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Heightened Taiwan Strait tensions after US House Speaker Nancy Pelosi’s visit to Taipei sparks concern among forwarders and shippers about geopolitical risks
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As nearly half of the global container fleet sailed through the strait in January-July this year, a blockade there will send undercurrents across the global supply chain
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If China’s drills last long or escalate, the supply chain industry has built resilience these past two years from so many such shocks, says Christian Roeloffs, Container xChange CEO
As the shipping world enters its peak season, freight forwarders and shippers are worried about geopolitical risks as tensions between China and Taiwan increase soon after US House Speaker Nancy Pelosi’s controversial visit to Taiwan, an industry analyst says.
Nearly half of the world’s container ship fleet passed through the narrow Taiwan Strait – which separates the island from the Chinese mainland – in the first seven months of this year, according to data compiled by Bloomberg.
“The global supply chain is interconnected and all the major stretches like Taiwan Strait are nerve centers of these value chains. And if any one stretch is blocked, the undercurrents are felt across the system,” said Christian Roeloffs, cofounder and chief executive of Container xChange, a technology marketplace and operating platform for container logistics companies.
“Especially at a time when the industry is busy shipping cargo for the peak season, the impact will reverberate across [the industry]. What will decide the degree of impact is the tenure of this disruption.
“While we do expect trade disruptions across Taiwan, China, South Korea and Japan due to this, if the military action persists longer or [intensifies], another view is that the supply chain industry has built resilience over these past two years owing to many such shocks in the past.”
Roeloffs cited the COVID-related lockdowns in China as a case in point. He said the industry was expecting the lockdowns (that lasted two months in the commercial hub Shanghai) to impact the peak season negatively.
“However, we do not see any such disruption, especially in container prices and leasing rates. Therefore, it will be very difficult to forecast the degree of impact that this show of strength by China will cause on containerized trade in these markets,” added Roeloffs.
“The immediate impact will be a rerouting of the vessels through the eastern side of the island, which will add a few days in the voyage of containerized cargo,” according to information shared by a customer of Container xChange with business in Taiwan.
No signs of peak season rise in container prices
Global average container prices have shed 18% from US$3,339 in July to US$2,730 so far in August, Container xChange said.
Average container prices declined in July compared with June, with rates in the US slipping 20%, China 5% and India 7%. These prices have so far continued to drop across the US and China going into August.
The average one-way pickup rates of cargo-worthy containers from Asia to North America had dropped 35% from US$1,612 in June to US$1,052 in July. The pickup rates declined on the China-US stretch from US$2,088 in June to US$1,220 in July, Container xChange said.
