First, what's going on? Well, according to Lloyd's, the China business has saved Taiwan.
The island’s three main gateways — Kaohsiung, Keelung and Taichung — have seen a dramatic drop in container volumes this year as a result of the slump in trade caused by the global economic downturn. Kaohsiung, Taiwan’s top performing port, saw box volumes slide 23.2% to 1.9m teu in the first quarter this year compared with a year earlier.Note that the article ignores the whole flag issue that turns Taiwan's routes into domestic routes of China. The article further observes that....
But since direct connections were re- established on December 15 after a break of 49 years, Kaohsiung has seen an increase in the number of containers direct from Chinese ports with 165,000 teu between January and March.
Latest figures from Kaohsiung Harbour Bureau show the port handled slightly more than 4m teu in the first six months of this year compared with nearly 9.7m teu for the whole of last year. Monthly volumes have averaged more than 700,000 teu since March.
China has been taking the lead in opening up all its major ports to shipping lines keen to establish direct cross-strait services. Chinese operators, notably China Ocean Shipping (Group) and China Merchants, have also expressed interest in investing in Taiwan ports.The KMT strategy is to let China put tentacles into Taiwan's economy so deeply that they can never be withdrawn. Think they will let China invest in Taiwan's ports? I can see the progression of headlines now:
CHINA FIRMS LOOK TO INVEST IN TAIWAN PORTSThe remainder of the article discusses the Kaohsiung Harbor Bureau's involvement in upgrading smaller ports in the Penghu and elsewhere to take advantage of the cross-strait shipping agreements. Kaohsiung is also expected to face stiff competition from the new Taipei Port in Danshui, well-positioned for the China trade, and to serve as a port for any invading Chinese forces.
GOVERNMENT MULLING CHINA INVESTMENT IN LOCAL PORTS
OPPOSITION PARTIES PROTEST PORT INVESTMENTS ON SECURITY, POLICY GROUNDS
GOVERNMENT REJECTS BIDS FROM CHINESE FIRMS TO INVEST IN LOCAL PORTS
(six months later)
CHINA FIRMS INVEST IN LOCAL PORTS THROUGH FRONT CORPORATIONS DESPITE GOVERNMENT BAN
A couple of small errors in this article: the "split" between Taiwan and China is 59, not 49 years old, and the reporter writes: But Kaohsiung is also expected to come under pressure from home-grown rival Taipei Port Container Terminal to develop a new seven-berth box port at Keelung in the north of the island. But the port is in Danshui, not Keelung. Keelung is being reconstructed as a tourist port (pics here).
I love the title of the next article:
Nation hopeful as Chinese free trade agreement nears
Actually, as we saw in the post below this one, the nation is more like confused and wary, though shippers might be hopeful. Hey, at least he identified Taiwan as a nation.
The opening article is pure stenography, merely repeating the government line without caveat or contradiction:
The key to current optimism is an economic co-operation framework agreement, which would be similar to a free trade pact, that is expected to be signed between Taiwan and China next year. The deal would end all tariffs on Taiwan products entering China, making Taiwan more competitive than South Korea and Japan.Again, as I noted earlier this month, ECFA is about preserving the current political economy -- our electronics firms are going to take a hit. Simulations I have heard about have the vital IT sector falling anywhere from 7-9%. Since that sector drives productivity rises and keeps living standards up, it is pretty clear what is going to happen once ECFA is signed and our economy is hollowed out for the sake of China. Interestingly, the shipping trends reflect that. From the same article:
In a report outlining the impact of the agreement on Taiwan, the island’s economics ministry said the pact would boost Taiwan’s growth rate by up to 1.72% and create 270,000 jobs.
Taiwan and China are expected to hold talks on the agreement in October, although Taiwanese president Ma Ying-jeou said the island cannot afford to wait....
But while container lines have been mauled by the slump in the box trades, Taiwan’s bulker owners have fared much better.Container traffic -- read exports of electronics and other goodies -- are down, but bulk goods are not doing so badly. The dry bulk expansion is global, and the industry is expected to undergo a 40% expansion this year. The financial crisis slammed shippers -- with the collapse of Lehman, financing dried up, and many formerly private banks are now at least partly state-owned. Much of the growth in dry bulking is being driven by Asian demand for iron ore and for coal for new power plants -- the latter reason no doubt driving Taipower's acquisition of bulk carriers, to ship coal for, among other things, its new, incredibly stupid, coal-fired plants in central Taiwan. As the Nation noted in 2007, "China already uses more coal than the United States, the European Union and Japan combined..."
Wisdom Marine Lines has an ambitious plan to expand its dry bulk fleet from 44 to 50 ships by the end of this year, rising to around 70 vessels by 2013. The shipping firm, one of Taiwan’s largest bulker operators, will also diversify its fleet from handysize and handysize vessels into larger ships including supramax, panamax and capesize.
Taipower, the island’s leading electricity provider, has moved into the bulk sector with an $182m order placed in July at CSBC Corp for four post-panamax 93,000 dwt bulkers. Similarly, Chinese Maritime Transport has two capesize bulkers on order with the 177,000 dwt China Pride due for delivery this year and the 176,000 dwt China Pioneer set to joint the fleet in 2011.
Another trend is cross-strait shipping pacts...
While the carrier has tried to push through rate restoration measures in common with other lines, Evergreen Marine has also reached out to its liner rivals across the Taiwan Strait. Since the beginning of this year the carrier has formed agreements to operate at least three joint services with Cosco Container Lines and China Shipping Container Lines.Articles out that same day note that Taiwan shipper Wan Hai, which has been steadily reducing its non-Asian shipping, looks pretty well set for the next couple of years, since it has focused on the Asian market where economies are looking a bit better than in the US, where Goldman Sachs is more important than the entire US economy, and Europe.
Yang Ming Marine, another key local shipper, has more business outside Asia and is taking a loss this year, resulting from the collapse of the box trade that saw profits plummet 90% last year. The repercussions stretch into shipbuilding, where it has delayed delivery on 14 ships now in the yards at China Shipbuilding. Despite this, it will eventually take delivery of 24 new ships in the next five years, doubling its capacity by 2013.
Finally, cruise lines are looking at Taiwan's tourism, high incomes, and excellent ports....
The latest entrant with plans to launch Taiwan cruises is Costa Crociere, the Italian cruise giant, which intends to inaugurate services early next year using the 1991-built, 52,926 gt cruise liner Costa Classica .The piece also notes a local firm is getting in on the action, operating from my hometown of Taichung:
Costa Crociere is planning 15 cross-strait cruises next year specifically for tour groups from mainland China who want to visit Taiwan. The firm said it will be the “first international cruise company operating in China to introduce regular Taiwan itineraries”.
The Costa Classica will operate from Hong Kong and call at Taipei, Keelung and Taichung starting from January 31, 2010.
Taiwanese shipping company Excalibur International Marine Corp has also taken advantage of the thaw in cross-strait relations after launching charter passenger cruises between Taichung and Xiamen using the 2004-built 2,292 gt Ocean Lala at the end of June. The firm’s general manager Han Chih-yang said the eventual aim is to operate “a regular cruise service going not only to Xiamen, but also to other Chinese ports like Fuzhou and Shanghai”."Ocean Lala." LOLz. The cruise business here should take off once the renovations at Keelung port are completed -- though the local government still hasn't figured out how to take advantage of that port city's incredible potential for a beautiful port and ocean experience.
REFS: CS Monitor piece on Kaohsiung port from April, previous extensive post on port issues.
- N Korea releases US journalists.
- Taiwan Amnesty Int'l Meeting tonight, presentation from David Reid.
- The gutlessness of the local EPA on dolphin issues.
- Changhua hosting aboriginal festival this weekend.
- FT says China's growth figures don't add up. Who could have imagined that Beijing would lie about its growth figures, which it hasn't done since, oh, 2008.
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