1989 / 2月
Sung Chu-ch'in /photos courtesy of Wei C. Wang /tr. by Phil Newell
Winter's rolling around, but it's as nice as ever in the south of Taiwan. As dawn breaks over Kaohsiung harbor, the container, shipbreaking, and shipbuilding operations start another busy day.
At the container docks, the cranes crank up their engines and get to work loading and unloading. The hum of activity of super container ships makes Kaohsiung the world's third largest container port, and it's still growing.
Tucked away in a corner is the Tajenkung shipbreaking area, where the U.S. aircraft carrier Shangri-La is being devoured plate by plate. In two months it will have disappeared without a trace, and the Tajenkung operations become a piece of history at the same time.
At the China Shipbuilding docks, a christening ceremony is being held for the ships Cemtex Hunter and Yuli. Doves and balloons fill the sky, symbols of an industry in full flight.
Containers, shipbreaking, and shipbuilding all have their ups and downs. What does the future hold in store?
In 1986 the container volume at Kaohsiung was third in the world, trailing only Hong Kong and Rotterdam. Last year volume reached 3.08 million TEU (equivalent to twenty feet of container), a growth rate of 11%. There is hope of passing Rotterdam to become number two.
Ma Shun-yi, assistant director of the Kaohsiung Bureau of Port Affairs, believes that the rapid increase in volume is due to Taiwan's economic growth and the development of container transfer. Currently imports, exports, and transfers each take up about one-third of container volume at Kaohsiung.
Lin Ming-shih, director of the Office of Planning at the harbor, notes that with the appreciation of the NT dollar and the trans-formation of the industrial structure, export products are more and more often small-sized, high-value-added products. While export value is up, the rate of increase in container volume has slowed. However, because two major U.S. shippers opened transfer bases at Kaohsiung, the increase in transfer volume has compensated, maintaining a high growth rate for total volume.
In fact, the growth in transfer volume has exceeded all expectations. Lin Ming-shih points out that since Taiwan is an island, with no large interior, estimates in 1986 foresaw an annual growth of 5% in transfer volume, reaching one million TEU in 1996. Incredibly, transfer volume had already broken that mark by the end of last November, and will reach about 1.11 million TEU for the year.
This turnabout is mainly due to the establishment of transfer bases in Kaohsiung by major shippers for transshipment to Hong Kong, Singapore, Indonesia, and the U.S. Currently, companies from Japan, South Korea, and local companies as well all plan to rent container piers, and a Denmark company has already decided to establish a transshipment center in the habor. And while transfers are not directly helpful to Kaohsiung's operations, they enhance its--and the ROC's--status.
Why is Kaohsiung so attractive? Well, efficiency is high, service is good, and fees are low. Facilities and their operators are superior. Liu Jung-yu notes that the standard for container handling is 25 TEU per hour; at Kaohsiung the rate can reach 30. Also, except for a brief summer rainy season, the climate is superb. Winds and rain slow handling, keep ships in port, and raise costs in both time and money.
Kaohsiung is currently building its fourth container center; four docks have been completed. A fifth one is planned to meet business expected to come over from post-1997 Hong Kong. The harbor authorities have decided to invest NT$10 billion and eight years, to build seven deepwater docks and five container areas to handle new supersized container ships. It could spell an increase of one million TEU a year.
The new areas will go where the Tajenkung dock currently is sited, that will cease operations after dismantling the Shangri-La. Its fate was decided by rising competition and a boom in shipping.
Hsu Hao-jan, chairman of the board of the Taiwan area Shipbreaking Industry Association, says that few countries did ship breaking in the past. Now India, Pakistan, and the mainland all do. Besides low labor costs, they are also ready customers for everything down to the furniture of the dismantled ship. Rising environmental protectionism on Taiwan raises the cost of handling waste. Despite gains in efficiency (it formerly took three or four months to take apart a 3,000-ton ship--now it takes a week), costs are too high: NT$1300-1600 per ton, compared with, for example, NT$600 a ton in the mainland.
Further, with shipping experiencing a boom, says shipbreaking engineer Chuang T'ing-sung, ships are getting extended lives, and fewer are being scrapped. Finally, with economic liberalization, imported steel can undercut scrap steel, which in the early days met 80-90% of domestic demand. And the rising NT kills hopes of exports.
Already 70% of shipbreakers are out of the industry. An NT$380 million fund has been set up to help workers find new jobs. Hsu Hao-jan says that shipbreaking will not totally disappear--there will still be the need to dismantle old ships at home.
Shipbuilding, on the other hand, is a phoenix from the ashes. Last year the China Shipbuilding Corporation made the ROC the world's fourth largest shipbuilder, behind only South Korea, Japan, and Yugoslavia, with 647,000 tons (an increase of 36% over the previous year). The eight orders turned NT$6.57 billion. It is expected that eight new ships will be built again this year.
And that doesn't count military ships. Work will start next January on a 4,000-ton missile cruiser for the navy. China Shipbuilding plans to build two new docks--one of 75,000 and one of 30,000 tons--for the construction and repair of mid- and small scale ships. Hsu Jung-hsiang of China Shipbuilding is confident that the company can construct other military vessels, as long as the buyer provides the basic data.
The spate of orders contrasts markedly with years of continual losses since the completion of facilities in 1975. With the energy crisis, shipping was in dire straits; private investors were scared away. The government took responsibility--and lots of criticism. Though a state-operated enterprise, capital was raised by bank loans, leaving large debts. Layoffs reached 1,400, and severance pay added to the burden.
Starting at the end of 1987, shipping has pulled out of its nadir. Nevertheless, with ship sales calculated in US dollars, the rising NT has lowered sales prices and raised costs, which, together with the debts, has slowed the recovery of the industry. It is estimated that only in 1991 will costs and income balance.
The old Navy expression goes "shape up or ship out." Though shipbreaking fades, the global revival in shipping has allowed Kaohsiung to thrive by doing both.
One of China Shipbuilding Corporation's new efforts, the Cemtex Hunter, at its christening ceremony.
Workmen smile at the birth of another ship.
Numerous major shipping companies have been flocking to set up container transhipment bases at Kaohsiung harbor.
Kaohsiung harbor's facilities and efficiency at loading and unloading containers are world renowned.
Even the super ships, like this aircraft carrier, must someday see their sea lives come to a close.
All things must pass--but that doesn't keep shipbreaking workers from feeling heavy-hearted.
The Tajenkung shipbreaking dock will soon be a piece of history.
Dismantled steel plates are off to the mill for rebirth.
After the ceremony to exchange flags, the Cemtex Hunter can take its tri al voyage.