Competitors force government to back transshipment as manufacturing drifts across the strait to mainland centres Taiwan's Kaohsiung port is gearing up for an expansion project costing NT$90 billion (HK$21.12 billion) as it attempts to counter faster-growing regional competitors. The project is also aimed at supporting a transshipment industry that Taiwan hopes will help make up for shipping business lost as a result of its manufacturing industries' migration to the mainland. 'The government will shoulder half of the investment,' Kaohsiung Harbour Bureau director-general Huang Ching-tern said yesterday. The expansion plans call for five container berths capable of accommodating 15,000-teu (20-foot equivalent units) vessels to be completed by 2008, increasing Kaohsiung's handling capacity by 2.5 million teu. Last year, port throughput grew 4.1 per cent to 8.84 million teu. By comparison, port throughput at Shanghai jumped 32 per cent last year to 11.37 million teu. In Hong Kong, the world's busiest port city, throughput grew by about 7 per cent to 20.45 million teu. The project will also include eight additional berths dedicated for transshipment of petrochemical products, and comes on the heels of a separate four-berth, two million-teu expansion costing NT$9 billion announced last year. According to Mr Huang, Evergreen Marine, Yang Ming Marine Transport, Maersk Sealand and a Japanese consortium have expressed interest in that project. Situated on Taiwan's southwest coast on the Taiwan Strait, Kaohsiung is handicapped by a longstanding ban on direct shipping links with the mainland. This political constraint has been a boon for ports in Hong Kong, Shenzhen and Shanghai, especially after the large-scale migration of Taiwan's manufacturing industries to the Pearl and Yangtze river deltas. Hong Kong has also experienced a steady erosion of market share to Shenzhen ports offering shippers lower costs, increased shipping frequencies and easy proximity to Guangdong factories. 'China's ports, supported by large catchment areas, are showing tremendous growth. They have a lot of export and import cargo,' Mr Huang said. 'Kaohsiung is a mature facility. With a population of only 23 million, Taiwan can't rely on [its own] imports and exports. We have to grow our transshipment business.' Transshipments now account for 55 per cent of cargo throughput at Kaohsiung, which is building a free trade zone to further grow its transshipment business. The zone, which will be operational in January, aims to attract assembly plants and distribution centres. 'The factories in the free trade zone will provide steady cargo volumes for shipping lines berthing at our port,' Mr Huang said. In July last year, the Taiwanese government passed the free trade harbour zone statute, allowing Kaohsiung to offer one-stop administrative processes, reduced tariff rates and a freer flow of cargo to facilitate re-export processes. 'Though Taiwan is no longer supported by strong exports, it still has a role to play in transshipment, given its geographical location and water depth,' a shipping line executive said. 'A lot of shipping lines have their dedicated berths there.' In the first quarter of this year, Kaohsiung's container throughput increased 8.5 per cent to 2.3 million teu. By comparison, ports in Shanghai and Shenzhen each reported growth of more than 25 per cent to 3.09 million and 2.78 million teu, respectively.