Analysis: the disappearance of China’s ships: the latest headache for the global supply chain

Analysts say they began to notice the drop in maritime traffic in late October, as China was preparing to enact legislation governing data privacy.

Shipping data companies are generally able to track ships around the world because they are equipped with an automatic identification system or AIS transceiver.

This system allows ships to send information, such as position, speed, heading and name, to stations located along the coasts using high frequency radio. If a ship is out of range of those stations, the information can be exchanged by satellite.

But that is not happening in the world’s second-largest economy, a major player in world trade. In the past three weeks, the number of vessels sending signals from the country has plummeted by nearly 90%, according to data from global shipping data provider VesselsValue.

“We are currently seeing industry-wide downsizing of terrestrial AIS signals in China,” said Charlotte Cook, chief business analyst at VesselsValue.

    A freighter seen at the Yangshan deep-water port in Shanghai 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, the Chinese Foreign Ministry declined to comment. The State Council’s Information Office, which acts as the country’s cabinet press office, 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 took effect on November 1. It requires companies that process data to receive approval from the Chinese government before they can allow personal information to leave Chinese soil, a rule that mirrors the fear in Beijing that such data will end up in the hands of foreign governments.

The law does not mention shipping details. But Chinese data providers could be withholding information as a precaution, according to Anastassis Touros, AIS network team leader at Marine Traffic, a leading provider of ship tracking information.

“Whenever you have a new law, we have a period of time in which everyone has to check if things are okay.” Touros said.

China is cracking down on data privacy.  That's terrible news for some of your biggest tech companies.

Other industry experts have more clues about the influence of the law. Cook said his colleagues in China told him that some AIS transponders were removed from stations located along the Chinese coast at the beginning of the month, on instructions from national security authorities. The only systems allowed to remain must be installed by “qualified parties.”

Not all the data is gone – satellites can still be used to capture ship signals. But Touros said that when a ship is close to shore, the information collected in space is not as good as that which can be collected on land.

“We need ground stations to have a better image, a higher quality image,” he added.

With the arrival of Christmas, the loss of information from mainland China, home to six of the 10 busiest container ports in the world, could create more problems for an already troubled global shipping industry. Supply chains have been under pressure this year as heavily congested ports struggle to keep up with rapidly recovering demand for goods.
Supply chain stress is escalating and shows no signs of fading, says Moody & # 39;  s Analytics

Shipping companies rely on AIS data to predict vessel movement, track seasonal trends and improve port efficiency, according to Cook of VesselsValue. He said the lack of Chinese data “could significantly affect the visibility of the ocean supply chain in China.” The country is one of the world’s leading importers of coal and iron ore, as well as a large exporter of containers.

“As we move into the holiday season, it will have a huge impact on [supply chains] and this is the most important element at the moment, “said Georgios Hatzimanolis, media strategist at Marine Traffic. He expects the loss of” minute-by-minute “ship data from China to have” a huge impact on the supply chain. ” as companies can lose crucial information about the times of docking, unloading and departure of the ship.

The global supply chain is already under “great stress,” he added. “You don’t need another factor to make it more difficult.”

Ningbo-Zhoushan port seen in August.  Experts worry that the lack of shipping data outside of China could strain the global supply chain.

China’s self-isolation

China’s desire to retain absolute control over all data and information within its borders is not surprising, as President Xi Jinping continues to reaffirm the dominance of the ruling Communist Party in all aspects of the economy and society.

The country has been pushing for economic self-sufficiency while facing external threats, such as US sanctions. key technologies.
Xi emphasized his self-reliance goals in the years before and during a bitter trade and technology war with former US President Donald Trump. That’s the point, for example, of “Made in China 2025,” an ambitious plan to propel China’s manufacturing sector into more advanced tech fields.
China's largest private companies are in chaos.  It's all part of the Beijing plan

Some senior Beijing officials have recently tried to quell concerns among global investors that the country is isolating itself from the rest of the world by prioritizing 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 fluid.”

But China has adopted policies during the coronavirus pandemic that often appear to do the opposite.

For example, during the pandemic, Xi has redoubled his drive for self-reliance, emphasizing the need to create “independent and controllable” supply chains to ensure national security.
And the country’s radical crackdown on technology was extended to foreign IPOs this summer, when China’s Cyberspace Administration proposed that major companies with more than one million clients seek approval before listing stocks abroad. As with the recent data privacy law, the agency cited concerns about whether personal data held by those companies could be exploited by foreign governments.

However, China’s actions this year may come at a cost if the country goes too far in trying to protect itself from perceived foreign interference.

– CNN’s Beijing office contributed to this report.

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