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China’s military exercise threatens to cause supply chain disruptions

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China’s military exercise threatens to cause supply chain disruptions

China is conducting a live military training exercise in the Taiwan Strait and around Taiwan from Thursday to Sunday. The Taiwan Strait is one of the busiest shipping corridors in the world. Bloomberg reports that nearly half of the world’s container ships transited the Taiwan Strait this year. Furthermore, Bloomberg noted that 88% of larger container ships transited the Taiwan Strait this year. Given the significant amount of container ships that pass through the Taiwan Strait, any delays as a result of the military exercise could result in disruptions to the global supply chain as some ships may reroute or delay.

Several reports indicate that some liquified natural gas carriers have already rerouted or slowed speed in response to China’s military exercise. The Taiwan Strait is also a major thoroughfare for natural gas.

Below is an image from Freight Waves featuring the positions of container, general cargo, tanker and bulker ships on Wednesday afternoon. Map excludes fishing, passenger, tug and bunker ships. Red icons: tankers. Green icons: all other cargo vessels (Map: MarineTraffic) Source: Freight Waves

Below is an image from Bloomberg displaying the Taiwan Strait and the designated military drills area. the polygons show military drill areas, vessel positions as of Aug. 3. Source: Bloomberg.

The military training exercise is set to be over by next week which may indicate that any delays would be short-lived. As it is currently Typhoon season, shippers often see weather delays of a few days this time of year. Krieger experts will continue to monitor the current situation in the Taiwan Strait and keep our clients informed of any critical updates. Krieger Worldwide strives to always provide the highest level of customer service to our clients; if you have questions or concerns, please reach out to your Krieger Worldwide customer service representative. Together we can!