Evergreen Marine Corporation Taiwan Ltd.

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Evergreen Marine Corporation Taiwan Ltd.

330 Minsheng East Road
Taipei 10444
Taiwan
88625057766
Fax: 88625055255

Subsidiary of Evergreen Group
Founded: 1968
Employees: 3,900
Sales: $1.2 billion
Stock Exchanges: Taiwan Taipei
SICs: 4731 Freight Transportation Arrangement

Evergreen Marine Corporation Taiwan Ltd. is the largest container shipping company in the world and one of the most successful companies in Taiwan. Although it was only 25 years old in 1994—young compared to many major shipping companies—Evergreen had risen quickly to the top of the shipping industry by focusing on innovation, quality, customer service, and global expansion. Evergreen also expanded into other industries—including construction, trucking, hotel operation, and air transportation—through an umbrella organization called Evergreen Group.

Evergreen Marine Corp. was founded by Y. F. Chang, a Taiwanese visionary whose success has made him one of the wealthiest entrepreneurs in the world and a celebrity in his home country. Chang, the son of a ship’s carpenter, grew up in the shipping industry. In fact, 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 one small ship—a 20-year-old cargo vessel named the Central Trust —and 50 employees, 32 of whom worked at sea. He began by offering ship-anywhere service to Taiwanese exporters.

During his first year of business, one of Chang’s customers paid him handsomely to make a delivery to the Persian Gulf. From this experience, the opportunistic Chang realized that the 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. They were spending billions of dollars on massive modernization projects involving the construction of schools, communication infrastructure, hospitals, airports, and power plants, to name a few. 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. 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. 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; in fact, 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.

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. Evergreen began offering containerized shipping in its U.S. markets in 1975. Throughout the late 1970s, Chang invested aggressively 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 Corp., 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, that lucrative market was largely managed by the well-established Far Eastern Freight Conference (FEFC). The FEFC was dominated by established shipping companies, and outsiders like Evergreen were not encouraged to compete. Nevertheless, Evergreen executives began an in-depth analyses 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. Going into the early 1980s, Evergreen was serving all three major markets: Asia, North America, and Europe.

By the early 1980s, Evergreen had established itself as an emerging force in the global shipping industry. The company’s green shipping containers were becoming an increasingly common sight in ports throughout the world, and Evergreen was aggressively investing for future growth. Indeed, Evergreen assumed full control of its New York operation early in the decade and quickly opened more than 20 offices in the United States and three more in Canada. Importantly, Evergreen launched its prosperous “round-the-world” service in 1984. This ambitious scheme linked Evergreen’s fleet of vessels, as well as ships owned by other carriers in some instances, 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.

Partly to help finance the round-the-world service, Evergreen invested more than $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 whom 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 $835, compared to $1320 for the average major U.S. carrier. Furthermore, Evergreen was generating a profit of about $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.

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 reevalúate its presence in foreign markets. Meanwhile, Chang pursued new ventures through Evergreen Marine Corp.’s parent company, Evergreen Group. In 1989, Evergreen started Taiwan’s first private international airline, EVA Airways Corporation. The start-up was the result of months of intensive research by Evergreen managers. Using the same customer orientation that had made Evergreen Marine successful, company employees soon turned the fledgling EVA into a small but successful international airline. EVA’s planes even 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.

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.

While the Evergreen Group expanded, the core Evergreen Marine Corp.—the company was renamed Evergreen Marine Corp. Taiwan Ltd.—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 going into 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 (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 customer’s 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.”