Shippers rerouted vessels as China began its most provocative military drills in decades around Taiwan, with at least one owner barring ships from transiting the Taiwan Strait.
The maneuvers, in response to US House of Representatives Speaker Nancy Pelosi’s visit to Taiwan this week, are taking place in six areas surrounding Taiwan, and China advised ships and aircraft not to go near the regions. The drills began yesterday at noon and were set to last until Sunday.
Ships continued to travel through the Taiwan Strait yesterday, according to data compiled by Bloomberg.
Photo: Lee Hui-chou, Taipei Times
While the data showed about 15 vessels in the drill zones at noon, those might have moved out of the areas before exercises began. There were no ships in the zone closest to the Chinese mainland in the Taiwan Strait or to the east of Taiwan.
It is an evolving situation and at least one shipowner has barred vessels from transiting the Taiwan Strait, said Anoop Singh, head of tanker research at Braemar.
Some vessels are being rerouted around the eastern side of Taiwan, which would create delays of as much as three days, shipbrokers estimated.
Delays of that duration are not uncommon, and the long-term impact might be minimal if tensions ease next week.
However, the risks for ships traveling through Chinese waters might be compounded by bad weather, threatening further delays. Shenzhen city, which hosts the Yantian container port and lies directly west of Taiwan’s southern tip, issued a tropical cyclone warning, citing a low-pressure system about 117km away as of yesterday morning.
Ships are also being diverted to Chinese seas, and the Taiwan Strait has not yet been designated a war risk zone for insurance purposes, a trader and an insurance broker said.
The Taiwan Strait is a key route, with almost half of the global container fleet passing through the waterway in the first seven months of this year.
“Given that much of the world’s container fleet passes through that waterway, there will inevitably be disruptions to global supply chains due to the rerouting,” said James Char (蔡志祥), an associate research fellow at Singapore’s S. Rajaratnam School of International Studies.
Even a small disruption in global supply chains, already battered by the COVID-19 pandemic and Russia’s invasion of Ukraine, could prove costly.
“China’s planned live-fire exercises are occurring in an incredibly busy waterway,” Economist Intelligence Unit lead analyst for global trade Nick Marro wrote in a note.
“The shutting down of these transport routes — even temporarily — has consequences not only for Taiwan, but also trade flows tied to Japan and South Korea,” he wrote.
At least three liquefied natural gas tankers around Taiwan changed course to avoid military drills, ship-tracking data compiled by Bloomberg showed.
Several others are reducing speed to avoid the maneuvers, which would result in small delivery delays to Taiwan and nearby destinations, traders said.
Some agricultural container cargoes from Southeast Asia to China have been postponed to load next week to avoid the risks, while some could not be rescheduled and are still waiting for shipping companies’ notices, a Shanghai-based commodity trader said.
The Maritime Port Bureau issued a notice telling ships to avoid the areas where drills would take place as there is no fixed route for sea transportation, Minister of Transportation and Communications Wang Kwo-tsai (王國材) said.
Formosa Petrochemical Corp (台塑石化) yesterday morning said there were currently no delays or postponements of cargoes heading to or leaving Mailiao Port (麥寮港) in Yunlin County.
CPC Corp, Taiwan (台灣中油), which has a refinery in Kaohsiung — close to one of the drill zones — said its port operations remained unaffected.
“We’re very careful and asking port and ship agents to be cautious, and to not go into the drill zones,” Formosa Petrochemical spokesman Lin Keh-yen (林克彥) said.
Additional reporting by AFP
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