Taiwanese shipping giant signs deal to move bulk of cargo services to Johor port; lower costs key factor for the move

By Nicholas Fang
TRANSPORT REPORTER

TAIWAN'S No 1 shipping line, Evergreen Marine, has signed a deal to move the bulk of its cargoservices from Singapore to Malaysia's Port of Tanjung Pelepas (PTP), starting later this year.

After lengthy negotiations, Evergreen and the two-year-old Johor port said in a joint statement yesterday that they had signed a terminal service agreement on Monday and the Taiwanese shipping line expects to begin using PTP from the third quarter.

Malaysian officials hailed Evergreen's move as a strong endorsement of its upgraded port infrastructure. PTP officials could not be reached immediately but other port officials were elated.

'This is very good for Malaysia. It is an indication that our service is as good as Singapore's,' said Datin O.C. Phang, general manager at the Port Klang Authority.

The deal is the second major coup for PTP after Danish giant Maersk Sealand shifted its transhipment hub to the port almost two years ago after taking a 30-per-cent stake in it.

Evergreen public relations manager Elysia Chen, in a telephone interview from Taiwan, said yesterday that lower costs at PTP were a key factor for making the switch.

She said that it had also received guarantees of priority berthing, comprehensive feeder links and levels of efficiency that could compare with those in Singapore.

'Singapore has a lot of experience in providing very efficient service and we have been very happy with them over the past 20 years. But PTP has promised to provide similar levels of service and we believe they will catch up very soon,' she said.

Ms Chen said although Evergreen had been very happy with its relationship with PSA Corp, 'the shipping industry is going through a very difficult time, so as a carrier, we have to make this decision'.

She declined to reveal the value or duration of the deal, but said 'the bulk of Evergreen's cargo coming to Singapore' would move to PTP.

PSA handles about one million TEUs (20-foot equivalent units) of Evergreen cargo each year.

Although the full extent of sweeteners given to Evergreen will take a while to surface, industry speculation has centred around the likelihood that the incentives would also cover the Taiwanese group's other businesses in Malaysia, including its EVA Airways airline and its Evergreen International Hotels operations. This could not be confirmed.

Asked about the latest development, Singapore's port operator PSA Corp said it regretted that an extension of the long-term agreement could not be reached between itself and Evergreen.

But it said Evergreen's departure is not expected to have a significant impact on its financial performance.

'PSA has a diversified customer base and a growing global market with its participation in 13 overseas port projects in eight countries,' it said in a statement.

Singapore's Transport Ministry also regretted that an agreement could not be reached but said: 'Notwithstanding Evergreen's departure, PSA remains the world's number one container transhipment port.'