Shippers diverted ships as China launched its most provocative military exercises in decades around Taiwan, creating logistical headaches for global supply chains.
The drills, announced by Beijing after US House Speaker Nancy Pelosi’s visit to Taiwan, are taking place in six different areas around the island from noon local time Thursday through Sunday. China has advised ships and aircraft not to approach areas where exercises are taking place.
Some ships continued to travel through the Taiwan Strait on Thursday, with several still in sounding areas, according to data compiled by Bloomberg. By midday, there were approximately 15 ships in the exercise areas, compared to 45 at the same time on Wednesday. There were no ships in the area closest to mainland China in the Taiwan Strait.
Vessels are also being diverted around the eastern side of the island, which will create delays of about three days, shipbrokers estimate. Delays of this length are not unusual, and the long-term impact may be minimal if tensions ease next week.
However, the risks for ships traveling through Chinese waters may be compounded by bad weather, which threatens further delays. The city of Shenzhen, which hosts the Yantian Container Port and is located just west of Taiwan’s southern tip, issued tropical cyclone warningciting a low pressure system about 117 kilometers (73 miles) away as of Thursday morning.
The Taiwan Strait is a key route, with almost half of the world’s container fleet transiting the waterway this year. The disruption is just the latest setback for supply chains that have been reeling since the start of the pandemic and Russia’s incursion into Ukraine.
At least one LNG tanker south of Taiwan has altered course to avoid military exercises, according to ship tracking data compiled by Bloomberg. Several other ships are slowing down to avoid the maneuvers, which will cause small delays in supplies to Taiwan and other nearby countries, traders said.
Some agricultural container cargoes from Southeast Asia to China were postponed for loading next week to avoid risks, while some could not be rescheduled and are still awaiting notification from shipping companies, according to a Shanghai-based commodities trader.
Taiwan’s Maritime Port Bureau has issued a warning for ships to avoid the area where the drills will take place because there is no fixed route for sea transport, according to Taiwan’s Transport Minister Wang Kuo-tsai.
Taiwan’s Formosa Petrochemical Corp. said Thursday morning that there are currently no delays or delays in cargo bound for or leaving Mailiao Port. CPC Corp., which has a Kaohsiung refinery located near one of the drilling zones, said its port operations remained unaffected.
“We are very cautious and ask port and shipping agents to be careful and not enter the drilling areas,” said FPCC spokesperson Lin Keh-Yen.
—With help from Sharon Cho, Elizabeth Lowe and Winnie Zhu
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