Evergreen Marine Corporation (Taiwan) Ltd.
Evergreen Marine Corporation (Taiwan) Ltd.
Sales: NT $3.5 billion (US$101.9 million) (2001)
Stock Exchanges: Taiwan
Ticker Symbol: EMC
NAIC: 483111 Deep Sea Freight Transportation; 483211 Inland Water Freight Transportation; 488310 Port and Harbor Operations; 488320 Marine Cargo Handling (All but Dock and Pier Operations); 488510 Freight Transportation Arrangement; 484110 General Freight Trucking, Local; 484121 General Freight Trucking, Long-Distance; 488490 Other Support Activities for Road Transportation; 493110 General Warehousing and Storage; 493190 Other Warehousing and Storage; 493120 Refrigerated Warehousing and Storage; 234990 All Other Heavy Construction
With more than 130 owned and long-term chartered ships, Evergreen Marine Corporation (Taiwan) Ltd. is the third largest container-shipping firm in the world. As a corporation that is part of the Evergreen Group, Evergreen Marine and its affiliates serve Asia, Europe, the Americas, Australia, Africa, and the Mediterranean. The parent corporation is responsible for directing worldwide operations, planning service routes, and assigning personnel.
Evergreen is a regularly scheduled global marine and inter-modal shipping carrier that transports containerized cargo between ports and destinations in more than 80 countries through its worldwide service network. The company is not a part of the conference system—a group of shipping companies of different ownerships and nationalities servicing the same ports that agree to use the same rate structure. In addition to feeder services that expand the reach of Evergreen into hundreds of minor ports, intermodal road, rail, and river barge services carry the company’s containers far inland, directly to its customers. The company is certified to ISO 9002, the international voluntary standard for quality, and complies with the standard at all locations.
On September 1, 1968, Dr. Chang Yung-fa, from the Taiwan port of Keelung, founded the Evergreen Group by beginning a shipping business with one secondhand, 20-year old cargo vessel named the Central Trust to provide “go-anywhere” service. Chang garnered the funds to launch his business through a loan from Japan’s Marubeni trading house. He was intent on building up his business to a scheduled shipping service, and established the company’s first liner service for the previously neglected Middle East trade route less than a year later.
Chang’s success has made him one of the wealthiest entrepreneurs in the world and a celebrity in his home country. The son of a ship’s carpenter, he grew up in the shipping industry. Before he started Evergreen in 1968, the 41 -year-old Chang had worked his way up from a lowly shipping clerk, to sailor, and eventually to captain of a ship. The hard work and leadership skills that had helped him attain that position would prove to be essential to the future success of his fledgling company. Chang started Evergreen with 50 employees, 32 of whom worked at sea.
During his first year of business, one of Chang’s customers paid him handsomely to make a delivery to the Persian Gulf. The opportunistic Chang realized that this potentially lucrative shipping route between East Asia and the Persian Gulf was being neglected by his competitors, many of whom were focusing on the giant North American market. At the time, several oil-rich Middle Eastern countries were just becoming familiar with 20th century technology and modern culture, and were spending billions of dollars on massive modernization projects, such as the construction of schools, communication infrastructure, hospitals, airports, and power plants. Chang quickly zeroed in on that route. He purchased a second ship in 1969, and initiated regularly scheduled service to the Middle East. Despite early losses, Chang was able to secure enough capital to purchase several more vessels during the early 1970s.
As his Middle East service expanded, Chang searched for other untapped market niches. In 1972, he began offering service between East Asia and Central America, a region that most shipping companies had dismissed as highly unprofitable. Evergreen Marine Corporation (Japan) Ltd. was established in Tokyo, and realized rapid growth. Then, in 1974, Evergreen began offering service between East Asia and the U.S. East Coast—Evergreen opened a New York office in cooperation with a U.S. company and purchased four new vessels from a Japanese shipbuilder. Evergreen Marine Corporation (New York) was established, followed by Evergreen Marine Corporation (California) in 1976.
The new ships were relatively small S-class vessels, and many observers believed that they were too small to be profitable considering the extreme competition in the U.S. East Coast market. Despite these predictions, Evergreen succeeded in carving out a market. Chang further developed the company’s American market opportunities, ordering more ships and launching new service routes to California in 1976 and then to Seattle in 1977. Due to these heavy investments, Evergreen posted a string of early losses throughout the late 1960s and early 1970s; further, the company was affected along with the rest of the shipping industry by the energy crises of 1974 and 1975. Eventually, though, business improved in the late 1970s and Evergreen began to show profits.
Containerized Shipping Sweeps the Industry
Evergreen’s survival and growth during the industry downturn of the mid-1970s was the result of savvy business management, sheer tenacity, and Chang’s willingness to take risks. Chang’s gains were particularly impressive considering that his competition largely comprised containerized shippers. Indeed, prior to the late 1960s, most freight was shipped loose on bulk carriers. Goods were trucked or sent by rail to a port, unloaded, and then reloaded onto a ship. The system was slow and inefficient, and the open goods were vulnerable to spoilage and pilferage. In 1956, American Malcolm McLean, the operator of a trucking company, conceived the idea of containerized shipping, in which goods were loaded into a container at the factory, taken to port, and loaded directly onto a ship. By the late 1960s, established shipping companies had either converted to the new system or had been trammeled by their competitors.
Unfortunately for Chang, Evergreen lacked the resources necessary to convert older ships to containerized haulers. It was largely because of that disadvantage that he attacked the smaller, neglected routes during the late 1960s and early 1970s, and concentrated on efficiency and customer satisfaction. When Evergreen finally did convert to containerized shipping, the company took the industry by storm, offering containerized shipping in its U.S. markets on the East Coast in 1975. In spite of the fact that this new venture took place during the oil crisis and a subsequent downturn in marine transportation, the effort was a success. This same year also saw the establishment of Evergreen Group Incorporated S.A. in Panama, which was renamed Evergreen International S.A. in 1981. In 1979, Evergreen Marine Corporation (U.K.) was established as Evergreen’s European headquarters for operations and business development, a function that was later transferred to Hamburg, Germany. When this change occurred, the U.K. office became the company’s exclusive agent in the United Kingdom and Ireland.
Throughout the late 1970s, Chang aggressively invested in Evergreen to update existing ships and expand its line of freighters. As part of Chang’s plan to develop a worldwide network of containerized shipping routes, Evergreen initiated new routes serving Europe, the Red Sea, and the East Mediterranean. At the same time, he augmented the expansion effort with Evergreen Transport Corporation, a trucking company that he started in 1973 to support Evergreen Marine’s shipping operations.
Evergreen’s willingness and ability to penetrate competitive global markets was evidenced by its North European initiative. At the time, this lucrative market was primarily managed by the well-established Far Eastern Freight Conference (FEFC). The FEFC was predominantly made up of established shipping companies, and outsiders like Evergreen were not encouraged to compete. Nevertheless, Evergreen executives began an in-depth analysis of the North Europe market, as they did for all of the regions that they considered servicing. Although they were hesitant to tap the market because of the entrenched competition, Evergreen officials commenced service in Northern Europe in 1979. The gamble paid off, and Evergreen quickly developed a profitable operation in the region.
Evergreen’s Global Profile
To showcase its global expansion, the Evergreen Group was renamed Evergreen International S.A. (EIS) in 1981. Not surprisingly, more extensive routes were developed, and a massive worldwide company headquarters was constructed in Taipei, Taiwan in 1986. That same year, Evergreen Marine Corporation (New York) and Evergreen Marine Corporation (California) merged to form Evergreen International (USA), and, in 1987, Evergreen International (Deutschland) GmbH in Hamburg, Germany was established as the company’s new European headquarters, with all responsibilities being transferred from the London office.
Evergreen is committed to maintaining its traditional philosophy of serving world trade by providing the best transport services possible. By so doing, it is certain to play an even more important role in the world of commerce.
Evergreen had established itself as an emerging force in the global shipping industry at this time. The company’s green shipping containers were an increasingly common sight in ports throughout the world, and Evergreen was aggressively investing for future growth. Importantly, Evergreen launched its prosperous “round-the-world” service in 1984. This ambitious scheme linked Evergreen’s fleet of vessels, as well as some ships owned by other carriers, to offer through service around the globe. Evergreen began regularly sending eastbound ships from Singapore to Pusan and Tokyo, through the Panama Canal, to New York, across the Atlantic, through the Suez Canal, and back to Singapore. A similar westbound service departed regularly from Tokyo, and made stops in Korea, Singapore, Europe, and New York, among other ports. The round-the-world voyages typically required about 75 days and were coordinated with the help of satellite systems.
Investing in Growth and Employees
Partly to help finance the round-the-world service, Evergreen invested more than US$1.5 billion in new ships, terminals, trucks, and containers between 1983 and 1986. The heavy investments surprised other members of the shipping industry, most of which were suffering from a severe industry downturn. They watched curiously as Evergreen expanded, while at the same time excess shipping capacity was suppressing prices and reducing industry profits. Furthermore, competitors wondered where the tight-lipped Chang found the money to expand; some analysts speculated that Japanese trading house Marubeni was financing Evergreen under the table, while others suspected various Japanese or American banks.
Regardless of who fronted the investment capital, Evergreen’s operations swelled during the mid-1980s as its reach stretched to every corner of the globe. While many of its competitors reduced services or failed, Evergreen’s share of major east-west shipping routes ballooned to a dominating 10 percent. Amazingly, Evergreen was still a private company—75 percent owned by Chang and 25 percent owned by his employees.
Evergreen’s stunning gains during the shipping industry recession of the mid-1980s were largely attributable to the company’s innovative and disciplined workers. The company’s philosophy was reflected by its name, Evergreen, which symbolized Chang’s goal of constant growth. That growth was achieved by an incessant preoccupation with customer service, which drove the company to become constantly more proficient and productive. Evergreen’s heavy investments in cutting edge technology, for example, had made it the most cost-effective carrier in the world.
Evergreen ships were outfitted with microcomputers and satellite tracking systems that allowed the company to pinpoint the exact location of each of its containers at all times. As a result, Evergreen’s large ships were staffed by just 17 crew-members in comparison to an industry average of about 30. A 1986 study showed that Evergreen’s cost of delivering a 20-foot container was only US$835, compared to US$1320 for the average major U.S. carrier. Furthermore, Evergreen was generating a profit of about US$80 per container while the industry average was less than $10.
Chang gave the credit for Evergreen’s success to its top-notch employees. In contrast to most other shipping lines, Evergreen staffed its ships with highly trained crew members, many of whom had college degrees. Chang personally interviewed every employee that joined the Taiwan office, and once applicants were invited to join Evergreen they were treated well. The company paid higher salaries than most of its competitors and fringe benefits were plentiful. For example, Chang motivated workers by compensating them with ownership shares in the company. The result was an intense loyalty toward, and respect for, the company, which translated indirectly into customer loyalty. Evergreen’s Taiwan headquarters was quiet and efficient. The highly dedicated employees arrived early and departed late, and their desks were devoid of personal effects. Furthermore, no one smoked, sipped tea, read newspapers, or used telephones for personal calls during business hours.
- Evergreen Marine is established with one secondhand cargo vessel.
- First liner service begins on Middle East trade route.
- Evergreen Marine Corporation (Japan) Ltd. is established in Tokyo.
- Evergreen Marine Corporation (New York) Ltd. is established.
- Evergreen Group Incorporated S.A. is established in Panama.
- Evergreen Marine Corporation (California) is established.
- Evergreen Marine Corporation (U.K.) is established in London, later becoming the exclusive agent of Evergreen for the United Kingdom and Ireland.
- The company is renamed Evergreen International S.A. (EIS) to highlight the global expansion of the Evergreen Group.
- The company initiates two-way around the world container service, eastbound and westbound.
- Headquarters offices are built in Taipei, Taiwan; Evergreen Marine Corporation (New York) and Evergreen Marine Corporation (California) merge to form Evergreen International (USA).
- Evergreen Marine International (USA) is renamed Evergreen America Corporation.
- Evergreen Star Hong Kong Ltd. is established, replacing its agent for Evergreen Marine Corporation and Uniglory Marine Corporation.
- Evergreen International (Deutschland) GmbH becomes certified to ISO 9002.
- Evergreen Philippines Corporation (EGP) is established in Manila to handle operation of Evergreen and Uniglory services.
- Evergreen Group fleet numbers 61 full container vessels. Owned ships and those chartered long term total 130 over 400,000 TEU (twenty-foot equivalent units).
By late 1986, Evergreen was operating 52 ships and managing 160,000 containers. Moreover, in addition to Evergreen Marine, Chang’s privately held enterprise had branched out to include 14 different companies, most of which were engaged in the manufacturer, storage, and transportation of containers. All of the divisions had names beginning with “Ever.” For example, Chang owned Everlaurel, a Japanese trading company, and Evergenius, a software supplier. Those two companies mirrored Chang’s intent to diversify out of the shipping industry into a range of new businesses.
Indeed, Chang felt that he had achieved his goal of permeating the shipping industry and that the only challenge remaining was to increase Evergreen’s market share. To raise expansion capital for more growth, Chang took Evergreen public in September 1987 with a listing on the Taiwan Stock Exchange. Financials released in that year showed that Evergreen’s diversified operations had garnered $1.2 billion in revenues in 1986, $50 million of which was netted as profit.
Beginning in 1988, Evergreen Marine Corp. entered a period of consolidation. During that time, the company worked to reorganize its existing operations, cut unnecessary overhead, and reevaluate its presence in foreign markets. Meanwhile, Chang pursued new ventures through Evergreen Marine Corp.’s parent company, the Evergreen Group.
Evergreen Takes to the Skies
Chang Yung-fa, still at the helm of Evergreen at 62 in 1989, the world’s largest container-shipper at that time, stuck his neck out to buy eight Boeing 747-400 jumbo jets, and four extended range twin engine Boeing 767-300s for a grant total of US$1.7 billion. He also completed an order for 14 new MD-lls with McDonnell Douglas. Barring complications, the planes would be in use by 1992, partnering for passenger and freight service with Cathay Pacific, Lufthansa, Japan Air Lines, and Singapore Airlines. The aircraft purchases followed the formation of Evergreen Airways in March, just after the government decided to allow local, privately owned companies to establish international passenger and cargo airlines.
The founding of the new air service “clearly has the support of the Taiwanese government,” The Economist stated. Chang Yung-fa was helping reduce Taiwan’s “embarrassingly stubborn trade surplus with the United States,” which reached US$9.1 billion in the first nine months of 1989—a 23 percent rise on the same period the previous year and higher than the government’s US$8.1 billion target for the whole of 1989. Interestingly, Taiwan had a population of 20 million at that time but was the 13th largest trading nation. The government wanted to reduce the island’s reliance on trade with America, and would need efficient transportation links around the world.
EVA’s planes reflected the technology focus of Evergreen’s ships. Televisions were mounted on the backs of seats, for example, and satellite telephones were available. Furthermore, EVA’s technologically advanced planes averaged less than one year in age by 1994, giving the company a significant long-term advantage over competitors with aging fleets. By 1994, EVA was operating 20 aircraft and serving cities in Asia, North America, Europe, and Australia.
Rate Struggles and Expansion
With the goal of increased trade in mind, Evergreen offered a US$200 per container discount in 1990 over the previous year, which flew in the face of a rate stabilization pact discussed with ten other large North Atlantic carriers. Several other shipping firms had increased their rates by 8 percent. Evergreen later accused North Atlantic lines of conducting a smear campaign by leaking misleading reports that blamed Evergreen for undermining collective attempts to increase rates. The contracts involved included Beck’s and Heineken for shipping beer from Europe to the United States. International Freighting Weekly stated that Evergreen’s unusual outburst blamed other members of the Eurocorde Discussion Agreement for “leaking biased reports, claiming it was an attempt to discredit the line.”
Another of Evergreen Group’s major ventures in the early 1990s was its hotel business, which represented Chang’s efforts to become active in travel and leisure industries. Evergreen’s first hotel was the Evergreen Plaza Hotel, which opened in Hong Kong in 1991. The hotel featured 22 floors with 360 rooms and offered a full range of amenities for business travelers. Evergreen opened a second hotel, the 400-room Evergreen Laurel Hotel, in Taiwan in 1992. In 1993, moreover, the company began operating a second Evergreen Laurel Hotel in Bangkok. Other Evergreen hotels were slated to open during the mid-1990s. Evergreen’s hotels offered luxury accommodations, Western cuisine, and full recreational and conference amenities.
Along with this expansion went a flurry of renaming for the subsidiaries. The Hamburg office was renamed Evergreen Deutschland GmbH in 1992, and Evergreen Marine International (USA) was renamed Evergreen America Corporation in the same year, with its headquarters in Jersey City, New Jersey. The new American headquarters was responsible for all operations in the United States, Canada, and the Caribbean area. By 2002, Evergreen America had 26 local offices, all reporting to the Jersey City office. Evergreen Marine Corporation (Japan) Ltd. was also renamed that year as Evergreen Japan Corporation, with branch offices in Osaka, Nagoya, Fukuoka, and Sendai. The London office was also renamed Evergreen U.K. Ltd.
At about this time, Evergreen began to provide refrigerated containers in response to customer demand, and ordered three new container vessels to be delivered in 1993. The new ships, each 3,399 TEU, would be used on the westbound around the world routes, along with the 11 3,428 TEU vessels. In 1993, Evergreen Star Hong Kong Ltd. was established, replacing the company’s agent for Evergreen Marine Corporation and Uniglory Marine Corporation. Having a presence in Hong Kong was viewed by Evergreen as a means to pave the way for better business relations in Hong Kong and Mainland China.
While the Evergreen Group expanded, Evergreen Marine Corporation was renamed Evergreen Marine Corporation (Taiwan) Ltd., and renewed its global expansion effort. It was aided by its smaller sister company Uniglory, which was started in 1984 and was 50 percent owned by Evergreen in early 1995. The number of ships operated by Evergreen Marine declined between 1986 and 1993, but Evergreen’s shipping capacity increased. Indeed, in 1993 Evergreen Marine launched its first ship with more than 4,000 TEUs (twenty-foot equivalent units—an indicator of carrying capacity). In 1994, moreover, Evergreen ordered 10 new giant ships; five with 4,229 TEU capacity and five with 4,900 TEU capacity. That brought the total number of ships operating in Evergreen Marine’s fleet to 56 by 1995.
On Evergreen’s 25th anniversary in 1993, the company was displaying healthy revenues of $1.2 billion and profits of $106 million. During that short time, Chang had built the largest shipping company in the world and had become a world-renowned entrepreneur with companies involved in a vast array of industries. Furthermore, at the age of 66 and still firmly in control of the company he started, Chang showed no signs of slowing down. When asked to give advice to shipping industry newcomers in the 1994 Journal of Commerce and Commercial, Chang suggested: “they must better themselves with all-round shipping experience and a strong willingness to serve customers’ needs. There also has to be a commitment to taking some risks in life because not everything turns out successful. And finally, one must possess a spirit of adventure.”
Still Pursuing Quality
In 1994, Evergreen Marine Corporation received a quality award for service performance from several customers, including Olin Corporation, Toyota Motor Sales, Venture Stores, and Target Stores. Olin, a chemical firm that is based in Stamford, Connecticut, praised Evergreen for its service and safety record. The company had not applauded the performance of any ocean carrier before. In 1995, the company’s headquarters in Hamburg became certified to ISO 9002, the voluntary international standard for quality that had become a prerequisite for international trade in Europe.
In 1997, to meet the growing needs of customers in the Philippines, Evergreen Philippines Corporation (EGP) was established in Manila. The new company handled the operation of Evergreen and Uniglory services, working independently with the departments and sections as a team. By 2002, the Philippines office had branch offices in Cebu, Davao, and General Santos.
Evergreen’s ability to offer good rates and stay outside the conference system came to fruition in 1998, according to Traffic World. “The line is one of the biggest carriers in the world—second in TEU counts in U.S. trade lanes with about 1.2 million in 1997, according to PIERS [PIERS Trade Monitor, a publication that deals with maritime research]. It also has a reputation for offering good service at discount prices—just below those of conference carriers. Indeed, Evergreen often has been the carrier of choice in major trade lanes, such as the trans-Atlantic, where it has been offering rates only a tad below those of the Trans-Atlantic Conference Agreement.”
Evergreen Marine Corporation and COSCO agreed to launch ESA in 1999, a joint service linking major ports in Asia with Mauritius, South Africa and the east coast of South America. The carriers anticipated lower operating costs through the new partnership. Evergreen contributed eight ships capable of carrying 2.728 containers, while COSCO committed one vessel of 1,960 TEU (20 foot equivalent unit) and one chartered ship. The route would be Hong Kong, Kaohsiung, Singapore, Port Louis, Durban, Cape Town, Buenos Aires, Montevideo, and Santos.
Fledgling Airline Profitable
In spite of a region-wide recession for Asian airlines, EVA Air posted an after tax profit of NT$62.59 million (US$1.94 million) in 1998. China News reported that the company had a target of NT$46 billion (US$1.34 billion) for the end of 1999, nine percent higher than its profit for 1998. A shift in main focus from passenger to cargo service mid-year took the carrier from a deficit to a profit for the year. Tony Chou, head of EVA Air’s operations division, explained, “The next two to three years will still be very lean years for the civil aviation industry. Our confidence, however, has been built up by our first quarter performance this year. We got better than expected results, and we are hopeful we will be able to hold this up.”
EVA Air has developed some appealing services to attract passengers, such as providing deluxe service, a cross between the business and economy class, which was a major hit. The airline also made arrangements with hotels and resorts to capture the tourist market. Chou noted, “We look at our customers’ behavior first, and later introduce innovations that meet their demands. We present EVA Air as a new airline that is aggressive and energetic. We are not afraid to make changes provided they would satisfy our customers.”
This gung-ho approach carried over to the freight business, a good idea since it amounted to 41 percent of EVA’s business. Evergreen estimated that cargo would account for 50 percent of EVA’s business the following year, as the cargo business was growing at a rate of 14 percent a year. The company purchased three more aircraft to accommodate the new business, and anticipated expansion from its fleet of 40 planes serving 32 destinations to between 60 and 70 wide-bodied aircraft by 2008. In addition to new services to Atlanta, and between Taiwan and India, the airline entered into alliances with leading domestic carriers who provided connections between Mumbai and Bangalore and Madras and Delhi to increase services in India. The company also launched passenger services to Canada after flights booked in the Canada-bound Taipei route exceeded 300,000 in the first nine months of 1998.
Burgeoning Growth and Mergers
In August 1999, Evergreen Marine Corporation and China Ocean Shipping Company (COSCO) jointly launched a service linking South Africa and South America, providing 10 vessels on a weekly route. Evergreen contributed eight ships from its 20 2,728 TEU G-type fleet while COSCO provided the 1,960 TEU Sky River and one chartered vessel. The service, the ESA, linked the main ports in the Far East with Mauritius, South Africa, and the east coast of South America, with a port rotation of Hong Kong, Kaohsiung, Singapore, Port Louis, Durban, Cape Town, Buenos Aires, Montevideo, and Santos.
In October 1999, the Evergreen Group announced that it would be building 25 new container ships, half of which would be managed by Lloyd Triestino Company, the Italian shipping company acquired by Evergreen the year before. As reported in the Central News Agency (Taiwan), President Chang Jung-fa stated that the ships were to be used to build up the Triestino fleet with its 42 Panamanian-registered container ships. Evergreen acquired Lloyd Triestino for US$35 million and took on its US$100 million in debt, but allowed the company to keep its name and to operate as a sister company to Evergreen. Triestino would develop new services, including expanded service to Mainland China. Evergreen had just launched weekly service linking Mainland China, the Mediterranean, and Northern Europe.
Chang also stated that Evergreen Group would merge Evergreen Marine Corporation (Taiwan) Ltd., the world’s second largest container carrier, with Uniglory Marine Corporation, an Evergreen subsidiary. Uniglory would then become an intra-Asia trade department within Evergreen Marine. Along these same lines, Evergreen Marine Corporation (Taiwan) Ltd. joined the Crowley/APL/Lykes alliance in the trade between the east coasts of North and South America, withdrawing its small charter vessels. The combined service would use six vessels with an average 2,300 TEU capacity in a weekly rotation, and would cover New York, Norfolk, Charleston, Miami, Rio de Janeiro, Santos, Paranagua, and Buenos Aires. In addition, Evergreen and its Panamanian affiliate Unigreen Marine improved services between the United States, The Caribbean, and Venezuelan markets, using three B-type vessels. The companies also planned to offer transshipment at Panama to and from Evergreen’s eastbound and westbound around the world services.
In March 2001, The New World Alliance (TNWA) announced expansion of its trans-Pacific services with a creative slot exchange partnership with Evergreen Marine Corporation over a two year period. The exchange of container space marked the first time that APL, Hyundai Merchant Marine (HMM) and Mitsui O.S.K. Lines (MOL), as members of The New World Alliance and Evergreen had worked together. Evergreen purchased space on TNWA’s weekly service between the U.S. Pacific Northwest and major Asia ports—the Pacific Northwest Express (ONX)—and TNWA purchased space from Evergreen on its services linking Asia and the U.S. east coast. An article in PR Newswire stated that the deal was a win for customers and carriers alike, as existing services would be enhanced and more transportation options would be provided for customers.
A new container terminal built by Evergreen Marine Corporation at Taranto in southeastern Italy opened for business in early July 2001, replacing the Gioia Tauro terminal to become the company’s maritime freight transition center in the Mediterranean. The new terminal, which could handle two million TEU containers per year, had a one-kilometer pier that can berth three large container ships at a time. The pier could be expanded to 2.5 kilometers long, capable of berthing seven ships.
Evergreen’s rapid and innovation expansion paid off. Traffic World reported in May 2001 that the company’s operating profits were up from US$28.9 million in 1999 to US$40.1 million, a 39 percent increase over the previous year. Revenue increased 15 percent to US$1.9 billion. Just to make sure it could keep up, however, Evergreen was putting larger and faster ships into service, and was developing slot exchange relationships with other carriers. Unfortunately, the latter part of the year reflected what much of the rest of the shipping industry was experiencing—a significant slowing of business for Evergreen Marine Corporation and Greencompass Marine, both of which reported August revenues of about 8.55 percent less than the previous year. These losses continued after the September 11, 2001, terrorist attacks on the Twin Towers in New York City, but most of the major shipping firms remained optimistic because of their diversity of services and destinations.
In early 2002, Evergreen Marine Corporation announced plans to move its transshipment hub from the Port of Singapore Authority (PSA) to the Malaysian southern Port of Tanjung Pelepas (PTP) because of significantly cheaper container handling charges. Chang Yung-fa was quoted in Bernama: The Malaysian National News Agency as stating, “Charges for Tanjung Pelepas are more than 50 percent lower than those in Singapore. Our company has annually handled about 1.2 million TEUs on container cargoes in Singapore, so the difference between the two ports amounts to as much as NT$200 million ($584,000) or so.”
The shift was a major loss for the state-owned PSA, which had lost 10 percent of its container volume the year before due to economic slowdown and the Danish global container liner Maersk Sealand’s shift to PTP. Maersk, the largest container shipping company in the world, moved 1.8 million TEUs through Singapore annually. Evergreen Marine and its Uniglory Marine Corporation had been moving nearly 1.2 million TEUs through Singapore annually, which came to about 7 percent of the total number of containers handled by PSA. The change would take place in August 2002 when Evergreen’s contract with PSA expired. PTP essentially performed a major coup in landing Maersk and Evergreen, as the port had just been established in 1999.
Still More Frontiers to Conquer
Evergreen Marine also announced in IPR Strategic Business Information Database that it would begin new operations from Mainland China in March 2002. The expansion to China business must overcome longstanding political hurdles that blocked direct transport to the mainland. Fortunately, Evergreen’s decision was in response to China’s Vice Minister of Foreign Trade and Economic Cooperation, An Min, who called for Taiwan to take measure to open direct trade and transport. The company’s acquisition of Lloyd Triestino a year earlier allowed Taiwanese companies direct shipping lines with China. Evergreen established representative offices in Dalian, Tianjin, and Qingdao as part of its primary strategy to further develop the market, planning to secure a strong market share of China’s potentially significant trade growth after it joined the World Trade Organization.
In March 2002, Evergreen announced that it would launch regular container service from Taiwan to the west coast of South America, providing a weekly container service between Taiwan and Panama, Colombia, Ecuador, Peru, and Chile. An Evergreen spokesman stated in AsiaPulse News that the cargo travel time between southern Taiwan’s Kaohsiung Port and destinations in Chile and Colombia would be shortened by 31 to 26 days respectively.
Evergreen planned to pick up on the total logistics trend by increasing its investment in forwarding operations, container depots, warehousing, and trucking in China, Southeast Asia, the Indian subcontinent, and South America. Given Evergreen’s savvy moves historically and the fact that it reported a profit of NT$1.7 billion (US$50.3 million) in 2001, up 35 percent from 2000, it seemed likely that its cautious but strategic approach to the China markets and logistics business would pay off.
Evergreen America Corporation (select U.S. and Canadian cities); Evergreen International S.A. (Panama); Evergreen Japan Corporation; Evergreen Deutschland GmbH; Evergreen U.K. Ltd.; Evergreen Star Hong Kong Ltd.; Evergreen Philippines; Evergreen Poland Sp.Zo.O.
Maersk Seal and (Denmark); Hanjin Shipping (Korea); Hyundai Merchant Marine Ltd. (Korea).
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Annette Dennis McCully