Status description

• Liner service risks-
  Due to rapid market changes, the risks associated with service development strategies have dramatically increased. These risks stem from factors such as industry structure, international political and economic issues, and the resurgence of trade conflicts driven by reciprocal tariffs. Furthermore, several other factors intensify the risks to future operations: continued vessel upsizing causing supply/demand imbalances, the restructuring of new alliances (e.g., Gemini), and the rising inflation risk that may prompt the Federal Reserve to cut interest rates.

Risk mitigation and response measures

• The Company maintains real-time knowledge of market dynamics across all regions, facilitating cross-divisional discussions regarding economic policies and industry changes in various countries, using these insights to develop appropriate response strategies. These strategies include adjusting capacity and allocation and strengthening key market layouts to rapidly respond to market shifts, thereby mitigating operational risks and losses.
• The Company is focused on increasing market share. This is achieved by continually adjusting the layout in Asia, India, and South America, while also stabilizing the continuously expanding transpacific services and establishing new regional markets, such as opening new service in the Middle East.

• Specialized talent recruitment and training -
  As the organization expands and the market labor force contracts, the Company may face challenges in recruiting highly specialized professionals or maintaining employee engagement, thus impacting operational efficiency.

• To address this, the Company is strengthening the specialized workforce layout through precise, multi-channel recruitment to ensure core staffing and organizational resilience.
• This includes deepening industry-academia partnerships and specialized training mechanisms to build a talent pool with maritime shipping expertise and immediate operational capability.
• Furthermore, the Company is establishing long-term career development and retention strategies to boost employee stability and enhance its competitive advantage.

Status description

• In response to climate change and the global push for net-zero carbon emissions, decarbonization regulations worldwide are becoming increasingly stringent. This is placing growing pressure on companies to accelerate their energy transition and invest in new technologies, or risk facing penalties and higher operational costs.

Risk mitigation and response measures

• The Company demonstrates its concrete commitment to maritime shipping decarbonization by placing orders for low-carbon fueled ships and utilizing biofuel bunkering to reduce carbon emissions.
• To stay abreast of evolving international regulations, the Company strengthens engagement with alternative fuel suppliers and establishes cooperative agreements to ensure a stable future supply of necessary energy resources.

• Increase in immediate and long-term climate risk events -
  The occurrence of natural disasters (e.g., heavy rain, floods, typhoons, etc.) can easily cause derivative risks to the operation of existing shipping routes and the allocation of ships, including considerations of maritime navigation safety and the proper functioning of important port facilities.

• The Company establishes emergency response plans and conducts regular exercises and simulations; in addition, disaster response tools and materials are inventoried, and all disaster response measures are updated on a rolling basis.
• A weather forecasting system is utilized to monitor the global formation of cyclones, which facilitates the identification of potentially affected ships and the initiation of ship-to-shore typhoon avoidance monitoring.

Status description

• Navigation and cargo safety -
  Due to human factors (e.g., Mis-declaration), equipment malfunction, or improper cargo storage and loading, may impact the safety of freight transportation or warehousing (potential incidents include collision, stranding, fires, chemical spills, and container tipping).

Risk mitigation and countermeasures

• To enhance cargo compliance and risk control, a Know Your Customer (KYC) mechanism has been implemented. Customers are required to accurately complete and submit necessary documentation for dangerous goods to ensure safe stowage and storage, while effectively screening for and preventing non-compliant items.
• Risk assessments, education and training, and regular disaster prevention exercises are strictly executed. Furthermore, the Company utilizes its proprietary navigation safety intelligent management system and a method thereof Ship Sailing Management Monitoring System (Eagle Eye), for oversight and inspection to ensure navigational safety.

• Interruption of terminal operations -
  Failure of the terminals to operate normally as a result of events such as congestion and strikes.

• Through regular reports from overseas representative units, the Company monitors local terminal operations and labor disputes, and drafts contingency plans, such as adjusting port berthing or shipping schedules.

• Occupational safety -
  Personnel injury or health impairment may occur during operations or in the course of official duties, stemming from factors such as human error, ergonomic risks, or inadequate environmental safety measures.

• The Company continuously optimizes the work environment and safety facilities. Safety awareness is reinforced through education and training, and regular consultations with an on-site physician, along with mental and physical health promotion, are provided to prevent occupational accidents.

Status description

• Economic/Monetary market volatility -
  Volatility in the financial and monetary markets has resulted in exchange losses and rising interest costs.

Risk mitigation and response measures

• As the majority of the Company's assets and liabilities are denominated in US dollars, a natural hedging mechanism against exchange rate risk has been inherently established.
• The Company monitors exchange rate and interest rate changes, capitalizing on favorable exchange rates to conduct spot transactions, and adjusts borrowing periods and interest calculation methods in a timely manner to control interest expenditure.
• Debt structure is also adjusted to ensure no significant difference in the cost of long-term and short-term borrowing.

• Management of accounts receivable/Credit risks -
  The failure of customers to fulfill their contractual obligations may result in financial losses for the Company.

• Transaction limits are established for individual customers based on the credit policy, and customers' financial stability is regularly assessed.
• The Company benefits from a broad customer base, avoiding significant transaction concentration with a small number of customers and featuring wide geographic dispersion.
• Expected credit impairment losses on accounts receivable are estimated by calculating the historical roll rate and adjusting the bad debt provision ratio with the inclusion of forward-looking factors.

• Liquidity risk -
  Insufficient cash flow leads to the inability to meet repayment obligations.

• The Company manages liquidity to ensure sufficient funds are available to meet operational needs and maturing financial liabilities, thereby avoiding risks that could damage its reputation.

Frequent cyberattacks -

• The increasing frequency of cyberattacks, such as ransomware and hacking, presents risks including the disclosure of customer data, the theft/alteration/replacement/damage of corporate secrets, operational disruptions, and data loss, potentially damaging the corporate reputation or increasing operational costs.

Risk mitigation and response measures

• Proactive protection mechanisms are installed on critical hosts to prevent the execution of unauthorized programs.
• The data center and the three dedicated terminals are subject to 24/7 cybersecurity incident monitoring, with dedicated personnel tracking all types of security incidents to mitigate the risk of potential propagation.
• The Company has successfully obtained ISO 27001 certification, the international standard for information security management systems, comprehensively establishing the confidentiality, integrity, and availability of its information security system.

Status description

• Failure by internal personnel or partners to comply with principles of ethical conduct or regulations may lead to acts such as unfair competition, fraud, conflict of interest, money laundering, corruption, insider trading, or violations of privacy protection regulations. These actions can damage corporate interests and reputation and may result in legal proceedings and penalties.

Risk mitigation and response measures

• External suppliers must agree to comply with the "Supplier Management Policy," the "Supplier Code of Conduct," and sign the "Supplier Corporate Social Responsibility Commitment.
• Employees regularly participate in training courses and seminars covering topics such as competition law, international sanctions, and business ethics.

Status description

• The increased frequency and severity of terrorist activities and armed conflicts pose a significant threat to local security and stability. This may lead to shipping route diversions or even suspensions, thereby increasing operational costs.

Risk mitigation and countermeasures

• Risk control measures are formulated based on the current situation. Regional conflict situations are closely monitored, and shipping route allocations are continuously adjusted to maintain service levels.
• Where necessary, routes are adjusted and safety measures are strengthened, such as hiring armed guards, to ensure the safety of personnel, navigation, and cargo during the transit.