsiung port in southwest Taiwan is already under fire from competition from Xiamen and Fuzhou on China’s mainland, with its growth already slowing up in the first half of 2008, a while before the squeeze really hit.
Further, it has to be said that the plunge in the economy has been so hard it could blight almost any mitigating strategies, as Taiwan’s exports tumbled by 42% at the end of last year.