As the shipping world enters peak season, freight forwarders and shippers are concerned about the geopolitical risks as tensions between China and Taiwan increase after the US House Speaker Nancy Pelosi visited Taiwan
Almost half the world’s container ships passed through the Taiwan Strait – which separates the island from the Chinese mainland – in the first seven months of this year, according to data compiled by Bloomberg.
“The global supply chain is interconnected and all the major stretches such as the Taiwan Strait are nerve centres of these value chains. And if any one stretch is blocked, the undercurrents are felt across the system. Especially at a time when the industry is busy shipping cargo for the peak season, the impact will reverberate. What will decide the degree of impact is the tenure of this disruption,” said Container xChange cofounder and chief executive Christian Roeloffs.
“While we do expect trade disruptions across Taiwan, China, South Korea and Japan due to this if the military action persists longer or in intensity, another view is that the supply chain industry has built resilience over these past two years owing to many such shocks in the past. Case in point, we were expecting lockdowns in China (that lasted two months) to impact the peak season negatively. However, we do not see any such disruption, especially on container prices and leasing rates. Therefore, it will be very difficult to forecast the degree of impact this show of strength by China will cause on containerised trade in these markets.” added Mr Roeloffs.
“The immediate impact will be rerouting the vessels through the eastern side of the island which will add a few days in the voyage of the containerised cargo”, according to information shared by a customer of Container xChange with business in Taiwan.
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