Service Overview

Against the backdrop of the recent increase in global trade, there comes more need for stability and speediness in container transport service. To cope with such customer needs, "K" Line has been carrying out the planned deployment of a series of 13 brand new 5,500-TEU containerships with a speed of 25 knots. They have been deployed in the Pacific Northwest/Asia/Europe service route. This deployment also signifies that we have finished constructing the new East/West trunk Line service framework. Completion of the trunk Line makes it possible to achieve an increase in callings Chinese ports and to significantly reduce transit times. We have placed an additional order for 8 new 4,000-TEU Panamax type containerships that are to be delivered between 2004 and 2005. And furthermore, we have placed an order for four 8,000-TEU type and five 5,000-TEU type that will be delivered between 2006 and 2007. As a matter of fact, we are confident that we are able to satisfy customer needs with the best quality service available anywhere on the globe.

In September 2001, Hanjin Shipping Co., Ltd. (Korea)/Senator Lines GmbH (Germany) were added to the alliance and all parties have now reached an agreement on working toward the forging of a new and strengthened alliance. The CKYH alliance has become closer and deeper in mutual relationship- COSCO Container Lines, "K" Line, Yangming Marine Transport Corp. and Hanjin Shipping Co., Ltd. In the beginning of 2003, we have provided 3-sailings-per-week service in the remarkably expanding trade between Asia and U.S. East Coast. Similarly, improvement has been attained through optimum positioning of the fleet of each alliance member. Against the backdrop of brisk tonnage movement, the previous 2- sailings-per-week service has been increased to 4 sailings on a weekly basis in the Asia/Mediterranean trade. This has enabled us to start a direct service to Turkey, Greece and other East Mediterranean countries, and in a similar manner we will continue enhancing and improving our service to meet the diversity of market needs. In the meantime, we have been successful in rationalizing the Atlantic trade, circumstances of which had been worsening. In the China trade, we have increased the frequency of direct calls at ports in China that is developing a great deal: 74 direct calls per week. This achievement has enabled us to exceed services offered by other competitive companies and groups.

In the meantime, concerned with the recent remarkably developing Intra-Asia trade, "K" Line has been enhancing its service network in quality through exploitation and development of new sea transport routes, increase in both sailing frequency and speed-up of transit time. "Tropical Express" that is being provided under "K" Line's own management constantly provides 4-sailings-per-week service to both Thailand and Straits service routes. In addition to "Tropical Express, "we have provided an Intra-ASEAN service linking Singapore/Thailand/Malaysia/Indonesia with the ASEAN Free Trade Area named "AFTA" in mind. Looking at "K" Line's participation in Asian services outside of Japan, you will see that we have opened a direct two-sailings-per-week service to the Middle East from China and Southeast Asia, and that we also offer a three-sailings-per-week service to India and Sri Lanka from China and Southeast Asia. Furthermore, we have been successful in a three-sailings-per-week service between Taiwan/Hong Kong/Vietnam. One loop has been arranged to cover Japan with direct callings.

Business efforts also are being steadily carried out for penetration into a new trade in compliance with customer needs and further expansion of "K" Line's Global Network as well as improvement of existing service network. From May 2004, we will introduce a new service between the East Coast of the U.S.A and East Coast of South America including Brazil, Uruguay and Venezuela. The regional economies of the East Coast of South America are showing remarkable restoration and a very promising base for exports to the U.S.A.

In container transportation, it is the terminals that are the gateway linking the sea with land, and "K" LINE has four terminals exclusively for containers. In North America, a group company is performing efficient port business, managing their own container terminals. More precisely, International Transportation Service, Inc. (ITS) situated at Long Beach, a main gate port to U.S. West Coast implemented expansion of its terminal and renewed a host of IT-related equipment, succeeding in occupying 240 acres including a newly-built deep-draft berth. With this innovation and expansion in place, ITS is expected to contribute to prompt cargo delivery.

Along with the various other innovations, the shipping industry is required to successfully ride the wave of rapidly advancing Information Technology (IT), and "K" Line is actively endeavouring to introduce and develop the most updated IT services. Our recognition of this obligation is exemplified by the information being provided on the Internet, by our acquiring membership in Bolero Net ahead of other domestic rivals and by our active participation in EDI (TEDI.) We are also taking part in GT Nexus, a joint portal site of shipping Lines, demonstrating how positively we are coming to grips with the introduction and acceptance of e-commerce through.

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