1.CEPD to Carry Out Free Port Development Plan

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1 1.CEPD to Carry Out Free Port Development Plan The economic and finance committee of the Executive Yuan (Cabinet) has decided that Taiwan will develop free port zones. The zones will become the major focus of the next stage of the Global Logistics Development Plan. The program will be coordinated by the Council for Economic Planning and Development (CEPD) in consultation with the ministries and commissions of the Executive Yuan, and will be carried out in accordance with policy regarding relations across the Taiwan Strait. According to the preliminary plan, the free port zones' primary objectives are: (1)To extend the achievements of the Global Logistics Development Plan, and continue to push for liberalization and internationalization; (2)To meet the challenge from free port zones established by neighboring Asia-Pacific countries; (3)To find ways to break the existing restriction on transshipped goods to high-value-added processing; (4)To enhance the operational efficiency in the area of harbors and airports. The Taoyuan and Kaohsiung air cargo parks and other areas surrounding harbors and airports can adopt the mode of free port zones to advance their operational efficiency and competitiveness. The CEPD plans initially to provide preferential treatment to companies and people doing business in the zones. The preferences will include allowing the free flow of goods with no customs administration or clearance, and to grant 72-hour landing visas to foreigners engaged in business activities within the zones. The CEPD will gather relevant parties to form a task force and will draw up a detailed working plan with reference to operating models from advanced countries. The whole plan is expected to be put to the Executive Yuan for review and approval four months hence.

2 2.KHB First Quarter Business Increase Affected by the economic recession, business at KHB last year grew only slowly. Container throughput for 2001 totaled 7,540,525 TEUs, an increase on the year before of only 1.54%. This year, thanks in part to the efforts of shipping companies and KHB staff members, business in the first quarter has registered growth from the first quarter of last year.

3 3.Kaohsiung Port's 'New Policies' for 2002 Since the Port of Kaohsiung continues to face great economic challenges, all members of the Kaohsiung Harbor Bureau have reached a consensus on implementing a strategic business plan. The challenge has been brought on by the global economic recession and the fact that many ports in China have been developing rapidly and that plans for direct shipping links have stalled. The strategic plan includes proposals : 1.To open the No. 1 through No. 3 berths for recreational utilization, such as a recreational plaza and seashore sidewalk. The designated area can be linked to the local business community. 2.To improve development of industries and returns on investment. KHB plans to allow port related business to enter joint venture agreements to gain more benefits and extend the rent-free period. 3.To develop the Vessel Information and Integration System and automatic payment system for harbor shippers. 4.To expedite the ongoing development plans for Talin commercial harbor, the construction of an off-shore container terminal, KaoPort Integrated Access Traffic System, and development of affiliated ports, to cope with the ever-changing marine shipping market. 5.To enhance environmental protection and improve the environment of the port and the sea.

4 4.KHB Vessel Information and Integration System Starts Online Service The Kaohsiung Harbor Bureau in order to provide better service to marine shippers and harbor industries has developed the Vessel Information and Integration System that went online February 18. Through the utilization of modern technology, the System integrates computers, websites, facsimile, IVR (Inter Voice System), and VTS to obtain real-time information of vessels entering and leaving port. The System also automatically collects information on vessels, personnel, and harbor and operating conditions for marine shippers and harbor industries to allow for the most cost-effective and efficient deployment of personnel and facilities. The Vessel Information and Integration System can transmit and receive information pertaining to a vast range of shipping activities, including entry, clearance, anchorage, berthing, pilot departure and boarding, vessels passing signal stations and intra-harbor movement of ships, tugboats, and motorboats. It can also relay this information to users interested in obtaining information on ships in port and other related operations. Shipping companies are also welcome to use the online facilities available at the front desk of KHB. Since the new system has come into operation, the inspection system that was previously in operation has been integrated into the new system. KHB started constructing the System about a year ago. In addition to adding new software and hardware facilities, it integrated the work of business units inside and outside the Bureau, such as the pilot office, motorboat operators, mooring companies, the joint inspection center and shipping lines, etc. The previously established systems, such as the Vessel Traffic System, automated service, and web services are included in the new system. Since November 20, 2001, the Vessel Information and Integration System has undergone a dual-track testing process, and from January 1, 2002, it commenced full-scale testing. As a result of this three-month testing process, the System has now reached a stable operating condition. Since the System started its online service, its operation has covered all matters related to a ship's entry and clearance. To facilitate the operation of the new system, KHB also invited shipping companies to participate in training courses in order to familiarize themselves with the new online operation. With the Vessel Information and Integration System, shipping operators will be spared the task of individually visiting the offices of pilot, harbor police foreign affairs, customs and quarantine. Obtaining the most up-to-date information will save time and allow for the most efficient arrangement of personnel, facilities, and equipment. And as less time and money will be wasted, the Port of Kaohsiung will further enhance its paramount position in the competitive maritime industry. 5.World's Major Container Lines Revamp to Cope with Changing Market

5 Recently, the world's major container lines have taken steps to revamp their fleets and service lines. The restructuring is expected to bring more economic benefits to the companies in the rapidly changing market. A noteworthy point about these changes is that Kaohsiung is included in all the new service lines; Kaohsiung is either the starting or end port, or a transit port along these new shipping lanes. Evergreen Swings to Pendulum Services Evergreen Marine, the world's third largest container line, has decided to replace its long-running round-the world (RTW) services with two pendulum services. The new pendulum routes have come into service since mid- February. Evergreen has put much of its post-panamax capacity onto the Asia-Europe trade route. The capacity transferred was formerly used on the Trans-Pacific route. The revamp will shorten transit times along key sectors, especially between the Far East and Europe. The first of the pendulum services covers the NUE (Northern Europe-US-East Asia) area. The service will be on a weekly schedule with the following port rotation : Kaohsiung, Pusan, Osaka, Nagoya, Tokyo, Shimizu, Los Angeles, Colon (Panama), Charleston, Norfolk, New York, Rotterdam, Bremerhaven, Thamesport, Antwerp, Le Havre, New York, Norfolk, Charleston, Colon, Los Angeles, Tokyo, Osaka, and Kaohsiung. The second pendulum link will on a weekly schedule with a port rotation of: Rotterdam, Hamburg, Thamesport, Zebrugge, Le Havre, Colombo, Singapore, Kaohsiung, Hong Kong, Osaka, Tokyo, Tacoma, Vancouver, Tokyo, Nagoya, Osaka, Kaohsiung, Hong Kong, Singapore, Colombo, Rotterdam. Yang Ming Lines and K Line Commence New Joint Transpacific

6 Yang Ming and K Line commenced a new service in a joint effort at the end of March The new service offers wider coverage including direct calls at Shanghai, Ningbo, Xiamen, Qingdao, Yantian, and Kaohsiung. The lanes and schedules of the services are as follows: 1.PSW-1/AES-1 Pendulum Service 12 x 5500TEU Long Beach(Sun/Wed) / Oakland(Thu/Fri) / Kobe(Tue/Tue) / Shanghai(Thu/Fri) / Ningbo(Fri/Sat) / Hong Kong(Sun/Mon) / Yantian(Tue/Tue) / Singapore(Fri/Sat) / one East Med Port / one West Med Port /one Benelux Port /one German Port /one U.K.Port /one Benelux Port/ one West Med Port / one East Med Port / P.Kelang(Tue/Wed) / Singapore(Wed/Thu) / Yantian(Sun/Mon) / Hong Kong(Mon/Wed) / Xiamen(Wed/Wed) or Pusan(Thu/Fri) / Long Beach(Sun) 2. PSW-2 5 x 3500TEU Los Angeles(Sat/Tue) / Oakland(Wed/Fri) / (Yokohama)(Mon/Tue) / Keelung(Thu/Thu) / Kaohsiung(Fri/Sat) / Hong Kong(Sun/Sun) / Kaohsiung(Mon/Tue) / Keelung(Tue/Wed) / Los Angeles(Sat) 3. PSW-3 5 x 3500TEU Long Beach(Sat/Mon) / Oakland(Mon/Wed) / Tokyo(Sat/Sun) / Nagoya(Mon/Mon) / Qingdao(Thu/Thu) / Shanghai(Fri/Sun) / Kobe(Tue/Tue) / Nagoya(Wed/Wed) / Tokyo(Thu/Thu) / Long Beach(Sat) 4. PNW 5 x 2800TEU Tacoma(Thu/Fri) / Vancouver(Sat/Sun) / Portland(Mon/Tue) / Tokyo(Fri/Sat) / Nagoya(Sat/Sun) / Kobe(Sun/Mon) / Hong Kong(Thu/Thu) / Kobe(Sun/Mon) / Nagoya(Mon/Tue) / Tokyo(Tue/Wed) / Tacoma(Thu) 5. AES2 8 x 5500TEU Rotterdam / Felixstowe / Hamburg / Le Havre / Malta / Singapore / Hong Kong / Kaohsiung / Kobe / Nagoya / Tokyo / Kaohsiung / Hong kong / Singapore / Malta / Rotterdam

7 Hanjing Shipping Deploys the Hanjin Taipei into Its Pendulum Services to Kaohsiung Hanjing Shipping's 5,500TEU class vessel Hanjing Taipei made her maiden voyage to Kaohsiung and Taipei on February 22, Contracted in 2000 to Hyundai Heavy Industries, the Hangjing Taipei is a long-term chartered vessel from a German company. With a length of 275 meters, a depth of 24 meters, a width of 40 meters, the ship has a carrying capacity of 68,000DWT and a maximum speed of 26.8 knots. The Hanjing Taipei is the 16th vessel of the 5,500TEU class to replace the 4500 TEU class vessels for Hanjing's Pendulum II service, which covers Europe, Asia, and the west coast of the U.S. The port rotation of Hanjing's Pendulum II service is as follows: Kaohsiung Hong Kong Singapore Suez Le Havre Rotterdam Hamburg Felixstowe Suez Colombo Port Kelang Hong Kong Pusan Osaka Tokyo Long Beach Seattle Kaohsiung This route will also be shared by K-line,Yang Ming, COSCO, and Senator Lines under a slot charter agreement.

8 As the Hanjing Taipei joins the service, Hanjing now owns a fleet of 24 ships (16 ships of 5,500TEU and 8 ships of 4,500TEU class). Hangjing hopes to improve its service and operational efficiency by replacing its 4,500TEU class ships with 5,500TEU class ships. Hangjing currently has 34 liner services with a total of 123 vessels, also delivering dry/wet bulk services worldwide. Uniglory and Wan Hai Lines Jointly Open an Express Route Uniglory Marine Corp Vice-Chairman Mr. M.C. Lee and Wan Hai Lines Vice-Chairman Mr. P.T. Chen signed a co-operative agreement at the Evergreen Laurel Hotel in Taipei on February 27, The two carriers jointly opened an express route connecting Japan, Taiwan, and Hong Kong early in March. The new route will provide their customers with a faster transportation service. The two carriers said that they have been exchanging cabins on the routes of Taiwan-Vietnam and Taiwan-Thailand since 1997, and now they will extend this cooperation to cover shipping in Northeast Asia. In the beginning, each party will have one new 1,600TEU container ship for the new route, providing one voyage every week to their customers. The direct voyage Japan-Taiwan-Hong Kong will take 14 days. The port rotation on the route for berthing includes Osaka, Kobe, Shimizu, Hakata, Keelung, Taichung, Hong Kong, Kaohsiung, Keelung, and Osaka. Uniglory and Wan Hai have been concentrating their business on the coastal shipping market, not only to strengthen their own transportation network and make their business more competitive, but also to provide a better maritime shipping service to cargo owners doing export and import business in Asia.

9 6.M/V Cape Darby Celebrates Maiden Voyage to Kaohsiung The M/V Cape Darby, represented by Kaos Enterprise Ltd., made her maiden voyage to Kaohsiung on January 12, The ship is a new addition to the fleet of the Australia-Asia line owned by Australia's Project Asia Services B.V. The Maiden Voyage celebration was held on Monday, January 14 at the No. 36 Berth. Director Huang was invited to attend the celebration and presented a commemorative plaque to welcome her to Kaohsiung. M/V Cape Darby is a double-deck, multi-functional ship built in With a total tonnage of 23,132 tons, the ship is 193 meters in length, 27.8 meters in width, 10 meters in draft, and has a speed of 19.5 knots. Her carrying capacity is 30,000 tons of bulk cargo or 1,841 TEUs of containers. She is also equipped with two 50-ton and two 100-ton booms (able to load 200-ton overweight machine parts) and dehumidifying facilities. M/V Cape Darby is the first D class vessel of Project Asia. Project Asia of Australia commenced its Australia-Asia route in 1998, with a fortnightly services carrying lead, zinc, and aluminum, etc to Kaohsiung, and loading containers and general cargoes for return trip to Australia's major ports. Project Asia has recognized the advantages of Kaohsiung - its geographical position, harbor condition, and operational efficiency and has rated Kaohsiung the most efficient port in Asia for three consecutive years. It has, therefore, chosen Kaohsiung as its major logistics and transshipment center in the Asia-Pacific region; it has been utilizing Kaos's warehouse and storage yard at the Port of Kaohsiung as its base of operations. The M/V Cape Darby arrived at Kaohsiung Port's No. 36 Berth on January 12 and left for Hong Kong on January 14. Director Huang was invited to attend the celebration of M/V Cape Darby Maiden Voyage and Present a commemorative plaque medal to welcome her to Kaohsiung.

10 7.Japanese Vessel M/V NYK Lodestar's Maiden Voyage to Kaohsiung The NYK-owned, Panamanian-registered vessel, M/V NYK Lodestar, made her maiden voyage to Kaohsiung on January 15, The voyage started from Hong Kong and terminated at Kaohsiung's Berth No The M/V NYK Lodestar, was launched September 10 last year. The vessel has a total tonnage of 75,201 tons, length of 300 meters, width of 40 meters, draught of 14 meters, speed of 25 knots, and a total capacity of 6,422 TEUs. The ship left Kaohsiung the next day for Los Angeles, after completing loading and unloading. She will enter service on the North American route. 8.OOCL Vessel Thailand Maiden Voyage to Kaohsiung OOCL's brand-new ship Thailand made her maiden voyage from Pusan to Kaohsiung on the morning of March 18 and left that evening for Hong Kong after loading goods. The Harbor Administration Chief of KHB presented, on behalf of Director Huang, a commemorative plaque to the ship. The ship will be servicing European routes.

11 9.KHB Hosts Chinese New Year Function The Kaohsiung Harbor Bureau hosted its annual Chinese New Year function on the morning of February 18. Over 300 guests from the shipping industry and other fields were invited to the function. In his opening address, Director Huang expressed his satisfaction that for the past year, despite the recession that has been affecting most of the world's economies, Kaohsiung Port managed to maintain a healthy economic performance, thanks largely to the efforts of all the staff members at KHB. In the past year, KHB has implemented many new policies designed to expand its business prospects and improve its competitive edge. Among these new policies are the completion of the Vessel Information and Integration System, Kaoport 2020 Plan, KHB Integrated Access Traffic System, and the Talin Commercial Harbor Construction Plan. To allow Kaohsiung residents to enjoy more seaside activities, Berths No. 1 through No. 3 will be open for recreational purposes. These areas can be well integrated into the neighboring commercial community. These policies will enable Kaohsiung to cope with the new business challenges arising from Taiwan's membership of the World Trade Organization (WTO).

12 10.AIT Chairman Richard Bush Visits KHB Chairman of the AIT, Mr. Richard Bush, visited the Kaohsiung Harbor Bureau on the morning of February 24. Mr. Bush was accompanied by the AIT Kaohsiung Deputy Director Joanne Gilles, Mr. Christopher Kavanagh of the Taipei Office, and delegate of the Kaohsiung Office. Director Huang welcomed Mr. Bush and the other AIT delegates and gave a briefing on the port facilities and future development plans to the guests. Later, they were escorted by Kaoport staff for a harbor tour to better appreciate the port's facilities and development. Mr. Bush wished to get a feeling for Kaohsiung Port's current operations, and the scope of potential business opportunities for American enterprises, as well as the current status of the integration of Kaohsiung city and port. Mr. Richard Bush, Chair man of the AIT, pays a visit to the KHB and exchanges souvenirs with Director Huang. Prof. Dr. E. Sands chneider and three other delegates from the Zweites Deutsches Fernsehen visit the Port.

13 Lantern Festival Dazzles Kaohsiung In February, holiday fun seekers once again looked southward for more dazzling entertainment, as Kaohsiung was selected as the site for Taiwan's national lantern display for Lantern Festival, from February 26 to March 7. The headline appearance was President Chen Shui-bian presiding over the opening ceremony, and later lit the Grand Lantern and led a festive parade on February 26 from 7:30-9 pm. During the Lantern Festival, many temples were illuminated with colorful lanterns of various shapes and sizes. Water provides an excellent backdrop for the display of specially-designed lanterns, which is what makes the City of Kaohsiung so unique. Tens of thousands of lanterns were hung along the two banks of Kaohsiung's Love River, and many more were hung at the wharf of Kaohsiung Port. Visitors, it was suggested, should walk to the Port or travel there by ferry to view the shimmering lantern scenery from the waters of Love River, and many more were hung at the wharf of Kaohsiung Port. Visitors, it was suggested, should walk to the Port or travel there by ferry to view the shimmering lantern scenery from the waters of the harbor. A new design was also staged from Berth No's 17 to 21; colorful lanterns were arranged to resemble a prosperous island map. In recent years, Kaohsiung Port has made every effort to make itself more accessible to Kaohsiung residents; efforts include redesigning part of Berth No. 3 as a sea-observation deck and adding more artistic features to the Port to enhance its appeal to residents.

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