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Chinese naval drills around Taiwan Strait spark logistical bottleneck fears

Fears of more supply chain chaos have been sparked by naval and military drills that China is now conducting in the Taiwan Strait, with six no-sail zones being carved out.

China began a five-day drill on the night of 3 August, in response to US House Speaker Nancy Pelosi’s visit to Taiwan. China has viewed Taiwan as a breakaway province after the 1949 Chinese Civil War, when the defeated nationalists fled to Taiwan to establish an alternative government.

Ships heading for the Taiwanese ports of Kaohsiung, Taipei, Keelung, Su’ao, Tainan (Anping), Hualien have been advised to detour as much as possible.

As the Taiwan Strait is the main route for ships carrying goods from East Asia to the US and Europe, the situation sent the stock prices of listed Taiwanese shipping companies, including Evergreen Marine Corporation, Yang Ming Marine Transport and Wan Hai Lines, into a decline on 4 August.

Shipping lines have yet to issue any advisories to caution customers about possible delays in shipments to and from Taiwan.

Yang Ming Marine Transport chairman Cheng Cheng-mount said at a media briefing, “Ships don't have fixed routes like planes. As long as the ships avoid the exercise area, it should be fine. It shouldn't have much impact."

However, Xeneta chief analyst Peter Sand told Container News that the no-sail zones could have an indirect impact on freight rates.

He noted, “This is a disruption as it extends shipping transit times. All inhabited areas on Taiwan face China - so if you want to reach the island, you need to be in or very close to the Taiwan Strait.”

While Taiwan International Ports Corporation (TIPC) vice-president Cheng Shu-hui said that no shipping lines have cancelled calls to Taiwan, TIPC’s Keelung port branch head Wei Fu-tian said that as of today (5 August), 23 shipping companies have yet to adjust their arrivals in Keelung.

Wei said, “We’re monitoring the situation these few days. Ships that are interrupted by the naval drills could be prepared to delay their arrival by one to three hours.”

Martina Li
Asia Correspondent

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