Taiwan crisis to wreak havoc at ports and disrupt one of world’s busiest shipping lanes

Rising tensions over Taiwan threaten to make global supply chain issues even worse as China carries out live-fire military exercises off the island’s coast.

As Beijing prepares a major show of force, ships headed for the Taiwan Strait have been warned to expect port delays, traffic jams and on-the-spot searches, as well as a higher risk of accidental collisions. It threatens days of disruption in one of the world’s busiest maritime crossroads.

“We are telling our clients that there is a substantial threat to the safety of the vessel and crew,” said Casper Goldman, an analyst at maritime intelligence company Dryad Global. 

“That is not necessarily because of a compromise of security coming from the live-fire exercises but rather from the issues associated with rerouting and ship traffic density.”

Some shipping companies have already begun diverting tankers around the bustling trade route, according to reports, while others are assessing their options.

The strait, through which half the global container fleet has passed this year, is expected to remain open but ships have been ordered to avoid areas where China’s military is operating. 

Beijing’s four-day display of air and naval firepower will run from Thursday to Sunday, in six different locations surrounding Taiwan.

The demonstration is in response to a visit to the self-governing island by Nancy Pelosi, speaker of the US House of Representatives. China’s communist government lays claim to Taiwan and has reacted angrily to Ms Pelosi’s pledge of support for the Taiwanese.

Mr Goldman said ships seeking to pass through the strait should expect long waits at ports and traffic jams at sea.

“There’s a likelihood that ships will be delayed and it will put a bigger strain on an already-strained global supply chain,” he said.

“It's four days, it's a long period of time to have those areas shut off, so it is quite significant.”

He also warned that the number of ships forced to sail around the military exercises would increase the risk of unintentional collisions, as well as on-the-spot searches of vessels by jittery Chinese naval forces. 

“The Taiwan Strait is one of the most dense straits in the world, so we are advising people to ensure that they maintain a close watch and prevent collision with other vessels,” he said.

Mr Goldman added that he did not expect China’s military to go beyond the exercises, because any further escalation of tensions could harm the country’s own economy, which is already suffering from draconian “zero-covid” policies. 

A UK shipping source said most tankers would face delays of a few days at most, which was not uncommon for an industry that regularly has to plan around extreme weather such as typhoons.

However, they added that it would still cause delays at ports and add to the costs of shipping companies if they were forced to divert cargo around the strait. 

There were 308 containerships, tankers and bulkers headed for Taiwan on Wednesday, according to ship tracking firm VesselsValue, with 60 scheduled to arrive when military drills are taking place. 

Soren Skou, chief executive of Danish shipping giant Maersk, said disruption would cause major problems in the freight market.

“The Taiwan Strait is one of the most busy straits in the world,” he told analysts on Thursday. “So obviously, if it were to close, it would have a dramatic impact on shipping capacity in the sense that everybody would have to divert around Taiwan and add to the length of voyages, and that would absorb a significant capacity.”

The threat of disruption comes as a report found delivery times on shipped goods had improved year-on-year for the first time since the pandemic began.

Consultancy Sea Intelligence said schedule reliability – the percentage of ships making arrivals and departures on time – improved by 3.6 percentage points to 40pc in June, breaking a trend since the start of the year. Vessels are still arriving more than six days late on average.