Taiwanese companies appear to be weathering the disruptions in the Red Sea's crucial shipping lane without significant impact, as these disturbances coincide with the traditional low season in export demand, according to Economy Minister Wang Mei-hua's statement on Monday.
The Red Sea route has seen certain shipping companies suspending transit to avoid potential attacks by Yemen's Iranian-backed Houthi group, which has been launching drones and missiles at vessels since November in response to Israel's military actions in Gaza. The primary targets of these Houthi attacks have been container vessels navigating through the Red Sea. In December, Taiwanese container shipping firm Evergreen Marine announced the rerouting of ships scheduled to pass through the Red Sea, opting for the longer route around Africa's Cape of Good Hope.
Wang stated that her ministry had engaged with 14 industry groups and companies to assess the impact of Red Sea disruptions. She noted that the winter season traditionally witnesses decreased shipping activity to Europe, with even fewer shipments before the Lunar New Year holiday. Wang acknowledged that shipping costs had risen but emphasized that the situation was far from the severity experienced in the aftermath of Russia's invasion of Ukraine in 2022.
Taiwan's economy heavily relies on trade, with a prominent role in semiconductor production for a wide range of products, including cars, microwaves, smartphones, and AI servers.
The latter half of the year typically marks the peak season for Taiwanese exporters as they gear up for the year-end holiday demand in Western markets.
In 2023, Taiwan's economy recorded a preliminary growth rate of 1.4%, the slowest in 14 years. However, it is expected to rebound vigorously in the current year, with a projected expansion of over 3%, driven by strong demand for AI applications that heavily rely on chips manufactured in Taiwan.