Containership Flag Selection: The Opening of Direct Shipping between Taiwan and China

The signature of the cross-strait sea transport (CST) Agreement in 2008 has not only established the cross-strait direct shipping link, but also lifted the ban on the involvement of Taiwanese flagged ships to call at China's ports. This paper focuses on the flag selection for Taiwanese container shipping companies under the provisions of the CST Agreement, and embraces the empirical investigation based on the Analytic Hierarchy Process (AHP) and Grey Relation Analysis (GRA) with the Technique for Order Preference by Similarity to Ideal Solution (TOPSIS). The results show Hong Kong is the optimal choice rather than China and Taiwan. Although cross-strait shipping is highly controlled by both sides of the strait, economic factors are still taken seriously in commercial activities. Further, to assist shipping companies to get direct shipping approvals from China and revising a package of financial measures under current shipping policies are recommended for the Taiwanese government.