Chinese Technology Influence in U.S. Seaports

The proliferation of Chinese technology throughout U.S. seaports presents economic, transportation, and national security risks. A deeper understanding of these risks is required to inform decision making on how to address them as well as potential threats.

This paper proposes four notional courses of action on how to address risks posed by Chinese technology in U.S. seaports, summarizes findings that have been captured in this domain, and identifies actions for further discovery to capture and quantify the level of risk.

American seaports play a significant role in the U.S. and world economy. In 2018, $2.2 trillion in freight moved through U.S. ports, which in turn supported 30.7 million jobs and generated $378.1 billion in tax revenue for federal, state, and local authorities. The American Association of Port Authorities reports that 15,000 jobs are created for every additional $1 billion in exports shipped out of U.S. seaports. According to the U.S. Department of Transportation (USDOT), the nation’s ports handled 41 percent (over $1.8 trillion) of U.S. international trade by value in 2021. Today, over $6 billion in cargo is handled every week by U.S. ports, with an annual economic activity value of $5.4 trillion.

Seaports also play a vital role in national defense. Several U.S. commercial seaports have been designated as Strategic Seaports by the Department of Defense (DoD). Strategic Seaports are intended for use in military deployments because of their large staging areas, connection to rail infrastructure, and ability to load non-containerized cargo. Strategic Seaports are expected to make facilities available to the military with as little as 48 hours’ notice, and for extended periods of time, if necessary.

There is growing concern about Chinese influence in U.S. seaports. The Chinese government has made a concerted effort to expand its influence into seaports around the world. Chinese companies own or operate terminals in 100 ports in 60 countries. China is also a major player in port technology, including cranes (Shanghai Zhenhua Heavy Industries Company Limited, or ZPMC) and logistics management systems (National Transportation and Logistics Public Information Platform, or LOGINK). ZPMC has a 70 percent global market share in container cranes. ZPMC cranes constitute 80 percent of cranes in U.S. ports, and they are present in 10 Strategic Seaports. Global adoption of LOGINK presents economic and national security risks to the U.S. Through LOGINK, the Chinese government has significant visibility into shipping and supply chains, providing opportunities to spot vulnerabilities and track shipments of U.S. military cargo on commercial freight.

The federal government, particularly Congress, has expressed concern on the topic of Chinese influence in ports. A November 2022 bicameral letter to the President urged action “to halt the spread of LOGINK, a Chinese Communist Party controlled digital platform for maritime data-sharing,” and a subsequent letter in April 2023 from the House Committee on Homeland Security to the Secretary of Homeland Security expressed concern “about existing vulnerabilities at our nation’s maritime ports. We are particularly concerned about technology employed by Chinese-manufactured cranes operating in U.S. ports, which significantly increases the cybersecurity risk to business operations systems and terminal industrial control systems.” In May 2023, the House Subcommittee on Transportation and Maritime Security held a hearing titled “Evaluating High-Risk Security Vulnerabilities at our Nation’s Ports.”

Recent legislation addresses Chinese influence in ports. Section 3529 of the National Defense Authorization Act for Fiscal Year 2023, Study of Cybersecurity and National Security Threats Posed by Foreign Manufactured Cranes at U.S. Ports, commissioned a study by the Maritime Administrator, in consultation with the Secretary of Homeland Security, the Secretary of Defense, and the Director of the Cybersecurity & Infrastructure Security Agency to “assess whether there are cybersecurity or national security threats posed by foreign manufactured cranes at United States ports.” In March 2023, Rep. Michelle Steel (R-CA) and Sen. Tom Cotton (R-AR) introduced draft legislation in the Securing Maritime Data from Communist China Act of 2023, which calls for the ban of “the free, Chinese state-owned logistics platform LOGINK from being used by U.S. military or commercial interests at ports at home or abroad.” Included in the proposed legislation:

• Ban all DoD usage and DoD contracts with entities using or sharing data with the platform.
• Require the President to prohibit entities in the United States from using or sharing data with LOGINK.
• Require the administration to report on the threat of LOGINK, including a report on U.S. port bans.
• Work with international partners to stop its use and prevent its inclusion in any economic/ trade package.