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Analysis: China’s disappearing ships: Fresh headache for global supply chain

November 24, 2021
Henry

Analysts say they began to notice a drop in shipping traffic in late October, as China prepared to introduce laws governing data privacy.

Typically, shipping data companies are able to track ships around the world because they are equipped with an Automatic Identification System, or AIS, transceiver.

The system allows ships to send information – such as position, speed, course and name – to stations located along the coastline using high-frequency radios. If a ship is out of range of those stations, information can be exchanged via satellite.

But that is not happening in the world’s second largest economy, a key player in global trade. According to data from global shipping data provider VesselsValue, over the past three weeks, the number of ships sending signals from the country has dropped by almost 90%.

“We are currently seeing an industry-wide reduction in terrestrial AIS signals in China,” said Charlotte Cook, Head Trade Analyst at VesselsValue.

A cargo ship as seen at Shanghai's Yangshan Deepwater Port last October. Shipping data companies say they have lost information about ships in Chinese waters in recent weeks.

New data law could worsen supply chain chaos

When asked about the issue, China’s foreign ministry declined to comment. The State Council Information Office, which serves as a press office for the country’s cabinet, did not immediately respond to a request for comment on why shipping providers were losing access to the data.

But analysts believe they have found the culprit: China’s personal information protection law, which came into effect from 1 November. It requires companies that process data to obtain approval from the Chinese government before they can allow personal information out of Chinese soil – a rule that echoes fears in Beijing that Such data could end up in the hands of foreign governments. ,

The law does not mention shipping data. But according to Anastasis Turos, AIS network team leader at Marine Traffic, a leading ship-tracking information provider, Chinese data providers may withhold information as a precaution.

“Whenever you have a new law, we have a time period where everyone has to check if things are okay,” Bulls said.

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Other industry experts have more clues about the law’s impact. Cook said his colleagues in China told him that some AIS transponders had been removed from stations along the Chinese coast earlier in the month on the instructions of national security officials. Only systems required to be installed by “qualified parties” are allowed to remain.

All the data is not over: satellites can still be used to capture signals from ships. But Turos said that when a ship is close to shore, the information gathered in space is not as good as that collected on land.

“We need terrestrial stations for a better picture, a more high quality picture,” he said.

With Christmas approaching, the loss of information from mainland China – home to six of the world’s 10 busiest container ports – could spell more problems for an already troubled global shipping industry. supply chain is under stress This year, severely congested ports are struggling to meet the demand for faster return of goods.
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According to VesselValue’s Cook, shipping companies rely on AIS data to predict vessel movement, track seasonal trends, and improve port efficiency. She said the lack of Chinese data “could significantly affect the visibility of ocean supply chains across China.” The country is one of the world’s leading importers of coal and iron ore, as well as a major exporter of containers.

“As we move into the Christmas period, this will have a really huge impact. [supply chains] And that’s the most important element right now,” said Georgios Hatzimanolis, media strategist for maritime traffic. He expects a “minute by minute” loss of ship data from China, which will have “a huge impact on the supply chain,” as companies Ships may lose important information regarding docking, unloading and departure times.

The global supply chain is already under “a lot of tension”, he said. “No other factor is needed to make it more difficult.”

Ningbo-Zhoushan Port as seen in August. Experts worry that the lack of shipping data from China could affect global supply chains.

China’s self-isolation

China’s desire to maintain complete control over all data and information within its borders is not surprising, as President Xi Jinping continues to reassert the ruling Communist Party’s dominance in every aspect of the economy and society.

The country is pushing for economic self-reliance as it faces external threats, such as US sanctions. key technologies,
Xi emphasized his self-reliance goals in the years before and during A bitter trade and technological war With former US President Donald Trump. This is the case, for example, of “Made in China 2025,” An ambitious plan to push China’s manufacturing sector into more advanced technological areas.
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Some top officials in Beijing have recently tried to allay concerns among global investors that the country is isolating itself from the rest of the world because it prioritizes national security.

Chinese Vice President Wang Qishan, considered a trusted ally of Xi, told the Bloomberg New Economy Forum in Singapore that China “will not develop in isolation from the world.” Speaking via video, he also called on countries to keep supply chains “stable and smooth”.

But China has adopted policies during the coronavirus pandemic that often appear otherwise.

For example, Xi has doubled down on his push for self-reliance during the pandemic, stressing the need to create “Independent and Controllable” Supply Chain To ensure national security.
And the country’s massive dominance over technology extended this summer For foreign IPOs, when China’s Cyberspace Administration as proposed That major companies with more than one million customers seek approval before listing shares overseas. In line with recent data privacy legislation, the agency cited concerns about whether personal data held by those companies could be exploited by foreign governments.

China’s actions this year could come at a cost, however, if the country goes too far in its effort to protect itself from perceived foreign interference.

— CNN’s Beijing bureau contributed to this report.

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