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Chung Lien Transportation to lay off 1,000 workers

2019/04/17 14:25:52


Taipei, April 17 (CNA) Chung Lien Transportation Co., a local door-to-door freight delivery company, has decided to bow out of the cargo business and will lay off about 1,000 workers because of its slumping profits and low market share.

After withdrawing from the cargo business, Chung Lien said it will shift its commercial focus to leasing land to logistics services providers and will retain only about 20 employees to deal with the transition and new business.

The Taichung-based company said the layoffs will be carried out in three stages, on Sept. 1, 2019, Dec. 1, 2019, and March 1, 2020, and it pledged to abide by the Labor Standards Act in handling the process and to do its best in helping the affected employees find new jobs.

The company has already reported the layoff plan to the Taichung City government, as required by law.

In the interests of its clients, Chung Lien said it has signed a memorandum of understanding with Hsinchu Logistics to transfer all of its cargo delivery contracts to the Hsinchu-based company.

Hsinchu Logistics will also have the right to select land suitable for it to use from Chung Lien's inventory of about 47,000 pings (one ping equals 3.3 square meters) of land around Taiwan that the company plans to lease to warehouse and logistics companies.

Once Hsinchu Logistics finalizes its selection, the two sides will sign a formal lease agreement.

Chung Lien said it made the decision to get out of the cargo business because of the increasing pressure it faced from rising operating costs, including labor costs, especially after the government implemented the rigid "one fixed day off and one flexible rest day" weekly work schedule in late 2016.

Established in 1954 and capitalized at NT$1.09 billion (US$35.28 million), Chung Lien has a meager 5 percent share of the local cargo services market, a distant third behind Hsinchu Logistics and Kerry TJ Logistics, according to local media reports.

In 2018, Chung Lien posted a net profit of NT$438 million, up from NT$85.57 million a year earlier, but the increase resulted largely from the disposal of assets, the reports said.

It posted a net profit of only NT$15 million on its core business in 2018, down more than 40 percent from a year earlier, the reports added.

(By Wei Shu and Frances Huang)