China’s announcement of military drills around Taiwan is affecting global supply chains, as it leads to detours and delays energy shipments.
Namely, local branches of China’s maritime safety administration have warned ships to avoid certain territories, due to the military exercises. In fact, Bloomberg reports that a notice from the regulator in Fujian, said that ships were banned from sailing into the areas where exercises will take place from August 4 to August 5.
In addition, Taiwan’s Maritime and Port Bureau also warned ships to find alternative routes to access and depart from seven major ports on the island during China’s drills.
As a result, shipping companies are assessing their options, saying that traffic overall through the Taiwan Strait was normal on August 3, and consulting firms reported little impact for oil tankers in the region.
However, with China increasing military activity and bans taking effect, shippers may need to reroute vessels around the eastern side of the island, rather than through the busy waterway between mainland China and Taiwan.
Finally, gas suppliers are also rerouting or reducing speed on some LNG vessels currently en route to North Asia. As a consequence, shipments to Taiwan and Japan this weekend are expected to be affected.