The Chinese digital octopus spreading its tentacles through smart port ambitions

The Chinese digital octopus spreading its tentacles through smart port ambitions
Andre Wheeler March 1, 2024 https://splash247.com/the-chinese-digital-octopus-spreading-its-tentacle...

Andre Wheeler carries a warning today about China’s LOGINK digital platform.

As the world of shipping has moved towards smart ports, China has quietly been strengthening its position of power over global trade via its data aggregation platform that has been embedded into port and terminal operating systems.

Initially, the level of data exchange and interface required was built around China’s ambitions of being a regional hegemon through the Belt and Road Initiative. Initially described as an opaque system that merely sought to create “win-win” trade solutions, many port operators began to engage with China’s digital platforms.

Over time many started to see China’s introduction of the Digital Silk Road as a co-ordination platform for trade along the Belt and Road. Naively, many port and terminal operators began embracing the cheaper and more advanced China digital interface platforms. The safety and security of data issues became paramount in the debate.

These earlier concerns around supply chain integrity and security have now been escalated as governments begin to understand the full implications of LOGINK being the underpinning data platform of digital interfaces within smart port development. The discussion around meritocratic processes in technical and data sharing standards creation has shifted to one around logistics / supply chain integrity. With greater data sharing and system interoperability there is greater risk to data / information integrity as the smart port agenda has been subsumed under China’s digital silk road strategy in which ports have been instrumental in furthering China’s agenda.

Unfortunately, the open (the West) and closed (China) digital systems are entering a phase in which national agendas take precedence over transparency and visibility within global trade. This has been exacerbated by the increase in the expanse and use of the China LOGINK platform, much of which has gone unnoticed. What was a hidden data platform has now become increasingly visible as its tentacles have now enveloped up to 75% of global trade.

How has LOGINK achieved this level of penetration? Through engagement with ports, LOGINK can now be found in over 50 countries and spans every global logistics network. This spread has gone beyond port ecosystems but now includes railways and other transport networks. China has strategically focused on European ports as it seeks to carve the US out of the EU economy.

The spread is now a major concern to the EU as it begins to understand the extent of the potential risks to EU / China trade through supply chains vulnerability. More importantly there is an understanding by the EU that the level of port penetration by LOGINK makes Europe more susceptible to Chinese economic coercion through data manipulation. European ports have accelerated this risk with LOGINK now having a network of 31 European ports in which China can influence trade flows.

There is additional pressure as China ramps up its Taiwan ambitions, particularly when taking account of China’s civil-military fusion strategy. There are ports within the LOGINK network that include US naval facilities, including the ports of Antwerp, Zeebrugge, Valencia, Le Havre, Amsterdam, Gydnia and Stockholm. This presents a significant trade security risk should China wish to block the Taiwan Strait through military intervention and use data manipulation to effectively stop a response from these naval based ports.

Compounding the issue has been the expansion of China’s digital footprint through the integration of LOGINK into the port operating systems: CargoSmart and CaiNao (Alibaba). Integration within these platforms was made possible through China’s Transport and Telecommunications and Information Center partnership with the International Port Community Systems Association. This partnership created data sharing standards for countries that allowed for seamless data sharing interfaces.

As the role of ports in advancing China’s geo-economic ambitions is being analysed and understood, there has been a divergence in response by the US and EU. This divergence has potential future consequences for trade between these two economic blocks.

Initially the US has responded to this perceived threat by banning the Pentagon from using any port worldwide that has a digital interface or handshake with China’s LOGINK. This may well extend to any trade item that becomes defined as of strategic national importance. Examples could include shipments of rare earths, semi-conductor trade.

On the other hand, the EU has been more reserved in its response. The response has been shaped by the spread and integration of China’s trade within the EU and the direct LOGINK partnership in 24 European ports. Essentially the network and spread with European ports is making US / EU and global trade more complex. It is becoming evident that businesses will need to find ways to bypass the use of LOGINK or formulating APIs within these ports that allow a secure interface between port operating systems.

In the short to medium term, there is likely to be an increased use of data / information coercion to achieve global trade goals and economic dominance. Currently, it looks like China has used LOGINK to get in front of the West, securing a position of strength over strategic logistics and supply routes.

As global trade becomes increasingly digitally integrated, there needs to be a greater awareness of the power of that data and how it can be used. Companies need to be aware of these developments such that they have robust API software in place that will enable effective data exchange without compromising the security of their supply chains. The horse may well and truly bolt in terms of a weaponised LOGINK, but it is never too late to put systems in place that make you less vulnerable to economic coercion and / or trade manipulation.

An earlier version of this article suggested there were links between Portbase and LOGINK. This is incorrect and the article has been amended to reflect this.