The maritime industry is in the midst of a storm, and it’s not just about the waves. The discovery of cellular modems on Chinese-manufactured cranes in the United States has sent shockwaves through the sector, raising serious concerns about cybersecurity threats posed by reliance on Chinese state-owned enterprises (SOEs) for critical infrastructure components. This isn’t just about a few dodgy modems; it’s about the broader picture of China’s maritime dominance and what it means for the rest of the world.
China’s maritime ambitions are no secret. The People’s Republic of China (PRC) has been steadily expanding its blue economy, already worth over USD 1.2 trillion, as part of its 21st Century Maritime Silk Road initiative. This isn’t just about economic growth; it’s about projecting maritime power and challenging the US’s long-standing naval pre-eminence. The CCP’s maritime initiatives are a clear signal that China isn’t just playing catch-up; it’s aiming to set the pace.
China’s most crucial maritime advantage isn’t its navy but its economic command over the shipping industry. It’s the world leader in commercial maritime, dominating the entire international supply chain. From shipbuilding to port operations, China’s influence is pervasive. This dominance is set to increase, particularly with initiatives like Made in China 2025, which prioritises ocean engineering equipment and high-tech shipping. China’s state backing has played a key role in this dominance. Financial support has shielded Chinese firms from market volatility, allowing them to progressively expand their global shipping market share. Since the 2008 financial crisis, China’s share of the shipbuilding market has skyrocketed from less than five per cent to over 50 per cent in 2023. It’s a similar story with container volumes at the world’s busiest ports, where China’s share stood at over 41 per cent in 2024.
China’s maritime strategy isn’t just about building ships; it’s about investing in ports across the globe. Chinese SOEs, backed by the government, are flush with cash and willing to circumvent international norms regarding the environment, human rights, and labour. This allows them to present developing countries with maritime investment programmes that seem highly attractive. China invested around USD 11 billion into overseas ports between 2010-19, maintaining 129 port projects, many in strategically significant locations. The potential for these commercial port interests to be leveraged for military purposes is a real concern. A significant number of these ports have the necessary features to be used for military purposes, although only a fraction are majority Chinese-owned.
The discovery of unauthorised cellular modems on ZPMC cranes in the US has brought this issue into sharp focus. ZPMC, a Chinese SOE, dominates the ship-to-shore (STS) crane market with an 80 percent market share. These cranes are central to global supply chains, and their vulnerability to exploitation is a serious concern. The modems, which connected to Linux computers on port cranes, could be used for information gathering, remote communication, and bypassing firewalls. This is a potentially serious vulnerability, as ZPMC produces around 80 per cent of cranes at US ports, with over 200 Chinese-manufactured cranes currently operating in the US. The potential security risks of dependency on Chinese STS cranes have provoked a strong reaction in the US. The Biden administration took steps to strengthen the American position in the commercial maritime industry, including a USD 20 billion investment programme in American port infrastructure, as well as an executive order designed to strengthen shipping industry cybersecurity. Biden also proposed a 25 per cent tariff on Chinese STS cranes, which, although controversial with port authorities due to the financial strain it would have caused, was set to come into effect in mid-2025. It is not yet clear whether Trump will institute a similar targeted tariff for shipping and port infrastructure, as recommended by a new report by the Office of the United States Trade Representative on ‘China’s Targeting of the Maritime, Logistics, and Shipbuilding Sectors for Dominance’.
This news should spark a debate about the future of maritime infrastructure. How can the industry ensure cybersecurity while maintaining global supply chains? How can governments balance the need for investment with the risks of dependency? How might this news shape future developments in the sector? Will we see a push for more domestic manufacturing of critical infrastructure components? Will there be increased scrutiny of foreign investments in ports and shipping infrastructure? Will the industry see a shift towards more transparent and secure technologies? These are the questions that need to be asked and answered. The maritime industry is at a crossroads, and the choices made today will shape its future for decades to come.
