Cablegate: Port of Kaohsiung Sixth Container Terminal Faces
This record is a partial extract of the original cable. The full text of the original cable is not available.
240846Z Oct 05
UNCLAS SECTION 01 OF 02 TAIPEI 004305
SIPDIS
SENSITIVE
DEPT PASS AIT/W, USTR, AND FMC
DEPT FOR EAP/RSP/TC AND EB/TRA
USDOC FOR 4330/ITA/MAC
FROM AIT KAOHSIUNG BRANCH OFFICE
E.O. 12958:N/A
TAGS: EWWT ETRD ECON TW
SUBJECT: Port of Kaohsiung Sixth Container Terminal Faces
New Obstacles
Ref: Ref A) Taipei 3393 B) Taipei 03793 C) Taipei 03856 D)
Taipei 03196 E) Taipei 03197 F) Taipei 03525
1. (U) Summary. The planned development of Kaohsiung's
Sixth Container Terminal (Ref A) is facing major obstacles
due to weak investor interest in the Build-Operate-Transfer
(BOT) project. Additionally, in the wake of the Kaohsiung
Rapid Transit corruption scandal (Ref B-F) and the financial
problems and delays of the Taiwan High Speed Rail project,
Taiwan's Legislature is taking steps to implement a
moratorium on BOT projects, including the Sixth Container
Terminal. End Summary.
2. (U) Attempting to move forward on the Sixth Container
Terminal project, Kaohsiung Harbor authorities recently held
two seminars to inform prospective bidders about the project
and to solicit bids. All major shippers currently operating
in Kaohsiung attended the seminars. According to the Harbor
Bureau Director, interest in the project was high. He
expressed particular hope that Maersk-Sealand would bid on
the project. Kaohsiung Harbor, which handled 9.71 million
TEU containers in 2004, is expected to be at full capacity
of 9.9 million TEUS by the end of 2005. Development of the
new project is necessary for any expansion of capacity.
3. (SBU) Despite the optimism of the Harbor Director,
officials at Evergreen said they were unsure if they would
bid. They said they had already committed to a major
investment in the development of Taipei's new deep-water
port, as well as the mainland's Ningbo Harbor, and would
have trouble doing bothmore. They said they may consider
shifting some of their investment from Taipei to Kaohsiung,
but the issue is still being evaluated. American President
Line said they have no plans to bid on the project. While
Maersk declined to comment to AIT, freight forwarders who
work closely with Maersk said that Maersk is focusing all of
its development in the area on the port of Xiamen. This
leaves Yang Ming Lines as the major bidder. While Yang Ming
is interested in the project, they do not have the financial
resources to accomplish the project alone and would need to
induce Maersk, Evergreen or APL to join with Yang Ming to
move the venture forward. Yang Ming's interest may be due
in part to heavier government influence on the firm. Yang
Ming is 35 percent government owned with five of seven board
members appointed by the government.
4. (U) Adding to the difficulties facing Kaohsiung Harbor,
the Taiwan Legislature's Transportation Committee announced
on October 17th that the committee was moving for a
moratorium on all 11 of the Ministry of Transportation's BOT
projects. BOT projects have come under increasing scrutiny
after Taiwan's High Speed Rail project announced that it
would miss its scheduled October 2005 completion date by at
least a year and state-owned enterprises were compelled to
invest NTD 7.5 billion to rescue the project financially.
Adding to the complexity, Kaohsiung's Mass Rapid Transit
project is under investigation for corruption and improper
construction.
5. (SBU) Comment. As previously reported (Ref A), the Sixth
Container Terminal will not be completed any earlier than
2010. Even that date is likely to be delayed in light of
current events. Given that the Port of Kaohsiung is
currently at full capacity, it is likely that the port will
be further marginalized as mainland ports Shanghai, Xiamen
and Ningbo continue their rapid expansions. Kaohsiung is
also facing competition for resources from the planned
Taipei port, which will be better positioned in terms of
proximity to Taiwan's shippers. With the high cost of
domestic transportation, manufacturers in northern Taiwan
will opt to ship via Taipei once the port comes online. It
is likely that the Port of Kaohsiung, once the world's third
busiest port, will slide out of the top ten long before any
new capacity can be added. End Comment
Thiele
Keegan