By Ralph Jennings
KAOHSIUNG, Taiwan, May 14 (Reuters) - Taiwan's major international port is seeing signs that an export slump is near bottom, with a plunge in container traffic tapering off and workers in this industrial city taking less unpaid leave.
The Kaohsiung port -- the world's eighth busiest -- is a useful barometer since Taiwan is often the first economy in Asia to feel the impact of external events on trade because it is so integrated into the global supply chain.
"As we see it, the economy is coming back little by little," said Shieh Ming-hui, director-general of the Kaohsiung Harbor Bureau, operator of the port in the island's south.
Export-oriented economies in Asia have suffered from the collapse in global demand. Taiwan along with Singapore, Hong Kong and Japan are all in recession.
Shieh's comments echo those of international policy-makers, who in recent days have expressed cautious optimism about a gradual economic recovery around the world.
He said container traffic at Kaohsiung in April fell 12 percent from the same month in 2008, from 14 percent in March and a much steeper plunge of 28 percent during the November to February period.
The activity at Kaohsiung port one afternoon this week could be cause for optimism -- cargo ships stacked with containers plied the harbour as cranes on the port's docks loaded ships with steel and high-tech goods.
"Things are starting to stabilise," said Tony Phoo, an economist with Standard Chartered in Taipei, referring to the island's trade outlook.
"The third quarter is crucial, and odds are better in the fourth quarter. If you ask whether I think we've seen the worst, yes."
Taiwan's exports plunged late last year, so much that freighters no longer had to wait at sea for places to berth at Kaohsiung. Exports in January dropped a record 44.1 percent compared with a year earlier and in April were down 34.3 percent.
The tech-reliant economy contracted by a record 8 percent in the fourth quarter last year and is expected to shrink again in the first three months of this year but not as severely.
Officials in this gritty city of about 1.5 million people see tentative signs of recovery.
They said the number of workers taking unpaid leave had dropped to 5,000 from around 30,000 people earlier this year in three major trade zones because orders were picking up.
Taiwan firms often ask workers to take time off during downturns to save money and avoid layoffs for when business picks up again. Still, in the wider economy, unemployment is running at a record high of 5.72 percent.
"Media and scholars pay a lot of attention to Kaohsiung. Everyone uses it as a growth or recession indicator," said Shieh.
Port tenants, which include the world's biggest shipping lines, all planned to renew leases, he added.
EXPANSION PLANS
Other signs of optimism in Kaohsiung, a city dominated by heavy industry since before World War Two, can be found in boardrooms where local officials and port operators have drawn up plans for future developments.
Kaohsiung has hatched two port expansions and sighted land for a new logistics centre.
Taiwan's No. 2 shipper, Yang Ming Marine <2609.TW>, is building a new dock complex for T$16 billion ($486 million), set to open as early as 2010.
Yang Ming is coping with the downturn better than its peers, some of its workers said, as a Japanese cargo ship stacked 16 containers high pulled slowly into its existing docks.
The whole port will later expand access for cargo and chemical shippers, and the two expansions will add a combined capacity of 6.3 million twenty-foot equivalent units (TEU) to the port, which now handles about 10 million TEUs per year.
Extending the port's influence inland, the city government is seeking large plots of land within an hour of the port to build logistics centres to create jobs and replace traditional, polluting heavy industries, Vice Mayor Lee Yung-te said.
The city is also looking into whether it could expand the airport, which cannot handle large planes, Lee said.
(Editing by Lee Chyen Yee and Dean Yates)