New export zone proposal would offer air service

Air freight services will be offered to companies utilizing the Kaohsiung Offshore Transshipment Zone (境外航運中心), significantly cutting the time in which local companies with production lines in China can export their goods from Taiwan.

Currently Taiwan companies manufacturing goods in China can transport their products to the transshipment zone, where they can undergo simple processing for export by sea.

The Council for Economic Planning and Development (經建會) is expected to submit to the Cabinet later this week a proposal that will allow goods to be flown out of the country via either CKS International Airport in Taoyuan or Hsiaokang Airport in Kaohsiung.

The proposal, which will require revisions to the Offshore Transshipment Zone Law (境外航運中心設置作業辦法), was decided upon after a consensus emerged from an inter-ministerial meeting held by the council earlier this week.

The proposal comes as Beijing and Taiwanese business people urge haste in opening direct ties and while local transport companies clamor for a piece of China's cargo market.

On Tuesday China's trade minister Shi Guangsheng (石廣生) urged swift action be taken in the opening of the direct three links between Taiwan and China. Taiwan's largest carrier, China Airlines, (華航) in recent weeks has been working on a deal to invest in a Chinese air freight company and a cargo terminal at Xiamen airport.

The Council is expected to hand the proposal to the Cabinet sometime later this week.

The move should greatly benefit the Evergreen Group (長榮集團), which in addition to operating a massive sea container business -- Evergreen Marine Corp (長榮海運) -- also owns an airline, Eva Airways Corp (長榮航空).

Other major sea cargo companies servicing the cross-strait zone include the Wanhai Shipping Line (萬海) and Yang Ming Marine Transport Corp (陽明海運).

Indeed, EVA Airways in early May approached the local customs authority in Kaohsiung for permission to transfer its cargo directly from container ships in the offshore transshipment zone to aircraft at CKS Airport.

EVA executives said that poor air cargo services within China and the delays in shipping products via South Korea or even Hong Kong made it impossible to control delivery schedules and manage risks.

However, while air freight services may speed up the export process, it won't necessarily expand the volume of cargo through the zone.

Last year over 430,000 20 feet-equivalent-unit shipping containers, or TEUs, passed through the transshipment zone.

According to Ministry of Transportation and Communications, growth in capacity is severely restricted by the insistence of Chinese authorities on opening just two relatively small ports to service the route linking China to the transshipment zone.

Currently, vessels carrying goods from China to the offshore transshipment zone can only sail from ports in Xiamen or Fuzhou, which according to the ministry can only handle small amounts of cargo.

If Chinese authorities were to open other ports along the country's eastern seaboard such as those in Guangzhou, Dalian, Shanghai, Qingdao or Tianjin, then growth in volume throughout the zone could be significantly increased.

Of course doing this would likely take business from Hong Kong, reducing its role as one of the main transshipment center between China and Taiwan.

Additionally, this would also likely imply that direct links between China and Taiwan had been open, therefore rendering the zone unnecessary.