After attending a recent update on international trade opportunities, I was left asking questions. Are port and terminal operating systems which interface with China platforms unknowingly putting supply chains at risk in this volatile geopolitical environment? Are they inadvertently contributing to IP theft opportunities?
Momentum shift
As we see the momentum shift by businesses transitioning to compete in the new digital trading environment, there has been an increase in the adoption of smart port ecosystem integration. There still appears to be little recognition that the digital trading platform being rolled out under China’s Belt Road Initiative and Digital Silk Road has an underlying ICT network that cedes data ownership and control to the Ministry of Transport in Beijing via a centrally controlled coordination management system.
This network is aptly called Logink, (Logistics Link), and is being crafted under the direction of the Digital Silk Road (DSR) which is building digital connectivity along the Belt and Road Initiative (BRI).
Operationally Logink is under the direction of the China Transport Telecommunications and Information Center (CTTIC). In turn CTTIC is guided by the Chinese Communist Party and Xi Jinping’s DSR strategy.
Advantage of gap
Taking advantage of the gap in digital logistics market data standards, it has used both the DSR and BRI to de facto set international data standards that allow seamless data transfer and exchange at critical logistics / supply chain merge points. The most critical of these logistics merge points are ports.
This bifurcation of trading ecosystems has escalated, particularly as China / US tensions rise.
Unfortunately, we are rapidly approaching the stage where global trade is going to have to take sides on how trade is undertaken and what digital standards and systems are to be used. In a sense those countries that have open digital trading networks are trying to reverse the gains made via China’s DSR.
Within the Indo-Pacific region we see that the DSR is taking ascendency in the integration and seamless transfer of data / information. This has created a sound platform for China to become a superpower in terms of logistics and supply chain, giving significant control over their trading partners.
Powerful Logink
So how has this happened? In my view this has been enabled by port and terminal operating systems inadvertently docking into the little-known China data aggregation Logink network. What many failed to recognise is that it is not the ICT infrastructure or operating system that gives data its power, but the interface software network that does. That is why Logink is powerful.
Importantly, Logink was formulated prior to the Belt Road and at a time when China embraced an ‘open China’ where there was greater separation of state from the economy and civil society. Under the open China policy framework and its concomitant trade benefits, the world’s first real logistics and supply chain data information sharing warehouse network was created. However, this data aggregation platform is only now being reviewed as Xi Jinping’s China has changed trajectory.
Logink aggregates international data on the shipment of goods and infrastructure operations. It provides users the data that facilitates supply chain coordination, customs reporting, transportation monitoring and smart logistics across rail, air, sea, land, and ecommerce.
Portrayed as a one-stop enquiry service for public logistics information and data resources, it is often seen as a benign software application. This was welcomed into several international authorities, not least of which is the International Port Community Systems Association (IPCSA).
Dr Sun Tengda, the director general of Logink, played to the benign nature of Logink when saying that their work with the IPCSA was to simplify the logistics visibility in a standardised way that offers the international community the following benefits: standard setting, information interchangeability and data services.
Competitive advantage
Logink is now fully incorporated and partnered with 20 ports worldwide, increasingly being incorporated into Chinese and international companies. This gives China a significant competitive advantage as it has extensive data on port-to-port movement of product through these smart ports, making this data susceptible to manipulation.
It gives real time visibility of cargo, it also collects data on storage, logistics, packing processing and distribution data. As the data is held and controlled centrally in Beijing, there is potential for remotely adjusting data, such as container temperature such that fresh produce arrives spoilt by the time it reaches its destination.
If there is any doubt as to the seriousness of this issue, Australia’s miner of rare earths, Lynas has been forced to change its supply chain into the US as it initially passed through the Malaysian port of Kuantan, that docks into Logink.
The port through which these rare earths passed through is part of the China ASEAN Port Logistics Information Centre with data being fed into the Logink system. In turn this network connects 21 ports in China, East Asia, Europe, and ASEAN.
Integrity of data
From a port operating system perspective, it should be noted that data can be manipulated as to the shipper, route selection, partners, and regulatory controls. There is also the vulnerability of supply chain disruption should China decide to make ports go dark, as happened when Australian coal supply into China was disrupted.
There should be robust security and API protocols to protect the integrity of the data that is shared in an open platform, and ports need to build robust systems that will allow safe and secure data transfer within their ecosystem. This will become an increasing priority particularly when you consider the likes of Rotterdam, Hamburg, Haifa, and Antwerp are already docked into the Logink platform.
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Source: Splash247
