VZCZCXYZ0014
RR RUEHWEB

DE RUEHIN #0961/01 0812252
ZNR UUUUU ZZH
R 222252Z MAR 06
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC 9271
INFO RUEHBJ/AMEMBASSY BEIJING 4942
RUEHGZ/AMCONSUL GUANGZHOU 9135
RUEHHK/AMCONSUL HONG KONG 6138
RUESLE/AMCONSUL SHANGHAI 8526
RUEAIIA/CIA WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RULSDMK/DEPT OF TRANSPORTATION WASHINGTON DC
RHEFDIA/DIA WASHINGTON DC
RUEAHLC/HOMELAND SECURITY WASHDC
RUEAORC/US CUSTOMS AND BORDER PRO WASHINGTON DC
RHHMUNA/USPACOM HONOLULU HI

UNCLAS AIT TAIPEI 000961 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/TC 
HONG KONG FOR DHS/ICE MARK STEELE 
 
E.O. 12958: N/A 
TAGS: EWWT ECON TW
SUBJECT: TAIPEI LIKELY TO REPLACE KEELUNG AS TAIWAN'S 
SECOND LARGEST CONTAINER PORT 
 
REF: A. TAIPEI 240 
 
     ¶B. TAIPEI 729 
 
Summary 
------- 
 
¶1. (SBU) The construction of container wharfs at Taiwan's 
Port of Taipei will reduce container traffic at Keelung 
Harbor where the Department of Homeland Security plans to 
implement the Container Security Initiative (CSI).  The 
Port of Taipei will have seven container wharfs that will 
begin operations in succession from 2008 to 2013.  AIT/T 
believes that the Port of Taipei will replace Keelung as 
the departure point for most container traffic leaving 
northern Taiwan for the United States.  This will affect 
planning for CSI operations for northern Taiwan's ports. 
However, because Taipei's facilities will open 
successively, it may take some time for Taipei to displace 
Keelung.  End summary. 
 
Development Plan - Seven Wharfs by 2013 
------------------------------------------ 
 
¶2. (U) Taiwan is developing the Port of Taipei as a 
subsidiary port to Keelung Harbor.  To date, nine bulk or 
general cargo wharfs are finished and three more are under 
construction.  Most of the cargo that passes through the 
port consists of sand, gravel, petroleum products, and 
automobiles. 
 
¶2. (U) Currently, seven container wharfs are under 
construction.  A joint venture owned by Evergreen Marine, 
Wan Hai Lines and Yang Ming Marine Transport, Taiwan's 
major shipping companies, is building the wharfs under a 
build-operate-transfer (BOT) contract with the Taiwan 
government.  Evergreen, Wan Hai and Yang Ming own 50 
percent, 40 percent, and 10 percent of the joint venture, 
respectively.  The joint venture will build the wharfs and 
have the exclusive right to operate them for 50 years until 
¶2053. 
 
¶3. (U) Under the current schedule, the first two container 
wharfs will be completed and begin operations in March 
¶2008.  One new wharf will be completed each year until 2013 
when all seven wharfs will be in operation.  Each wharf 
will be large enough to berth ships with capacities of up 
to 8,000 TEU (twenty-foot equivalent units).  The total 
estimated yearly capacity for the seven wharfs when 
completed is 2-3.5 million TEU.  In comparison, 2.09 
million TEU passed through Keelung Harbor in 2005. 
 
Advantages Over Keelung - Capacity and Geography 
--------------------------------------------- --- 
 
¶4. (U) The Port of Taipei will have several advantages over 
Keelung Harbor that will attract container traffic away 
from the older port, especially U.S.-bound container 
traffic.  The Port of Taipei's main advantage is the size 
of its wharfs.  Keelung's 15 container wharfs will 
outnumber those at the Port of Taipei, but Taipei will be 
able to accommodate larger vessels.  The average length of 
the container wharfs at Taipei is 336 meters compared to 
234 meters at Keelung.  The average depths are 15.5 meters 
for Taipei and 12 meters for Keelung.  Each berth in the 
Port of Taipei can accommodate Post-Panamax ships with 
capacities of up to 8,000 TEU.  In comparison, even the 
largest wharf in Keelung, which is 324.3 meters long and 
14.5 meters deep, can accommodate ships with a maximum 
capacity of no more than 5,500 TEU.  The other fourteen 
berths are substantially smaller.  Shipping companies are 
more likely to use the larger vessels that will be able 
stop at Port of Taipei for longer routes, such as trans- 
Pacific routes to the United States. 
 
¶5. (U) The Port of Taipei has several geographic advantages 
as well.  It is closer to many of the manufacturing centers 
of northern Taiwan such as Taoyuan and Hsinchu.  It also 
 
has a better link to Taiwan's highway network.  In 
addition, the area of the port itself is larger than 
Keelung's, which is surrounded by the city of Keelung and 
mountains on all sides.  Shipping and logistics companies 
will, therefore, be able to build larger facilities at the 
Port of Taipei. 
Other Variables - Overall Trends and Shipping Companies 
--------------------------------------------- ---------- 
 
¶6. (U) There are other factors that make it hard to predict 
how much the construction of the Port of Taipei will cut 
into cargo traffic in other ports in Taiwan.  One important 
variable is the overall trend for cargo volumes passing 
through Taiwan's ports.  The total volume of containers 
passing through Taiwan's ports fell last year for the first 
time since 2001.  Taiwan's economy was suffering a 
recession in 2001, but 2005's 1.8 percent decline in 
container volum came in a year when Taiwan's economy grew 
by 4.1 percent.  Last year's decline may be the start of a 
trend driven by the rapid growth of cargo being handled by 
ports in Mainland China.  If volumes continue to decline in 
Taiwan, traffic from Keelung's smaller facilities will fall 
even more quickly. 
 
¶7. (SBU) Another important factor will be the strategy of 
shipping companies.  They will decide how to direct 
container traffic that passes through northern Taiwan's 
ports.  Ministry of Transportation and Communications 
Senior Specialist Chen Jin-sheng pointed out to AIT/T that 
shipping companies currently ship 800,000 to 900,000 TEU 
annually from Keelung to Kaohsiung before exporting out of 
Taiwan.  This constitutes 80 to 90 percent of Keelung's 
total outgoing container traffic.  Chen believes that most 
of this traffic will be exported from Taipei instead of 
Kaohsiung. 
 
Assessment - Port of Taipei Will Displace Keelung's Role 
--------------------------------------------- ----------- 
 
¶8. (SBU) Given the advantages of the Port of Taipei for 
larger vessels, AIT/T believes that it will eventually 
displace Keelung Harbor as the departure point for most 
container traffic leaving northern Taiwan for the United 
States.  However, because the container wharfs will open 
successively, this may not happen immediately when the 
first wharfs begin operations in 2008.  Many of Taiwan's 
large-scale transportation BOT projects, such as the high- 
speed rail, Kaohsiung mass rapid transit system, and 
highway electronic toll collection system, have suffered 
serious problems and delays (reftels).  To date, we are not 
aware of any problems associated with the Port of Taipei 
BOT project, but the possibility of delays in the current 
schedule cannot be ruled out. 
YOUNG