China conducted its largest-ever operations in the Taiwan Strait on Thursday, deploying dozens of planes and firing live missiles near Taiwan. On Sunday, six zones encompassing much of the island were used for the drills. Due to “changing airspace restrictions,” Singapore Airlines (SIA) has canceled two of its scheduled flights for Friday, August 5, while China conducts live-fire military drills in six zones surrounding Taiwan. Following US House Speaker Nancy Pelosi’s visit to the self-governing island on Wednesday, China is holding live-fire military drills from Thursday through Sunday. Since Mrs. Pelosi was the highest-ranking US official to visit Taiwan in the previous 25 years, China denounced the visit and responded with economic and military sanctions.
According to the Civil Aviation Authority of Singapore (CAAS), China informed airmen on Tuesday that aircraft should not fly into specific locations where live-firing exercises are taking place.
The Taiwan Strait is the primary route for ships passing from China, Japan, South Korea and Taiwan to the west, carrying goods from Asian factory hubs to markets in Europe, the US and all points in between. Any actions over Taiwan that affect the strait would be another blow to global shipping. Supply chains, which have been reeling since the start of the pandemic, have been struggling to recover this year from lockdowns in China’s cities and Russia’s invasion of Ukraine.
The Taiwan Strait is closed to ship traffic, this is projected to result in delays of around three days. Typhoons, which frequently affect ships at this time of year and cause additional interruptions, are another factor. While ships can divert around the eastern coast of Taiwan through the Philippine Sea, which would add only a few extra days to the journey, alternative routes pose difficulties. The Luzon Strait between the Philippines and Taiwan offers a possible north-south path, but the typhoon season in South China Sea makes it risky to travel. There is no direct impact, but some ships may need to avoid the exercises by changing routes, causing delays in reaching the port,” the representative said. But costs are expected to rise for shipping through waters near Taiwan, especially if the People’s Liberation Army returns for more drills after the current exercises. Logistics expenses will rise 10 per cent, said Ambrose Linn, a former member of the Hong Kong Logistics Development Council, as goods considered “urgent” for delivery in Taiwan will shift from ships to planes. Higher costs will also hit traffic headed for destinations on the mainland, as well as Japan and South Korea, according to analysts. “The shutting down of these transport routes – even temporarily – has consequences not only for Taiwan, but also trade flows tied to Japan and South Korea,” said Nick Narro from The Economist Intelligence.
Till the end of August, a lot of airlines had canceled unannounced flights to or from Taiwan. As prices rise, air freight capacity is becoming “tight.” Transportation expenses, which have already been influenced by price rises brought on by the pandemic, are expected to climb further as a result of the rerouting of ships and aircraft. Rerouting route takes longer and is more expensive as there is increase in consumption of fuel and labour. As a result, prices go up and the supply chain experiences delays. Supply-chain disruptions will affect Taiwanese manufacturers and the island’s domestic consumption if China continues to conduct drills close to Taiwan, according to industrial operators.
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