Taiwan’s Wan Hai Lines is in talks to invest in a mainland shipping company to expand its network and offset the severe industry downturn that is likely to impact its revenues this year, Dow Jones reported.

Wan Hai Lines, the largest container shipping firm on intra-Asia routes by market share, has been cutting capacity on the Asia-Europe route and restructuring its network because of the downturn in global trade and vessel overcapacity that has slashed freight rates and profit, company president Tony Chow said.

An investment in a Chinese shipping firm would allow Wan Hai Lines to exploit the expected growth in China’s river transport and trade between China and Southeast Asia, Chow said.

"We are positive on the domestic demand stimulus package implemented by the Chinese government, which will also create intra-Asia cargo as China and Asean remove trade tariffs,” he explained.

Chow did not reveal to name of the Chinese company, but said a conclusion to the talks was likely to take time because Wan Hai wants a stake of at least 51 per cent in the firm.

Taiwan and China agreed on closer transport links in November, including launching direct daily charter flights and direct shipping links, but restrictions remain on cross-strait business. For example, Taipei prohibits investment in container terminals on the mainland, and branch offices can only deal with cross-strait cargo. This means Wan Hai Lines must first ship Chinese cargo to a Taiwanese port before carrying it to a third destination, said Chow.

Investing in a Chinese liner would give Wan Hai Lines, which has 20 offices in China, immediate access to China’s river cargo business, he said. “There’s a lot of coastal and Yangtze River cargo that we can’t do now.”