Taiwan – U.S China impact on Global supply chain

As the shipping world enters peak season shipping, freight forwarders and shippers are concerned about the geopolitical risks that will knock as tensions between China and Taiwan increase soon after the US House Speaker Nancy Pelosi visited Taiwan.

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Nearly half the world’s container ships 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 centres of these value chains. And if any one stretch is blocked, the undercurrents are felt across the system. Especially at a time when the industry is busy shipping cargo for the peak season, the impact will be reverberated across.

What will decide the degree of impact is the tenure of this disruption.” said Christian Roeloffs, cofounder and CEO, Container xChange, a technology marketplace and operating platform for container logistic companies.

“While we do expect trade disruptions across Taiwan, China, South Korea and Japan due to this if the military action persists longer or in intensity, another view is that the supply chain industry has built resilience over these past 2 years owing to many such shocks in the past.

Case in point, we were expecting lockdowns in China (that lasted 2 months) to impact the peak season negatively. However, we do not see any such disruption, especially on 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 containerised trade in these markets.” added Roeloffs

“The immediate impact will be rerouting of the vessels through the eastern side of the island which will add a few days in the voyage of the containerised cargo”, according to information shared by a customer of Container xChange with business in Taiwan.

No signs of rise in container prices due to peak season shipping

The global average container prices decreased from $3339 in July to $2730 (so far in August) by 18%.

The average container prices have declined in the month of July as compared to the month of June in the United States by 20%, China by 5% and India by 7%. These prices continue to drop into the month of August so far across the U.S and China.

Average one-way pickup rates of cargo-worthy containers from Asia to North America decreased from $1612 in June to $1052 in July, by 35%. The pickup rates declined on China to the U.S stretch from $2088 in June to $1220 in July.

Source: Container xChange