Wan Hai Lines Director Randy Chen says that the Taiwanese carrier is pursuing its independent path and continuing to grow because of rising imports into Taiwan, expansion of transshipment services between Asian ports, and increased services to North and South America.
In an exclusive interview with AJOT at Wan Hai’s corporate headquarters in Taipei, Chen said that Wan Hai, Evergreen, and Yang Ming continue to invest in their container terminal assets because of growing imports into Taiwan.
Chen explained that the Port of Kaohsiung’s role as Taiwan’s leading port is changing: “We have to remember that in the eighties and the nineties, Taiwan was still very much a manufacturing hub and base and Taiwan is that, but it is changed … the nature of that has changed from toys, footwear, and furniture to semiconductors … and all the different elements in the supply chain, which all don't require the same level of containerization. And so, when we think about … transshipment, I think it's important that transshipment is rarely a sustainable business unto itself. It needs to have local cargo that is part of that volume equation. And so, for Kaohsiung to continue to support the level of transshipment as it did 20, 30, almost 40 years ago, it's probably not realistic. So, it [Port of Kaohsiung] continued to slip in volume and throughput. Now if you look at the Taiwanese carriers, we've all maintained, if not increased our port and terminal investment …not just in Kaohsiung but in Taipei Port where all three … Taiwanese carriers, Yang Ming, Evergreen, ourselves [Wan Hai], we're co-invested in that facility…Taipei Port is very much an import-oriented port.”
Chen emphasized that Kaohsiung still has an important role to play: “Kaohsiung served as a transshipment hub because … the land costs are just much cheaper in the southern part of Taiwan … But as industries and factories have moved … to other places, China, … Southeast Asia … the manufacturing that (remains) uses a lot of containerized capacity … in southern Taiwan.”
He explained that the Port of Keelung which serves northern Taiwan was not situated to support a higher volume of import container terminal business. Taipei Port was then invested in so as to support growing container imports generated by growing affluence and consumption in Taiwan and especially in Northern Taiwan and Taipei.
Wan Hai Transshipment Business
Chen said that Wan Hai’s transshipment business remains robust: its current network is served by a fleet of a total of 119 vessels. The majority of which operate with a capacity of 3,000 TEUs or less, the ideal size for Intra-Asian trades. However, Wan Hai is beginning to replace some of its smaller ships with larger ships to improve economies of scale by utilizing 13,000 TEU container ships to service the United States West Coast, East Coast, and the Asia to South America trades. There are 52 vessels in the current new build program “that we are currently engaged in. Thirty-four are 3000 TEU and 18 are 13,000 TEU.”
The result is: “Now we've also had extensive inroads into both coasts of the United States, the East Coast as well as West Coast. A lot of that growth came during and after COVID. And we needed to make sure that we had the right type of assets to put into those trades. And that's why we built the 18 Neo Panamax size ships (about 13,000 TEU capacity) that were built at Samsung and Hyundai. We also have services on the West Coast of Latin America. So basically Mexico, Guatemala, Peru, Columbia, Ecuador, and Chile. And so those same ships are appropriately sized for that.”
Chen added that: “Transshipment isn't just about the volume that's coming through Taiwan alone. It's very much about how it compares to Southern China and how it compares to the rest of the region vis-a-vis Vietnam and a little bit of Central China. So, I do think it’s not just because of Taiwan manufacturing. It’s about how your networks come together, how your networks are developing over time, how much of it may be collecting volume from Southeast Asia … and flows from Northeast Asia onwards towards, towards the south, towards the west.”
Upgrading Container Terminals
Chen said that while Wan Hai is investing in improved productivity and some automation at its terminals at Kaohsiung and Taipei, automation is not as big a benefit for ocean carriers with smaller ships and many sailing as compared to bigger ships with larger capacities and fewer sailings: “So we also are engaged in different types of automation … We prioritize high productivity. And high productivity isn't always about just automation. Automation sounds very good in terms of high productivity, but it … doesn't necessarily address the peaks and valleys of …. your throughput or how you handle throughput. And so, I think over the long period of time, we will continue to add automation … that makes sense…We just have a lot more vessel calls than say a deep sea carrier would have just because we have much smaller ships …. And so, the frequency of calls is just fundamentally different. If you're running 2,000 to 3,000 TEU ships regularly versus 15,000, 20,000 TEUs.”
The Emerging India Market
One of the growing markets for the container business in India: “I would say India has continued to be a very good story for containerization, just because it lagged behind all these other countries in terms of percentage of containerized cargo … It’s everywhere in India. It's not just Mumbai …. these are all things that just show that as an economy continues to not reinvent itself, but go through its different phases of development, it just makes sense that containerization follows and not necessarily for export manufacturing purposes … it makes a tremendous amount of sense because they're sourcing so many different materials that end up being put into manufacturing goods that are being consumed locally… That is India's story.”
Independence versus Alliances
Chen said that Wan Hai believes that being independent of ocean carrier alliances is in the company’s best interest because it provides more flexibility: “We have always subscribed to the approach that being flexible is more important than having the security of long-term arrangements such as alliances. So being able to change your level of exposure to different trades is, I think, critical when you are not the biggest player … if you're one of the top three carriers being able to enjoy the benefits of the alliance is much more apparent than if you are much lower…”
That does not mean that Wan Hai is not working with ocean carrier partners: “We have worked with almost every carrier in the industry.”
Lower Emissions
Chen was asked how Wan Hai is addressing efforts to lower emissions: “We're carefully assessing the right time to be committed to an alternative fuel. And the reason I say that is there's only one jurisdiction where they're really enforcing the use of an alternative fuel. And that's the European Union (EU).”
The push has yet to come from the United Nation’s International Maritime Organization (IMO) and so: “If the IMO is going to be very clear about the timeline as well as the pathway for alternative fuels, then just like any other carrier, we will be adapting to it then. But right now, there isn't that clarity.”
