The Kaohsiung Harbor confirmed that the contracts will not be renewed when they expire in May, but said the terminals will be taken over by South Korea's Hanjin Shipping Co., who is to continue to handle Maersk's container cargo.

Danish-headquartered Maersk has not yet made formal announcements, but the news broke after 200 dock workers went on strike Wednesday to demand severance pay from Maersk, the Liberty Times reported.

Talks between the stevedores and Maersk's Taiwan manager collapsed when the company told the workers to direct their demands at the local firm which subcontracted them.

Maersk previously leased four container terminals at the Kaohsiung harbor, Taiwan's largest port, but reduced this to two last year, the Liberty Times said.

Maersk has decided not to renew the lease for the two terminals when it expires in May, in order to make more funds available for its investment in China's Xiamen port, the paper said.

All its cargo coming into and leaving Taiwan will be handled by Hanjin under a four-year contract, Huang Kuo-ying, deputy director of the Kaohsiung Harbor Bureau, told the German press agency DPA.

"Maersk handles about 600,000 TEUs (twenty-foot equivalent unit) at the Kaohsiung Harbor each year. Hanjin, which now leases one terminal, will lease the two terminals now used by Maersk, and take care of Maersk's business," he said.

The Taiwan branch of Maersk denied that the company is quitting the territory.

"We will let Hanjin handle our containers. Our operations at the Kaohsiung Harbor will go on as before," a Maersk (Taiwan) employee, who identified herself only as Yang, told DPA.

The expiry of the lease with AP Moller-Maersk - whose 500 vessels make it the world's largest container line - is nonetheless set to deal a new blow to Kaohsiung harbor.

The world's third container port in the 1980s, Kaohsiung's ranking has been slipping in recent years due to the expansion of ports in neighboring countries, especially China.

The harbor's container volume has fallen from 10.3 million TEUs in 2007 to 8.5 million in 2009.