SIMIC

Nearly half the world's containerships passed through the narrow Taiwan Strait in the first seven months of this year, notes Mumbai's Construction Week.

"The global supply chain is interconnected and all the major stretches like Taiwan Strait are nerve centres of these value chains," said Container xChange CEO Christian Roeloffs.

"If any one stretch is blocked, the effect is felt across the system. Especially at a time when the industry is busy shipping cargo for the peak season.

"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 two years owing to many such shocks in the past." Mr Roeloffs said.

"We were expecting lockdowns in China - that lasted two 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." he said.

"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 Container xChange customer with business in Taiwan.

The global average container prices decreased from US$3,339 in July to $2,730 (so far in August) by 18 per cent.

The average container prices have declined in the month of July as compared to the month of June in the United States by 20 per cent, China by five per cent and India by seven per cent. These prices continue to drop into the month of August so far across the US and China.

Average one-way pickup rates of cargo-worthy containers from Asia to North America decreased from $1,612 in June to $1,052 in July, by 35 per cent. The pickup rates declined on China to the US stretch from $2,088 in June to $1,220 in July.