The government of Taiwan has implemented a NT$30 billion state aid package for the shipping industry via government loans, targeted at Yang Ming Marine Transport Corp. and Evergreen Marine Corp. (Taiwan) Ltd.

This has come as part of a larger package supporting the transport industry that has prioritized the airline industry. Nonetheless, the government has said that "in the next few months, global container volume may decrease by as much as 30%," indicating that pressure on the two container lines is set to continue.

As outlined in Panjiva's research of May 14, Yang Ming has already carried out a capital increase to support its finances. The government's loans may help obviate the need for further increases. The application of state aid may lead other countries to implement similar plans and/or launch trade policy infraction investigations given the subsidies may in particular help Taiwanese exporters.

Panjiva data shows that shipments by Evergreen and Yang Ming represented 42.0% and 12.2%, respectively, of exports from Taiwan to the U.S. in the 12 months to April 30. That is a similar level to 2016 but is a marked improvement for Evergreen from its 37.8% share in 2018. 

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Notably, Yang Ming's shipments from Taiwan to the U.S. jumped 10.2% year over year in the first four months of 2020 while those handled by Evergreen were broadly unchanged. That rebuilding of market share may have come at the expense of lower shipping rates.

Major exporters from Taiwan to the U.S. will face reduced logistics planning uncertainty as a result of the financing package. Indeed, the financing may allow Yang Ming and Evergreen to increase their competitiveness on such lanes. 

Major users of their competitors' services on Taiwan-to-U.S. lanes outside the logistics sector include auto parts makers Tong Yang, which shipped 3,290 20-foot equivalent units with a wide range of container lines in the 12 months to April 30, and Yamaha's motor division, which shipped 1,600 TEUs with Ocean Network Express. Others include plastic and rubber makers LCY and Cheng Shin Rubber, with 1,640 TEUs and 1,580 TEUs, respectively.

As of May 20, US$1 was equivalent to NT$29.91.

Christopher Rogers is a senior researcher at Panjiva, which is a business line of S&P Global Market Intelligence, a division of S&P Global Inc. This content does not constitute investment advice, and the views and opinions expressed in this piece are those of the author and do not necessarily represent the views of S&P Global Market Intelligence. Links are current at the time of publication. S&P Global Market Intelligence is not responsible if those links are unavailable later.