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Yang Ming seeks closer ties with Cosco

Yang Ming seeks closer ties with Cosco

Taipei: Taiwan's Yang Ming is planning to approach the mainland's China Ocean Shipping (Group) Co (Cosco) for closer ties following the signing of an agreement between Beijing and Taipei to restore direct shipping links across the Taiwan Strait, writes CargoNewsAsia quoting the Xinhua Financial Network. Yang Ming and Cosco are already operating joint services and capacity sharing under the CKYH Alliance, which includes besides Cosco and Yang Ming, Japan's "K'' Line and South Korea's Hanjin Shipping.

"We want to double the number of our operating offices on the mainland in the next few years from 20 now and our target is to double consolidated revenue in five years," said Yang Ming chairman Frank Lu.

Yang Ming Marine had consolidated sales of $4.07 bn last year. Direct shipping across the strait has been banned since the end of the civil war in 1949.
Ships carrying goods between the mainland and the island now must now detour via Japan's Ishigaki Island.

Negotiators for the two sides have agreed to Taiwan opening 11 ports for direct cross-strait service and the mainland 63 ports. Companies plying the cross-strait routes would be exempted from business and income tax and allowed to open liaison offices on the other side, according to the agreement.

Lu said Yang Ming and Cosco would share berths on both sides of the strait and in the long run they do not rule out the possibility of joint investment in port facilities.

"We may also forge relationships to benefit from Cosco's access to inland river transportation and railway transhipment hubs in China," he said.
Yang Ming is also open to the idea of cross-strait tie-ups with other mainland shipping companies, such as China Shipping and Sinotrans Container Lines, he said, without elaborating.

Lu expects the new rules to not only generate more business but reduce costs too. Without the need for a stopover at Ishigaki Island, a 10,000-tonne vessel should save $20,000 per voyage in fuel, Customs clearance and daily operating costs, he said.

The Mainland Affairs Council, which supervises Taiwan's policy toward China, said direct shipping links would cut transport time by 16-27 hours per voyage and reduce current costs by 15 to 30 %. Shipping firms should save $36.53m annually, assuming an average saving of $9,132 per voyage on 4,000 voyages a year, it added. Last year, cross-strait container traffic was 1.37m teu.

The Mainland Affairs Council is also betting that the rule change will prompt more Taiwan shipowners to register their vessels at home. Currently, 84 % of Taiwan-owned vessels are registered overseas, where they pay no tax to the Taiwan government. At the end of last year only 262 vessels of a combined 4.67m deadweight tonnes were registered in Taiwan, compared with 290 ships of 8.63m tonnes at end-1999.

All ships registered in Taiwan, China and Hong Kong will be eligible to operate direct cross-strait services, according to the newly signed agreements.
Ships owned by Taiwan, China or Hong Kong firms but registered under other jurisdictions can also operate direct cross-strait services as long as they hold permits for carrying transhipment goods.

Lu said Yang Ming would increase the number of its Taiwan-registered ships from the current eight. Yang Ming may also use its alliance with Taiwan Navigation Co to augment cross-strait operations, he said.

Yang Ming's current fleet consists of 100 ships, of which 60 are owned by the company and the remainder leased. Fifty-two of the company-owned vessels are registered overseas for tax and operational reasons. The company has 22 new ships on order for delivery from 2009 to 2013.  [07/11/08]

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