Ever since the leaders of the Nationalist government of Chiang Kai-Shek fled mainland China in 1949, the Communist leaders of the People's Republic have vowed to reunite their vast country with the small island of Taiwan to which they fled. The two nations have never maintained diplomatic ties, and it is technically forbidden to ship directly from Taiwan to mainland China.
So much for the official rules. Trade between Taiwan and mainland China continues to expand, and carriers that serve the region are taking advantage of unique rules that integrate Taiwan more into global supply chains that begin and end in China.
Robert Ho, senior executive vice president of Yang Ming Marine Transport, Taiwan's second-largest ocean carrier, said, "The situation is very unusual; this is a special arrangement." Unconcerned with politics, Ho said the rules work smoothly, and "it is not a problem for us to operate."
A recent change in the rules gradually opened more opportunities for carriers and their customers. Until this year, there were only two ways to move cargo between Taiwan and China. The first involves transshipments using feeder ships that connect Taiwan's largest port, Kaohsiung, to southeastern Chinese ports of Fuzhou and Xiamen. The feeders can carry only local transshipment cargo; that is, containers that are destined to go to third countries in Europe and Asia, Ho said in an interview in his office near the Port of Keelung.
A second scenario involves making stopovers between Taiwan and China - that is, in a third country, usually Japan or Hong Kong - to preserve the fiction that the shipment is not coming from Taiwan. If a Taiwanese company wants to send its containers from Keelung in Taiwan to Xiamen in China, the ship must call at Hong Kong or a tiny port in Japan's Yaeyama islands. "These rules of the game are not economical because of high fuel costs," Ho said, "but we don't complain as long as shippers and customers accept" them.
Recently, however, the Taiwanese government expanded opportunities by permitting oceangoing Taiwanese ships to call at Chinese ports directly, as long as those ships serve only Europe, Asia or other final destinations. "The ship is not allowed to carry any cargo that is discharged in China, even for transshipment," Ho said.
He said the second scenario, involving indirect service to China, is the route that Taiwanese companies use to send materials and components to China, and to bring back to Taiwan the finished products that Taiwan exports worldwide. However, the newest, third option also offers benefits for Yang Ming and its customers. "It makes our scheduling easier because we don't have to make a detour" to mainland China when the ultimate destination of the cargo is Europe or Asia.
Although Taiwan and China have long been rivals, Ho spoke glowingly of the economic opportunities derived from China's remarkable economic and infrastructure expansion. On a visit to China last year, Ho visited the Port of Yangshan, near Shanghai. He called the 20-mile-long bridge to the small island where the huge port is located "an engineering miracle."
The old ports on the Yangtze River are very shallow, and large ships cannot pass through the channel 24 hours a day, seven days a week. "They must wait for tides, and it is impossible for a mega-ship to visit," he said.
The Port of Yangshan makes life easier for Yang Ming. "There are no limitations (on mega-ships), and it is offshore so it is better for carriers," Ho said. "We save a lot of time; we don't have to go up the Yangtze. In the past, when we went to Shanghai, we had to change our rotations. Scheduling is easier than before."
Ho predicts that Yangshan will gradually become a transshipment hub for the region.
Overall, Yang Ming's container volume will grow 15 percent on its Asia-Europe routes this year, Ho said, with similar growth in 2007. "This is a booming market," he said.
Ho attributed much of his company's success to its continued participation in the CYKH alliance, which allows its participants - China Ocean Shipping Co., Yang Ming, "K" Line and Hanjin Shipping - to offer more frequent service and cover more ports.
"We started this almost 10 years ago, and it's been good," Ho said. "We've reduced operational costs and passed it on to the customer." Business is business, and the political rivalry between China and Taiwan plays no role in the success of the alliance.