EHIME COMMUNITY IN JAPAN CAPTURES OOCL NICHE SERVICE DIRECT RUN PROVIDES LINK WITH TAIWAN

EHIME COMMUNITY IN JAPAN CAPTURES OOCL NICHE SERVICE DIRECT RUN PROVIDES LINK WITH TAIWAN

Drawing on the support of a local Japanese community eager for shipping service, Hong Kong's Orient Overseas Container Line Ltd. recently inaugurated a niche service between Japan and Taiwan.

Japan's Ehime Prefecture was eager to have a direct shipping service to complement its new foreign access zone. Working with local companies, it made the deal more attractive for OOCL by reducing the carrier's risks.In late August, OOCL started service on a 10-day frequency between the ports of Matsuyama and Iyomishima on Southern Japan's Shikoku island and the Taiwanese ports of Keelung and Kaiosiung. The service uses the Sanjose Ace, with a container capacity of 187 20-foot equivalent units.

Officials close to the deal said a small community that doesn't have direct shipping service and wants it has three options. It can try to buy its own ship, but this is risky, given its lack of know-how. It can ask an established carrier to start the service, but chances are that if it made commercial sense, a carrier already would be offering the service. Finally, it can provide inducements to an existing carrier to reduce the risk and make the deal more attractive.

In this case, Ehime Prefecture identified local partners to handle parts of the business that may be less attractive to OOCL.

The vessel will be supplied by Mitsuhama Shipping Co. Terminal operations will be handled by Matsuyama Container Service and other stevedoring companies. OOCL will handle booking and documentation and supply container terminals in Taiwan. The local partners have expertise garnering business from local customers, and are knowledgeable about loading and unloading ships without gantry cranes in the small Japanese port.

Meanwhile, OOCL has the Taiwan contacts and facilities as well as global information services.

The partners declined to provide specific details on each one's share of profit or costs.

Officials said that while this type of deal often involves lengthy negotiations, this service was concluded after just two months of talks.

"It's a win-win situation," said one shipping official, who asked not to be identified.

While OOCL's risks are reduced, they are not absent, officials said. Other carriers presumably could enter the trade.

Officials close to the deal declined to say how much cargo sailed aboard the first two voyages or if it had broken even yet. "I think it's running well," one official said.