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Supply Chain Overview
Yang Ming’s supplier management covers quality, environmental protection, information security, occupational safety and health, supply chain safety, and the regulatory requirements of port states. While transporting the cargo of customers, we also pay attention to the issues of stakeholders’ concern, thereby fulfilling corporate social responsibilities together with suppliers from different sectors.
Upstream
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Midstream
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Downstream
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Shipbuilding companies
Ship construction
Ship chartering companies
Ship chartering
Container manufacturers
Container manufacturing
Container leasing companies
Container leasing
Fuels
Used by vessels to sail
Materials
Supplies required for vessel operation, container use, or maintenance)
Alliance partners
Shipping business
Port operators
Port operation
Port agencies
Handling matters for vessels in ports
Stevedoring companies
Container stevedoring
Railway companies
Offering inland container transport services
Trailer companies
Offering inland container transport services
Feeders
Offering container transport services for branch lines
Insurers
Offering hull insurance, war insurance, and carrier liability insurance
Vessel, container, and machinery repair services
Providing vessel, container, machinery, and equipment repair services to ensure vessels’ seaworthiness and smooth operation
Technical consulting service providers
Providing consulting services related to technical specifications, navigation and transportation safety or operations
Port agencies
Handling matters for vessels in ports
Stevedoring companies
Container stevedoring
Ship Recyclers
Vessel recycling
General services
Security or cleaning services
Logistics
Offering product distribution, product planning, management, procurement, storage, distribution processing, temporary storage, and delivery services during the process of delivering goods or products from manufacturers to retailers or users
General affairs
Procurement of computer software and hardware, office supplies, equipment, consumables and construction materials required for operations
Annual Procurement Analysis
The Company analyzes the annual procurement amounts and grades/classifies suppliers. In 2023, Yang Ming conducted procurement transactions with 2,298 suppliers. The number of suppliers this year increased compared to 2022, mainly due to the inclusion of information on the Yang Ming-authorized procurement by overseas regional centers in 2023. The Company categorizes suppliers into 8 types by procured items and service nature: general affairs and services, professional services, marine fuel, vessels, safe operation of vessels, container/ chassis/genset, container yard machinery, and shipping-related services, and sets a material threshold for each type of suppliers according to the proportion of procurement amount to total procurement expenditure and whether they are exclusive or irreplaceable. A total of 159 Tier 1 suppliers were identified, accounting for 80.60% of the total procurement amount.
| 8 Procurement Types | Definition of Tier 1 Suppliers | Significance to Yang Ming |
|---|---|---|
| General affairs and services | Accounting for over 2% of total procurement amounts | The basic general supplies necessary for corporate operations to maintain the basic operational efficiency and work quality of the Company |
| Professional services | Accounting for over 1% of total procurement amounts | The labor services for improving overall shipping and transportation safety, efficiency or quality or the professional services related to corporate operations to enhance operational quality and workplace safety, attaining personnel safety, vessel safety and cargo safety |
| Marine fuel | Accounting for over 1% of total procurement amounts | The stability of fuel supply and quality is tied to the daily operation of vessels. Also, such procurement constitutes a main part of the Company's operating costs. |
| Vessels | Accounting for over 1% of total procurement amounts | Vessels are the backbone of the Company's international container shipping services. Their construction, chartering or other uses/deployment have direct and significant impacts on the operation of routes. |
| Safe operation of vessels | Accounting for over 1% of total procurement amounts | Yang Ming treats personnel safety, vessel safety, and cargo safety as first priorities. Thus, the installation and maintenance of vessel equipment, the supply and inspection of parts and accessories, material supply and quality requirements, and vessel docking repairs are the keys to vessel sailing safety. |
| Container/Chassis/ Genset | Accounting for over 1% of total procurement amounts | In line with the capacity of the vessels in service, maintaining a stable number of containers, chassis, and gensets is a prerequisite for meeting the transport needs of customers. This is an important capital expenditure item for the Company. |
| Container yard machinery | Accounting for over 1% of total procurement amounts | Container yard machinery is also an important capital expenditures item for the Company to maintain the safety and efficiency of transport services. |
| Shipping-related services | Accounting for over 0.4% of total procurement amounts | Stevedoring at ports, storage at terminals, connection by feeders and hinterland transport via trucks and railway together constitute the global maritime transport service network. Yang Ming ensures the accurate connection of all transport links with 24/7 operation so as to offer customers global maritime transport services that are punctual, speedy, reliable and economical. |
Proportion of 8 Types of Procurement Expenditure
| 8 Procurement Type | Number of Suppliers | Procurement Amount % in Total Procurement Expenditure | Number of Tier 1 Suppliers | Proportion of Procurement Amount from Tier 1 Suppliers by Procurement Type | Number of Tier 1 Suppliers % by Procurement Type |
| General affairs and services | 234 | 0.20% | 7 | 43.08% | 2.99% |
| Professional services | 205 | 1.26% | 20 | 52.56% | 9.76% |
| Marine fuel | 18 | 21.72% | 14 | 98.52% | 77.78% |
| Vessels | 9 | 16.23% | 4 | 90.52% | 44.44% |
| Safe operation of vessels | 192 | 1.50% | 33 | 75.78% | 17.19% |
| Container / Chassis / Genset | 22 | 5.06% | 18 | 99.21% | 81.82% |
| Sipping-related services | 1,01 | 53.68% | 60 | 69.46% | 3.75% |
| Container yard machinery | 17 | 0.35% | 3 | 91.34% | 17.65% |
| Total | 2,298 | 100% | 159 | 80.60% | 6.92% |
Local Procurement
Marine transportation services are all over the world. As a part of the container transport industry, the Company offers global shipping and route services as well as regional transport services (e.g., feeder, train, truck, and other hinterland transport services). Moreover, based in Taiwan, Yang Ming strives to ensure the procurement of general affairs and services from local (Taiwanese) suppliers, except for procurements specific to the shipping industry, with the aim of facilitating and supporting the industry in Taiwan, realizing local procurement and promoting local economic growth. The Company's procurement expenditure on local procurement in Taiwan has accounted for 4.24% of the total procurement expenditure.
| 8 Procurement Types | Number of Local Suppliers | Local Procurement Amount % in Total Procurement Expenditure | Number of Local Tier 1 Suppliers | Local Procurement Amount % from Local Tier 1 Suppliers by Procurement Type | Local Tier 1 Suppliers % in Total local suppliers by Procurement Type |
| General affairs and services | 234 | 0.20% | 7 | 43.08% | 2.99% |
| Professional services | 160 | 0.34% | 6 | 34.73% | 3.75% |
| Safe operation of vessels | 92 | 0.57% | 15 | 69.18% | 16.30% |
| Shipping-related services | 49 | 3.06% | 5 | 81.07% | 10.20% |
| Container yard machinery | 15 | 0.07% | 2 | 56.22% | 13.33% |
| Total | 550 | 4.24% | 35 | 73.48% | 6.35% |
Green Procurement
Since 2013, the Company has supported the National Green Life Movement initiated by the Ministry of Environment. The Company has been recognized as one of the "Excellent Private Enterprises for Green Procurement" by the Keelung City Government for 3 consecutive years. In 2022, the Company supported the Ministry of Environment's Green Office and became a partner of the movement to continuously promote green actions in daily office activities, such as using energy-efficient lamps and water-saving equipment, adopting video conferencing, reducing paper consumption rate, and implementing paperless operations to effectively save energy and resources. Preference is given to selecting Green Mark products as office equipment, and the green services, green dining, green point events, and insurance services recognized by the Ministry of Environment. The Company also uses renewable energy and T-RECs. The amount of green procurement in 2023 was higher than that in 2022, with growth of 1.92%. In the Company’s office building in Taipei, the Company has installed greening facilities and solar photovoltaic systems, planted edible plants and landscape plants, and used a rainwater harvesting system for irrigation to reduce urban drainage pressure and protect water resources, creating a multifunctional ecological green roof.
Yang Ming's Green Procurement Amount / Growth Rate
Green Procurement
Aligned with the government policies, Yang Ming uses products with green marks, introduces green procurement and green concepts in order to fulfill the purposes of energy saving, emissions reduction and reduction in operating costs. The Company raises the amount of green procurement year on year to play its part in environmental protection.
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2022
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2021
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Sustainable Supply Chain Management Policy
Yang Ming adopted the "ISO 9001 International Quality Management System Certification" to develop and revise operating procedures, including selection and procurement procedures for vessels, accessories, materials, fuel, container machines, terminals, railways/highways. The Company also receives a third-party audit annually. The Company's supply chain management policy also requires suppliers to follow Yang Ming's existing ISO management system for management. To build a sustainably developed operating environment, the Company undertakes to communicate with different supply chain partners about environmental protection, human rights and labor management, ethics and integrity, public welfare, and other issues, create comprehensive management mechanisms, and continue improvement and optimization efforts.
Supplier Code of Conduct
According to the regulations and acknowledged standards of the UN Global Compact, Ethical Trading Initiative, OECD, ISO 45001, ISO 27001, ISO 14001, Universal Declaration of Human Rights, International Labour Organization (ILO) and other international organizations, the Company regularly reviews and amends Yang Ming's Supplier Code of Conduct and such amendment covers 3 parts: human rights and workers, environment, business ethics, and ethical management to reflect that the Company has acknowledged global issues and undertaken to comply with related standards. The Company also hopes that the suppliers comply with these standards and encourages them to actively cooperate and make continuous improvements.
| Human Rights and Workers | The Company is devoted to creating and maintaining a good working environment where employees are treated reasonably and with respect. The Company's suppliers are requested to adopt the same or similar standards in their working environments to ensure that the human rights of their employees are not affected and infringed. Relevant measures cover working hour management, salary and benefits, employee privacy, gender and opportunity equality, child labor, and occupational safety and health. |
| Environment | Suppliers should consider environmental factors and conduct improvement and maintenance for impact factors in the course of operations to reduce environmental burdens and impacts. Relevant measures cover the management of energy consumption and GHG emissions, waste and wastewater management, noise management, and air pollution management. |
| Business Ethics and Ethical Management | Suppliers should observe the highest moral standards in the course of operations, expand relevant business activities, and develop relevant policies for internal propaganda to enhance their employees' understanding of corporate ethical management policies. |
Supply Chain Management Strategy
With the aim of creating a sound and sustainability-based supply chain management system, Yang Ming aims at 3 key outcomes: a sound procurement system with sustainability factors; effective control of suppliers' sustainable management maturity, performance and on-going tracking; and sustainable engagement with suppliers. The following table shows the action plan for each key outcome and short-term and medium-term/long-term targets. To achieve the above key outcomes, professional consultants are invited to offer courses on sustainability trends and instructions for completing the supplier sustainability selfassessment questionnaires, hoping to enhance the sustainability awareness of procurement department personnel through education and training.
| Key Outcome | Action Plan | Target by 2024 | Target by 2025-2030 |
|---|---|---|---|
| A sound procurement system with sustainability factors | Amend the Supplier Code of Conduct. | Release and implement the amendment. | Continuously make amendments according to sustainability issues and risks. |
| Amend and add procurement-related documents. | Release and implement the amendment. | Continuously amend and add procurement-related documents. | |
| Effective control of suppliers’ sustainable management maturity, performance and on-going tracking |
Written and on-site reviews for suppliers. | The review rate for Tier 1 suppliers' sustainability self-assessment questionnaires reached 80%. | Increase the number of suppliers reviewed year by year and achieve a supplier review rate of 100%. |
| All new suppliers sign a "Company Sustainability Statement Survey" | 100% signing rate. | 100% signing rate. | |
| Sustainable engagement with suppliers | Strengthen communication with suppliers. | Strengthen communication with high-risk suppliers identified annually. | |
Labor Standards
Suppliers ought to uphold the human rights and fair treatment of workers, including all workers (temporary worker, casual worker, contract employee and other forms of labor). Use of child labor or any is crimination is prohibited. Suppliers are to comply with all the employment laws and regulations at where they operate.
Occupational Health and Safety Standards
Suppliers are to continuously provide safe and heathy work environment and occupational safety education and trainings, while working to minimize occupational injuries.
Environmental Standards
Suppliers are to comply with relevant environmental regulatory requirements in the region and mitigate impacts to the environment.
Standards of Ethics
Suppliers and their downstream suppliers ought to adhere to the principles of ethics and integrity and are forbidden to offer, promise, give or accept bribes or other forms of ill-gotten gains.
Management System Standards
Suppliers are to enforce management systems to promote compliance with relevant laws and continuously make improvement on the requirements of standards.
Supply Chain Management Process
Supplier ESG Review
In 2023, the Company conducted a written supplier sustainability review, prioritizing the 166 Tier 1 suppliers identified based on the procurement data for 2022 for ESG due diligence. The Company invited these suppliers to complete a sustainability self-assessment questionnaire related to the aspects of sustainable governance, society, and environmental management (with a total of 3 topics and 17 indicators), through which the Company can understand the sustainable governance status of the Tier 1 suppliers in the value chain. In 2023, a total of 102 Tier 1 suppliers responded to the supplier sustainability self-assessment questionnaire, including 9 for general affairs and services, 16 for professional services, 12 for marine fuel, 2 for vessels, 31 for safe operation of vessels, and 8 for container/chassis/genset, 21 for shipping-related services, and 3 for container yard machinery. The response rate reached 61%, higher than the 52% of last year, indicating that the suppliers' emphasis on sustainability issues has gradually increased.
After conducting a written review of all 102 key suppliers that responded to the questionnaire, the overall average score was 44.90, and 18 suppliers scored over 60. Most suppliers scored low because the supporting information provided was not complete enough to evaluate their actual implementation. Therefore, the Company will continue to strengthen communication with suppliers in the future on the importance of providing supporting information, so as to improve the quality of supporting information. In addition to assisting suppliers in presenting the management status more faithfully, the Company will also help them gradually strengthen their self-management awareness and raise their awareness of sustainability
According to the comparison among governance, social and environmental issues in the questionnaire responded, the overall scores for governance and social issues were similar, while environmental issues got the lowest scores. The issues with the top 3 highest scores were related to "corporate governance and regulatory compliance," "integrity management," and "labor human rights," indicating that the suppliers were stronger in terms of the management of legal compliance, integrity management, and labor human rights.
Supplier Evaluation and Selection
The Company assesses the qualifications of suppliers and selects them in accordance with the procurement and disposal procedures. For the supplier selection process, in addition to the basic information of suppliers, the Company continuously requests all new suppliers to sign a "Company Sustainability Statement Survey" and a "Statement of Integrity in Business Operation," which cover sustainability issues such as labor and human rights practices, occupational health and safety, environmental protection, ethical management, and corporate code of ethics, to review the implementation status of these sustainability issues through supplier self-assessment. The Company also requests suppliers to commit to upholding integrity in various business activities, and provides an independent whistleblowing mechanism for the suppliers to report any unethical business dealings. In 2023, the completion rate for signing the "Company Sustainability Statement Survey" and the "Statement of Integrity in Business Operation" for all new suppliers reached 100%.
Once becoming the Company's official partners, the Company's supplier partners must promise to observe all laws and regulations that should be complied with when executing their business activities, including but not limited to international or domestic regulations or conventions on labor, environmental protection, health and safety. They must also obtain licenses or special permits required to perform their business activities, including but not limited to having their employees meet regulatory qualification requirements and acquiring business licenses for businesses requiring special approval. The Company's supplier partners should completely understand the Company's requirements for the health, safety, hygiene and employment of employees as well as environmental protection, confirm that they have been informed of them, and undertake to take corresponding safety measures. In case of any staff injury/death or disaster during the contract period, the Company's supplier partners should take necessary response measures and make a report to the Company immediately after the incident occurs. In conclusion, in the event of any violation of the statement or contract provisions, Yang Ming may terminate the contract without notice and will not collaborate with suppliers that fail to make improvements afterwards and are not compliant with the requirements. The Company did not cause negative social or environmental impacts on the supply chain in 2023.
Once becoming the Company's official partners, the Company's supplier partners must promise to observe all laws and regulations that should be complied with when executing their business activities, including but not limited to international or domestic regulations or conventions on labor, environmental protection, health and safety. They must also obtain licenses or special permits required to perform their business activities, including but not limited to having their employees meet regulatory qualification requirements and acquiring business licenses for businesses requiring special approval. The Company's supplier partners should completely understand the Company's requirements for the health, safety, hygiene and employment of employees as well as environmental protection, confirm that they have been informed of them, and undertake to take corresponding safety measures. In case of any staff injury/death or disaster during the contract period, the Company's supplier partners should take necessary response measures and make a report to the Company immediately after the incident occurs. In conclusion, in the event of any violation of the statement or contract provisions, Yang Ming may terminate the contract without notice and will not collaborate with suppliers that fail to make improvements afterwards and are not compliant with the requirements. The Company did not cause negative social or environmental impacts on the supply chain in 2023.
Sustainability Risk Evaluation
In 2023, the Company initiated a supplier sustainability risk evaluation to analyze a total of 27 sustainability threat incidents in the 3 major aspects of environment, society, and governance and rate suppliers from 1 to 5 according to three dimensions (threat value, impact value, and weakness value/ vulnerability)Note from low to high. Through the risk evaluation process, the Company identified the risk levels of all suppliers in the aspects of E, S, and G.
The 102 Tier 1 suppliers that responded to the questionnaire were reviewed in 2023. The information provided by the suppliers was converted into risk values for calculation and compared with the sustainability issues identified by the Company. Based on the current status of the shipping industry, customers, international reports, news, the Company evaluated the probability of occurrence, impact level, and prior warning of each supplier sustainability threat incident to analyze the threat and impact values, and then set materiality thresholds to classify suppliers by risk level, and also established different management methods. The Company will continue to strengthen close communication with suppliers in the future. By providing improvement suggestions or formulating contracts, the Company will pay attention to and reduce sustainability risk issues and improve sustainability governance performance.
The 102 Tier 1 suppliers that responded to the questionnaire were reviewed in 2023. The information provided by the suppliers was converted into risk values for calculation and compared with the sustainability issues identified by the Company. Based on the current status of the shipping industry, customers, international reports, news, the Company evaluated the probability of occurrence, impact level, and prior warning of each supplier sustainability threat incident to analyze the threat and impact values, and then set materiality thresholds to classify suppliers by risk level, and also established different management methods. The Company will continue to strengthen close communication with suppliers in the future. By providing improvement suggestions or formulating contracts, the Company will pay attention to and reduce sustainability risk issues and improve sustainability governance performance.
Supplier Engagement
To continuously strengthen supply chain resilience and improve supplier sustainability, in addition to conducting written review of the Tier 1 supplier sustainability self-assessment questionnaire, the Company conducted its first on-site review of Tier 1 suppliers in 2022, focusing on 2 subsidiaries to observe the status of sustainability management and strengthen engagement. In 2023, the scope of the written review of the sustainability self-assessment questionnaire and on-site audits for Tier 1 suppliers was expanded to include the 5 non-subsidiary Tier 1 suppliers. A total of 4 Tier 1 suppliers for shipping-related services and as well as 1 supplier for container yard machinery were selected for on-site audits. By observing the management status of suppliers with special business types, the Company understood their sustainability maturity and identified related risks, as the basis for future promotion of the Company's sustainable supply chain management system and as the foundation for building suppliers' sustainable awareness. For example, the Company arranges on-site audits or provide other assistance for suppliers with poor performance in the written review to assist them in establishing the necessary systems. In the future, the Company will increase the number of suppliers reviewed year by year so as to drive the compliance of the overall supply chain with ESG indicators.
Sustainability Supplier Online Training
To enhance the engagement with domestic and overseas suppliers and allow suppliers to understand the goals and contents of Yang Ming's sustainability audit, the Company took the lead in Taiwan's shipping industry to hold the online "Yang Ming Sustainability Supplier Training" in the second half of 2023, with a total of 41 Tier 1 suppliers and more than 100 colleagues from the Company's procurementrelated departments participating in the training. In the conference, Yang Ming's Chairman Cheng-Mount Cheng conveyed Yang Ming's sustainable development goals and actions taken to manage the sustainable supply chain to the supply chain partners. With sustainable procurement as the theme, the Company shared international supply chain management trends and explained how to complete the supplier sustainability self-assessment questionnaire. The aim is to establish a closer communication channel with the Company's supply chain partners through the supplier training, continuing communication and encouraging them to jointly support and promote sustainable development.