Chinese military exercises near Taiwan disrupt key shipping routes – ‘Taking precautions!’

China could pressure Taiwan with economic boycott says expert

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As a result disruption has been caused to key trading routes for cargo and commodities being exported across the world according to analysts. On Thursday, furious at US House of Representatives Speaker Nancy Pelosi’s visit to Taiwan, Beijing began four days of military drills around the island.

The drills include the firing of live missiles and deployment of fighter jets.

Taiwan’s ports are open but some cargo ships and oil tankers have altered their routes around the island to avoid a confrontation with the Chinese military.

In some cases this is adding around half a day to voyages, according to analysts and ship owners.

It is a stark reminder of the havoc that was caused by an open conflict between Beijing and Taipei.

This is particularly the case given the fact that the 110-mile Taiwan Strait and a shipping lane east of the island are major routes for ships transporting goods from East Asia to the United States and Europe.

Niels Rasmussen, chief analyst at shipowner association BIMCO, said: “Some ships have already taken precautions and are proceeding east of the island instead of through the Taiwan Strait.”

It comes after disruption at Chinese ports earlier this year as a result of Beijing’s dynamic Zero Covid Policy affected global supply chains and fuelled inflation.

Zvi Schreiber, CEO at Freightos shipping index argued that more prolonged military drills by Beijing could add to delays for shipping companies 

He said: “Though China’s action has yet to significantly disrupt ocean freight operations, a prolonged version certainly could.

“Regional conflict could force vessels to take alternative routes, adding transit time, disrupting schedules and causing further delays and costs.”

Airlines have also cancelled flights to Taipei and changed the route of others to avoid areas that have been closed to civil aviation during the military exercises.

Large oil tankers owners have also raised security alert levels and are using alternative routes according to Anoop Singh, head of tanker research at Braemar, a shipping risk manager. 

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Shipping insurance groups have also seen alerts to members urging caution when navigating around Taiwan.

Tankers and container ships are still docking normally in Taiwan.

However, analysts have warned that even minor delays for ships could be a concern as global trade is still recovering from the impact of the coronavirus lockdowns.

Peter Sand, chief analyst at ocean freight platform Xeneta said that any delays could put even more strain on supply chains.

He said: “As ships are utilised for by-passing the tensions and not for expediting trade it’s a move in the wrong direction – meaning more hardship for supply chains.”

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