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Washington's Cosco spying claims a new hat on an old head

In just over three weeks Donald Trump and XI Jinping are due to meet in Washington DC for the latest round of bilateral talks. Meanwhile, Reuters reports today that US intelligence officials believe Chinese state-owned carrier Cosco "uses concealed equipment onboard its ships to spy on military communications near the coastlines of target nations including the US", and that the shipping line "has a decades-long intelligence-collection partnership with Beijing". "The arrangement allows China to collect communication signals from vessels and aircraft operating across Europe, North America and Asia," they said. Like, duh - it would be more surprising if it wasn't true. The Communist Party of China/government of China has always had a presence in virtually every sector of the country's economy, and certainly a physical presence in its leading state-owned enterprises (SOEs), so the claim that CCP members hold both senior management positions at its largest shipping company, as well as among the crews of its ships, and that the vessels themselves are used for intelligence gathering as well as carrying cargo should really not be news to anyone familiar with shipping in the 21st century. It's been hiding in plain sight all along. Logically, the argument is a syllogism with two premises: Cosco (and let's not forget the erstwhile China Shipping, which served the same purpose until folded into Cosco around a decade ago) is China de facto supply chain operator; meanwhile the country and the CCP use economic leverage as part of its international relations strategy... therefore the shipping company is one vehicle (pun intended) for the Chinese leadership's geopolitical ambitions. Tariffs on Chinese exports; the pending 301 port fees on Chinese carriers; Panama; Iran; threats to fund new container facilities in Greece... the list of trade flashpoints on which the world's largest two economies collide lengthens by the day. The trouble is, to borrow one of Trump's favoured analogies, that the US doesn't really hold the cards for this game. It doesn't have the transport assets on any scale to commercially compete with China - as has been established by bi-partisan congressional investigations and both current and previous administrations - which means that one of the few recourses available to Washington is to limit Cosco's access to the US market and make it prohibitively expensive for it to do business there. And in this respect, the proposed 301 port fees - proposed in 2025 but officially in abeyance until this November - is probably the strongest card in its hand, and we can expect the spying claims will be presented as strengthening the case for the introduction of the 301 fees - and the groundwork for this is likely to be on display in Washington on 24 September.

US importers need better visibility of every deal before goods are shipped

US importers can no longer treat customs clearance as the end of their compliance obligations - customs is increasingly scrutinising entries for months after cargo has been released, according to compliance specialists. During a CargoTrans webinar, Rennie Alston, director of trade compliance at CargoTrans, warned that while goods may receive immediate release, this should not be interpreted as the Customs and Border Protection (CBP) agency accepting the accuracy of an entry. "It is not an immediate release it's a conditional release," he said, adding that customs can review an entry through the 314-day 'liquidation' process and that importers remain responsible for retaining supporting records for five years. Mr Alston warned that the distinction was becoming increasingly important, as tariff volatility had prompted companies to alter suppliers, sourcing routes, declared values, and countries of origin. Nunzio De Filippis, co-CEO of CargoTrans, said CBP was increasingly able to identify such changes across an importer's history rather than examining individual shipments. "They can see trends across importers' history," he said, pointing to CBP's investment in technology and AI, allowing it to identify such changes "at much faster speeds than ever before". Mr Alston warned that customs could interpret abrupt changes as evidence of an attempt to circumvent tariffs, unless importers could demonstrate why the change occurred. "Customs operates not in the belief of what we are used to - innocent until proven guilty - customs has a mentality that you are guilty on the appearance of noncompliance, and until you can demonstrate reasonable care," he warned. That means importers need to be able to explain not only what was declared, but why it changed, and that companies should not simply rely on supplier documentation or their customs broker to establish correct shipment origin, classification, and value. Mr Alston said importers should instead have visibility of the transaction before goods are shipped, including purchase orders, commercial invoices, quantities, origin, and classification. He also urged companies to strengthen broker oversight and examine their customs data proactively. "Never say 'this is how we've always done it'," Mr Alston warned, arguing that such an approach could encourage CPB to broaden its review beyond a single entry and examine how long that practice had been followed.

Gemini partners to omit Shanghai call in Asia shuttle shake-up

The Gemini Cooperation is to merge two of its Asia shuttle services into one string, thereby dropping a call at the world's largest container port and key partnership hub, Shanghai. The change will lead to the end of the intra-Asia A04 shuttle and an expanded A14 service. "To enhance schedule reliability and provide a more consistent service offering, Maersk will combine the current A04 and A14 services into an enhanced A14 service," the Danish carrier told customers - although both services are part of the Gemini network, they are only operated by Maersk vessels. "The adjustment is intended to further enhance network reliability and service consistency, while maintaining connectivity across North China and South-east Asia through a consolidated service structure. Following the implementation, the standalone A04 service will be discontinued, while relevant cargo coverage will be incorporated into the enhanced A14 service," Maersk added. The final sailing of the A04 will be with the departure of the 4,250 teu Seaspan Lingue from Dalian on 23 September. The weekly A04 deploys two vessels with an average capacity of 4,200 teu on a rotation of Dalian-Tianjin-Busan-Shanghai, and thus feeds-in northern Chinese and South Korean shipments to its mainline services at Shanghai. Meanwhile, the existing A14 service deploys four vessels with an average capacity of 4,500 teu on a rotation of Tianjin-Tanjung Pelepas-Singapore-Xiamen-Busan. The revised A14 service kicks off with the eastbound departure of the 5,000 teu Ute from Tianjin on 26 September, while the redeployed Seaspan Lingue will depart Tianjin on the southbound voyage on 29 September. The revised A14 rotation will be Tianjin-Tanjung Pelepas-Singapore-Xiamen-Tianjin-Dalian-Busan. The net effect for shippers and forwarders is the omission of Shanghai and a reduction of calls at the South Korean gateway of Busan from two a week to one, which further reinforces the importance of Gemini's transhipment hub at Tanjung Pelepas. Although congestion issues at Shanghai were not specifically mentioned by Maersk, it is likely they have played a part, as vessel waiting times at the world's largest container port, and its nearby neighbour Ningbo, have remained stubbornly high in recent months, even worsening recently due to severe weather. "Terminal operations in Ningbo and Shanghai were severely disrupted again by Typhoon Saudel last week, resulting in extended delays of more than 10 days in the most severe cases," Linerlytica noted last week. According to its data, of the combined 3.92m teu in vessel capacity awaiting a berth globally, 56% of that is tied up in North Asia, particularly in the Shanghai-Ningbo basin. According to Kuehne + Nagel, the container yards at Ningbo are near to 95% occupancy, and the average vessel waiting time is 3.5 days, while at Shanghai, the average vessel waiting time is now just under five days. "Vessel queues, berth congestion, high yard density, and schedule adjustments are creating cargo backlogs and elevated risk of rollovers and transhipment delays," the forwarder noted, in reference to Shanghai operations.