Chinese military exercises force shippers to divert ships to avoid Taiwan’s danger zones

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THE BHARAT EXPRESS NEWS INSURANCE NEWS
THE BHARAT EXPRESS NEWS INSURANCE NEWS

Shippers diverted ships as China began its most provocative military exercises in decades around Taiwan, with at least one owner preventing ships from passing through the strait.

Taiwan said China fired 11 rockets into waters around the island at 4 p.m. local time on Thursday. The maneuvers, in response to US House Speaker Nancy Pelosi’s visit to the island this week, are taking place in six areas around Taiwan, and China advised ships and planes not to approach the regions.

A statement from the Eastern Theater Command of the People’s Liberation Army said it had completed live fire training and lifted relevant air and sea controls. It didn’t make clear whether that meant all exercises had ended, but the state-run People’s Daily later said controls had been lifted off Taiwan’s east coast. The exercises started at 12 noon on Thursday and would last until Sunday.

Ships continued to sail through the Taiwan Strait Thursday, according to data collected by Bloomberg. While the data showed about 15 ships in the drill zones around noon, they may have left the impact areas before the drills began. There were no ships in the zone closest to mainland China in the Taiwan Strait or east of the island.

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According to Anoop Singh, head of tanker research at Braemar, the situation is evolving and at least one of the shipowners has banned ships from entering the Taiwan Strait.

Some ships are being diverted along the east side of the island, which can lead to delays of up to three days, shipbrokers estimate. Delays of that duration are not uncommon, and the long-term consequences could be minimal if tensions ease next week.

However, the risks to ships passing through Chinese waters could be exacerbated by bad weather, threatening further delays. The city of Shenzhen, which houses the Yantian container port and is immediately west of Taiwan’s southern tip, issued a tropical cyclone warning Thursday morning, citing a low-pressure area about 117 kilometers (73 mi) away.

Ships are also being diverted to China’s seas, and the Taiwan Strait has not yet been designated a war-risk area for insurance purposes, a trader and insurance broker said.

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The Taiwan Strait is an important route, with nearly half of the global container fleet crossing the waterway this year. The disruption is just the latest inconvenience for supply chains, which have been reeling since the start of the pandemic and the Russian invasion of Ukraine.

At least three liquefied gas carriers around Taiwan changed course to avoid military exercises, according to ship tracking data collected by Bloomberg. Several others are reducing speed to avoid the maneuvers, which will result in minor delays in delivery to Taiwan and nearby destinations, traders said.

Some agricultural container shipments from Southeast Asia to China have been postponed to load next week to avoid the risks, while some could not be rescheduled and are still awaiting notifications from shipping companies, according to a Shanghai-based freight trader.

According to Taiwan’s Transport Minister Wang Kwo-tsai, the Taiwan Maritime Port Bureau has issued a warning warning ships to avoid the areas where exercises are taking place, as there is no set route for sea transport.

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Taiwan’s Formosa Petrochemical Corp. said Thursday morning that there are currently no delays or postponements of cargo en route to or departing from Mailiao port. CPC Corp., which has a refinery in Kaohsiung, close to one of the drilling zones, said its port operations remain unaffected.

“We are very careful and ask port and shipping agents to be careful not to enter the drilling zones,” said FPCC spokesman Lin Keh-Yen.

–With help from Elizabeth Low, Winnie Zhu and Cindy Wang.

Photo: Chinese military helicopters fly past Pingtan Island, one of the closest points in mainland China from Taiwan, in Fujian Province on Aug. 4, 2022. Photo credit: Hector Retamal/TBEN/Getty Images

Copyright 2022 Bloomberg.

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