1.Representatives of Hamburg Port Visits Kaohsiung to Exchange Ideas

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1 1.Representatives of Hamburg Port Visits Kaohsiung to Exchange Ideas Mr. Wolfgang Hurtienne, Head of Port Planning Division, Dept. of River and Port Engineering and Mr. Michael Heinrich, Head of Port Economic Section, two representatives from the Port of Hamburg, paid a visit to the Port of Kaohsiung on October 19, 2000 to share experiences and exchange ideas on port operations. They also visited local shipping companies to better understand the current market and its future development. The Ports of Hamburg and Kaohsiung became sister ports after the signing of an agreement in November The Port of Hamburg is located by the River Elbe, about one hundred kilometers from the North Sea. Handling about 3,738,000 cargoes a year, it is Germany's largest port and the 9th largest container port in the world. Hamburg has the most advanced berth facilities and its intermodal transportation network makes it one of the most important railway container transshipment centers in Europe. In addition, it also assumes a leading role in European logistics services. This visit not only strengthened the friendship between the two ports, it was also a great opportunity for Kaohsiung to learn from her sister port, especially as Kaohsiung is making its own efforts to develop a logistics business. 1. The Representatives of Hamburg Port presented an emblem to Director Oliver Yu. 2. Guests from the Port of Hamburg visited her sister port in Kaohsiung on November 19, 2000 Mr. Bill Hung introduced the harbor racilities to them. 3. The delegates of Port of Kaohsiung exchanged experiences on port business and development with guests from Hamburg.(Photo by Cheng hsu ming)

2 2.MOTC Minister Paid Her First Visit to Kaohsiung Port Ms. Chu-lan Yeh, Minister of Transportation and Communications, visited the Kaohsiung Harbor Bureau and the Port of Kaohsiung on the 2nd day of December This was her first visit since Minister Yeh came to office. After listening to a briefing on the operations of the KHB, the Minister was pleased by the performance demonstrated by the KHB staff under the leadership of Director Oliver Yu. Impressed by their energy and efficiency, the Minister decided to organize business tours for the Ministry and the units under its supervision to learn from each other, and the KHB would be the first stop on the tours. The Minister expressed her admiration and gratitude to Director Yu for his devotion to making the Port of Kaohsiung an even more competitive port in the international market, as well as his readiness to garner suggestions and requests from private enterprises. And she expected the current re-structuring would bring KHB even greater success. She also urged all staff in the Bureau to co-ordinate their efforts to achieve the goal of ten million TEUs of container volume every year. 1. Miniter Chu-lan Yeh paid her first visit to the KHB and listened to the briefing. 2. Director Oliver Yu gave an introductory tour of the KHB to Minister Chu-lan Yeh. 3. Group photo of Minister Chu-lan Yeh (first row, left fifth), Director Oliver Yu.

3 3. Norwegian Star of Star Cruises Tests Taiwan Market The Norwegian Star" of Star Cruises recently opened a new line to Taiwan. To test the local market, the Norwegian Star arrived at the Port of Kaohsiung on November 17, After a three-day stay, the cruise ship sailed for Taichung on the evening of November 20. While berthed at Kaohsiung, the ship was open to the public for a visit to its facilities. It also provided two cruise tours for passengers to the open sea. In the future, the Norwegian Star will operate two tourist routes: Keelung to the Open Sea" and Keelung to Okinawa to Keelung". 1. Norwegian Star of the Star Cruises docking at Berth #1 of the ort of Kaohsiung on November 17, 2000attracted many local visitors to go on board. 2. Norwegian Star Captain Holm Kjell Martin Halsans presented a gift to Director Oliver Yu for the hospitality received. 3. Director Oliver Yu attended the Virgin Sail Ceremony of the Star Cruises.(Photo by Kuo chin Wu)

4 4.Kaohsiung Port First Deep-water Logistics Warehouse Completed Kaohsiung Port's Berth #122, invested in by Kaochun Stevedoring CO., LTD has been completed and began operations on October 27, This warehouse's major source of goods comes from Norway's Gearbulk Ltd. It is expected to develop into a distribution and transshipment center for the Asia Pacific region. Although already operating a transshipment center in Singapore, Gearbulk Ltd. was attracted to the operational efficiency brought by the stevedoring privatization of the Port of Kaohsiung as well as the three working shifts and competitive tariffs offered by Kaochun. As a result, Gearbulk decided to sign a long-term contract and by so doing form a strategic alliance with Kaochun. 1. Director Oliver Yu exchanged ideas with representatives of Kaochun and shipping companies. 2. Opening ceremony of Kaochun's logistics warehouse. 3. Under the collaboration of KHB and Kaochun. the new logistics warehouse on Berth #122 was officially open on October 27, Representative of the Shipping Companies Mr. Knut Wibe presented a gift to Director Oliver Yu. (Photo by Kuo chin Wu) Gearbulk owns a fleet of ninety-eight container ships carrying cargoes of pulp, timber, aluminum ingots, iron, etc. for Taiwan's domestic supply. The company is also gradually shifting more business to Kaohsiung to substitute for the existing center in Singapore. Kaohsiung is expected to become Gearbulk's prime distribution center in the Asian Pacific region. Kaochun is developing a business in logistics and starting to operate its warehouses at Berth 122 in the

5 Port of Kaohsiung. The warehouses are expected to handle a minimum of 200,000 tons of bulk cargo per year. In the future, Kaohsiung will become its distribution and transshipment center in the Asian Pacific area and the annual handling volume of bulk cargo will be expected to reach a minimum of one million tons. In addition to the establishment of warehouse facilities, Kaochun. by adopting a threeworking-shifts-a-day system, aims to attract more large cargo transshipment business to expand its business territory.

6 5.Measures Added to Ensure Safer Transportation Through the Cross-Harbor Tunnel In order to ensure the safety of the cross-harbor tunnel structure as well as vehicles passing through the tunnel, certain protective measures have been taken by the Kaohsiung Harbor Bureau. For driving safety management, in addition to reinforcing the prosecution for speeding and violation of traffic rules, the Bureau also set regulations upon vehicles carrying hazardous goods, vehicles exceeding length, height, and width limitations, and forklifts. The above vehicles should file applications to the Bureau for passing through the tunnel from 12:00 to 12:15 a.m., 6:00 to 6:15 a.m., and 12:00 to 12:15 p.m., the vehicles will then be escorted by the harbor police cars. Vehicles without permission that pass through the tunnel at the restricted time will be prosecuted according to the regulations.

7 6.KHB Suggests Adopting A Reasonable Tariff on Containers Carried by General Vessels In order to improve operational efficiency and simplify and rationalize the tariff system, the Kaohsiung Harbor Bureau on October 18, 2000 proposed to the Ministry of Transportation and Communications the introduction of a reasonable tariff on containers carried by general cargo vessels, i.e. the tariff for containers carried by general cargo vessels be subjected to the same tariff as containers carried by full container vessels. According to the existing tariff, container handling and stevedoring management fees for containers carried by general cargo vessels are currently charged in accordance with the higher general cargo tariff by converting 70% of the container volume into tons". However, additional fees such as equipment hire, storage, wharfage, etc. are charged as container fees. Consequently, containers carried by general cargo vessels are subject to two different tariff systems: the general cargo and container tariffs. KHB pointed out that the above tariff was instituted to compensate for losses to dockworkers arising from earlier stevedoring reform. However, the simplification and rationalization of tariff is inevitable as the Port tries to improve the efficiency of its operations in the current competitive environment. Many operators in related businesses, such as shipping associations, wish the container tariff for both general cargo vessels and container ships be combined in a single tariff system to avoid disputes resulting from different systems of tariff. KHB also emphasized that many measures to promote business have been carried on since the Kaohsiung affiliated An-ping Harbor became an international sea port. The volume of container cargo handled in An-ping has so far totaled only 282 TEUs in three shipments. The main reason is that the container handling and stevedoring management fee results in a rise in costs. Cargo owners have petitioned many times for a more reasonable tariff system. Ship leasing operators also pointed out that the expansion of business in An-ping would be seriously affected, if the current tariff system remains unchanged.

8 7.Online Application For Hazardous Goods Handling Launched Kaohsiung Harbor Bureau has completed the launching of the online application system for handling of hazardous goods. Companies can save both time and cost by utilizing this new system. The system was officially put into operation on November 1, The Port of Kaohsiung is the first of the four international ports in Taiwan to adopt this new system. Applicants no longer need to go to the Bureau to file applications, but can now complete and submit applications electronically. 8.MOF Modifies Logistics Regulations To further improve Taiwan's logistics and customs efficiency, the Ministry of Finance has enacted regulations governing the clearance of cargo in logistics centers. In accordance with these regulations, the Customs Department is drafting relevant clearance rules and redesigning its computer programs. In addition, the Ministry of Finance has also urged Customs to set up an international unit responsible for communication and negotiation of terms of trade and tariffs with foreign countries and other international organizations. Taiwan currently has bilateral customs agreements with 23 countries, but lacks a single customs unit to take charge of international matters. The new international unit is expected to enhance the cooperation of customs agencies and trading bodies between Taiwan and other countries. This task will become more urgent as Taiwan will soon join the World Trade Organization. Under the new regulations, logistics centers are defined as bonded locations for storing, transiting, and distributing cargo. All bonded cargo, including import goods not sold to local companies and other bonded goods in local warehouses, may be stored and processed. The Customs Department is reducing its inspections, and simplifying and expediting clearance procedures to reach the ultimate goal of zero-inventory. Logistics centers can make use of automatic electronic transmission systems to control warehouse clearance without the presence of customs officers. Consequently, bonded cargo can be shipped abroad or distributed to other bonded locations, local companies, or consumers at any time. There is also no time limit for storage. Customs will, however, undertake post-import auditing on a random basis for surveillance," a Customs spokesman said. A Single Business Window" and a Service Team" will also be set up to provide assistance and services to facilitate the system.

9 9.An-Ping Harbor Extension Project I. Introduction The goal in extending An-Ping Harbor is to develop it into the best-affiliated harbor pertaining to the Port of Kaohsiung. Since completion of harbor entrance construction in 1979, An-Ping Harbor has been able to accommodate ships up to 6,000 DWT. However, current channel depth and the hinterland of the port area limit the operational capacity of the Harbor. The extension of An-Ping Harbor will alleviate the problem of shipping congestion in the Port of Kaohsiung. It will also enable it to cope with the increasing economic and industrial development of the Tainan area precipitated by the establishment of the Taiwan Technology Industry Area and the Tainan Science Based Industrial Park. II. Purpose of the Project The purpose of the extension project includes the following:.to coordinate domestic and outer island traffic linkages and implement the construction of a `blue corridor' of sea transportation around Taiwan..To relieve the traffic burden of rapid growth in the Port of Kaohsiung by creating an auxiliary harbor in close proximity..to develop the potential trade capacity arising from the Yun-Lin, Chia-Yi, and Tainan areas..to facilitate marine transportation with South East and North East Asia and Hong Kong..To promote the industrial and commercial development of the Tainan area..to provide an ideal environment for marine recreational activities and raise the tourist potential of the Tainan area..to shorten the distance and reduce the cost of land transportation and ease the pressure arising from the rapid growth of land transportation. III. Schedule of the Project The development is planned to be implemented in three stages. During the first stage (from 1992 to 2004), it is planned to expand the harbor entrance and fundamental infrastructure as well as San-Kun-Shen berths. The second stage (from 2004 to 2015) is to construct the land of the 5th Rezoning Plan. The last stage (from 2015 on) will be to completely construct the Szu-Kun-Shen berth area. IV. Details of the Project The size of the harbor area will be 445 ha with the entrance facing W30 S. The main channel will measure 180m in width, -11.5m for water depth, and have a turning basin diameter of 500m. The harbor will then be able to accommodate ships up to 20,000 DWT. Nine wharves are currently in operation; however, the depth of Berth #1 and #2 measures only 3.5m at the moment, but is expected to become 9.0m after the first stage of construction. Upon completion,

10 there will be 32 berths with a total of 5,566m in length in the harbor. The marina will be able to accommodate 30 large, 68 medium, and 88 small pleasure boats. V. Construction Cost The total capital investment for this project is estimated to be billion NT Dollars, being 18 billion NT Dollars for land acquisition and billion NT Dollars for construction. The capital for the project comes primarily from the government. It will be spent on the construction of fundamental facilities including 3,632m total length of breakwater, 914m length of revetment, 9.38 million cubic meters of dredging, the old Berth #1 and #2, the new Berth #8 and #9, harbor access road and related water supply, electricity and power supply, elecommunication system installation as well as harbor landscaping. In addition, a BOT policy for constructing the rest of the wharves and operation facilities are also open to private enterprises.

11 10.Wan Hai Lines - 35 Successful Years Over the past 35 years, Wan Hai Lines has emerged as the largest liner company serving intra-asia trade. It has built up a reputation as a low-cost and high-frequency carrier and now deploys a fleet of 55 vessels amassing around 60,000TEU slots on more than 20 service lines, of which the majority are operated without partnership arrangements. In an average month, Wan Hai schedules more than National Day Fireworks Set Off in Kaohsiung Port Statisties of Containers Handled Year (Month) Total Incoming Container Outgoing Container 1999 (1~12) 6,985,362 3,398,909 3,586, (1~12) 7,425,932 3,634,740 3,791,092 Commodity Volume of Imports & Exports Year (Month) Total Incoming Container Outgoing Container 1999 (1~12) 110,722,837 84,442,062 26,280, (1~12) 115,286,857 86,690,132 28,596,725

12 12.Visit to Ports in the USA and Canada KHB Director Oliver Yu visited ports in Long Beach, Seattle, Los Angeles, Vancouver, and Tacoma in December Ideas of port management and operations were exchanged between Director Yu and the port directors he visited. He was also interested in learning how the berths and equipment at other ports were utilization of its own resources. In addition to the port authorities, Yu also extended courtesy visits to chief directors of shipping companies such as Evergreen Vice President Wesley J. Brunson and Hanjin Shipping General Manager G.J. Park. December 7, 2000 Director Yu and executives of Tacoma Port Authority pose for a group photo. (from left to right) TPA Senior Director of Facilities Dept. Jeffrey A. Lincoln, TPA Deputy Director Timothy Farrell, KHB Director Oliver Yu, TPA Director Andrea Riniker, TPA Senior Director of Marketing & Trade Brendan J. Dugan, and KHB David.

13 Director Yu (right) presented the port emblem to Evergreen Vice President Wesley J. Brunson. December 5, 2000 Executive Director Larry Keller (second from right) and Director of Business Development Albert B. Fierstine (first from right) of the Los Angeles Port Authority introduced port facilities to Director Yu (second from left) and Evergreen Vice President. Director Yu (right) visited Hanjin shipping executive Kevin Nicolello Assistant manager (first from left) Phillip T. Wright Operations manager (second from left) C.J. Park General Manager (third from left) L.A. Port Authority Executive Director Larry A. Keller (left) presented the port emblem to Director Yu (right).