Evergreen Marine Corp., the largest container cargo shipper in Taiwan, has sought to mitigate concerns that its shipbuilding contracts with a Chinese state-own firm could help strengthen China’s navy by describing the contracts as “completely commercial.”
In a statement issued Friday, Evergreen Marine said all of the company’s shipbuilding contracts were reached after international bidding, and the deals with the Chinese firm were completely commercial in nature.
In addition to China, the Taiwanese shipper said, it has also entrusted firms in Taiwan, Japan and South Korea to build container vessels for its growing fleet.
Evergreen Marine’s statement came after Reuters cited a report from the Center for Strategic and International Studies (CSIS), a Washington-based think tank, as saying that the Taiwanese shipping services provider’s shipbuilding contracts with China State Shipbuilding Corp. (CSSC) could lower the costs for an upgrade of Beijing’s navy, leading to security concerns for Taipei.
Reuters said CSSC plays a key role for China’s rapidly expanding People’s Liberation Army Navy, and is believed to be building Beijing’s third aircraft carrier.
According to the CSIC report, since 2018, Evergreen Marine have purchased 44 vessels from China, with all but two built in the shipyards of Chinese firms including CSSC, which builds warships for China’s Navy.
The CSIC report indicated foreign companies from U.S. allies, such as France, also purchase ships from CSSC, which has been placed by the United States on an investment blacklist for U.S. individuals and companies because of its links to the Chinese military, according to Reuters.
Although there is limited transparency to show the foreign capital flows in China’s shipbuilding industry, “available evidence indicates that profits from foreign orders are likely lowering the costs of upgrading China’s navy,” Reuters quoted the report as saying.
The Washington think tank urged Evergreen Marine to consider U.S. allies, including South Korea and Japan as alternative shipbuilding partners, Reuters said.
In response, Evergreen Marine said it has entrusted South Korean companies to build 58 vessels with a combined capacity of more than 730,000 TEU, surpassing shipbuilding from China which has supplied 35 vessels with an aggregate capacity of about 240,000 TEU. TEU (twenty-foot equivalent unit) is a measurement of the loading capacity of a container ship.
“We believe the civil commercial ship building activities have nothing to do with national naval projects,” Evergreen Marine said, adding its agreements with CSSC’s commercial shipbuilding department were completely separate from CSSC’s military department.
As a listed company on the Taiwan Stock Exchange, Evergreen Marine said it discloses all the information about its new shipbuilding deals to authorities and investors.
At an investor conference held in mid-March, Evergreen Marine said it operates a fleet of 201 vessels, 62 percent of which are owned by the company itself, and has a loading capacity of 1.51 million TEU.
The shipping industry has benefited from a spike in freight rates at a time of supply shortage and port congestion amid COVID-19.
In the first three months of this year, Evergreen Marine generated NT$170.81 billion in consolidated sales, up 89.9 percent from a year earlier after posting a new monthly high of NT$58.67 billion in consolidated sales for March.
In 2021, Evergreen Marine posted record annual net profit of NT$239.01 billion, up 880.98 percent from a year earlier, increasing its net worth per share to NT$61.76. Consolidated sales rose 136.34 percent to a new high of NT$489.41 billion last year.
Source: Focus Taiwan News Channel