US raises alarm as Chinese platform corners market on global shipping logistics

“The pervasiveness of China’s state-supported commercial logistics platform provides the constant monitoring of port capabilities and throughput of US cargo and our allies and partners during peacetime,” it said, adding that multiple freight movements globally contain US military consignments, and logistics data could predict current or future operations.

Though the issue is often missing from discussions about securing supply chains, a group of bipartisan US lawmakers has been calling attention to it.

In March, Senator Tom Cotton, a Republican from Arkansas, and Representative Michelle Steel, a Republican from California, introduced the Securing Maritime Data from Communist China Act in both congressional chambers, calling Logink “a recipe for disaster”.

The bill, which is co-sponsored by Senator Mark Kelly, a Democrat from Arizona, not only prevents the US Defence Department from entering contracts with any entity that uses Logink but also requires the US president to ensure that any major international agreement, such as the Indo-Pacific Economic Framework (IPEF), will stop the platform’s expansion through US industries as well as those of American allies.

Steel said awareness had only recently dawned that China was “using the data and logistics platform Logink for years to spy on our supply chains and gather data about any potential weaknesses”.

The Chinese foreign ministry did not respond to a request for comments.

Though the bill has yet to make any progress in the US Congress, the issue has also been addressed in the Republican-controlled House’s version of the annual defence spending bill, which calls for “securing maritime data from China”.

Representative Dusty Johnson, a Republican from South Dakota, introduced the provision as an amendment to the National Defence Authorisation Act that would prohibit “US ports that take federal grant money from using China’s state-supported” Logink.

“Logink provides massive amounts of monitoring, data and logistics infrastructure to the [Chinese Communist Party] – it’s imperative we keep Logink out of American ports,” Johnson said in June. “China already competes unfairly in the global shipping arena. Blocking their access to American port data is one small step to keep this advantage to a minimum.”

The defence spending bill, which passed along party lines in the House, faces a difficult path in the Democratic-controlled Senate as it was larded with amendments regarding abortion rights for service members, healthcare for transgender troops and the defunding of diversity and inclusion initiatives.

The US-China Economic and Security Review Commission raised concerns about Logink in September 2022. It said the Chinese government could potentially “gain access to and control massive amounts of sensitive” data, including commercial transport of US military cargo, insight into supply chain vulnerabilities and critical market information.

The panel cautioned that global shipping data gained through Logink “could enable the interdiction or disruption of US operations or actions, including foreign military arms and munitions sales (such as to Ukraine or Taiwan), movement of US military forces, or the sustainment of US overseas strategic, military, intelligence or other operations”.

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Experts agree that information on what’s going where and at what price could provide both commercial and strategic advantage, while also frustrating US-led efforts to de-risk critical supply chains.

Gabriel Collins of the Baker Institute for Public Policy at Rice University in Houston said that Beijing having an “informational advantage” complicated efforts to de-risk supply chains, and possibly undermined them.

“Even if you’re pulling physical production to some extent out of China and rehousing it to other places, whether that be Vietnam, Malaysia, India, United States or Mexico, you still have the issue of PRC in positional advantage that could potentially be turned against you in a whole number of ways,” said Collins, who co-authored a research paper titled “China’s Logink platform and its strategic potential for economic, political and military power projection” in April.

The report described Logink’s ability to help Beijing “contest allied logistical support from the factory floor to the frontline” as “a challenge the United States has never faced before”.

Citing an example of how Logink might enable China to block or disrupt trade flows, Collins noted that in 2016 Hong Kong authorities seized a shipment carrying Singaporean armoured vehicles and equipment that was headed back to Singapore after a drill on Taiwan.

“I think that right there just affirms that, one, the PRC government is watching what goes through the shipping channels, and, two, if they see it as it being in their interests, they’re willing to act on it,” he said.

Collins added that facilitation tools have become more advanced over the last seven years, and that “by fusing all these data sets, you have a really good picture of the world and what’s going on your system”.

Andy Mok, a senior research fellow at the Centre for China and Globalisation, a think tank based in Beijing, described Logink as “not only a service provider, but also a strategic asset for China’s development and security” and said it was “a reflection of China’s legitimate interests and aspirations”.

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“Logink can also contribute to the global common good by facilitating trade, cooperation and innovation,” he said, emphasising that the key is to ensure that it operates in a “transparent, accountable and responsible manner that respects the interests and rights of all stakeholders”.

The Brookings report said that despite this growing awareness, the Defence Department still uses multiple systems and unclassified networks for its logistical data, which creates challenges in protecting it from cyber threats and “ensuring the integrity of supply chains”.

Representative Mike Gallagher, the Republican chairman of the House Select Committee on China, recently called the Pentagon “a massive emitter of data”.

“But the Pentagon doesn’t treat data like it treats ammo,” he said, and called its supply chain planning “bloated, ossified, antiquated”.

The Brookings report said Chinese companies had “taken control of physical logistics infrastructure worldwide and important terminals in the US”, contending that “adversaries could cause a key delay in support or disruption of critical logistics during a crisis, endangering operations and costing lives”.

The state-owned China Ocean Shipping Company (Cosco) currently holds ownership stakes in terminals at five US ports, including joint ventures in Seattle, Los Angeles and Long Beach, California.

Cosco Shipping Group said that they “do not possess controlling stakes” in these joint ventures, and that it was “a common practice for major global shipping companies to enhance their services by leasing terminals through joint venture arrangements”.

“As a prominent global shipping enterprise, Cosco Shipping Group is committed to promoting worldwide economic development and smooth trade by maintaining a strong legal and compliance culture in all our global operations,” a PR official at the company said in an emailed statement.

However, the Brookings report asserted that “this real-time visibility generate considerable vulnerabilities for US operations and logistics”.

According to Statisca, a German data platform, as of June 2022, China Cosco Shipping Corp Ltd owned 50 container terminals worldwide. Cosco Shipping Ports Ltd, a subsidiary, operates 37 ports globally. In October 2022, Germany allowed Cosco Shipping Ports Ltd to acquire 24.9 per cent of the shares of the container terminal Tollerort in Hamburg.

“For US mariners, being tracked by a foreign country brings visions of the first and second world wars when German U-boats indiscriminately sunk our vessels,” said David Heindel, president of the Seafarers International Union, the largest North American union representing merchant mariners.

Calling on US Congress to act “appropriately and swiftly”, Heindel said: “These threats aren’t part of some science fiction plot. They are real.”