The rating on Wan Hai Lines Ltd. (Wan Hai) reflects the company's strong market position in intra-Asia container routes, its good operating efficiency, and intermediate financial risk profile. Counterbalancing factors include the highly cyclical nature of the container shipping industry, as well as the company's increasing exposure to volatile long-haul routes and aggressive fleet expansion. Wan Hai's key credit measures are likely to face pressure over the short to medium term due to increasing challenges in the global container shipping industry. The company's operating cash flow dropped by 15% to Taiwan dollar (NT$) 6.6 billion in 2006 from NT$7.8 billion in 2005, due to downward pressure on freight rates resulting from a supply/demand imbalance, as well as higher-than-expected bunker and
