United States: Biden Administration Announces Investment In Domestic Manufacturing Of Ship-To-Shore Cargo Cranes

On February 21, 2024, the Biden Administration announced its plan to invest $20 billion, including through grants, into US port infrastructure over the next five years through President Biden's Investing in America Agenda. The announcement was part of several actions the Administration announced to "bolster cybersecurity of U.S. ports." As a result of this investment, PACECO Corp., a US-based subsidiary of Japanese company Mitsui E&S Co. Ltd., is planning to onshore US manufacturing capacity for ship-to-shore cargo crane production. This will be the first time in 30 years that cranes will be built domestically. Only two days later, the US Coast Guard issued Maritime Security (MARSEC) Directive 105-4, "which provides cyber risk management actions for owners or operators of ship-to-shore (STS) cranes manufactured by People's Republic of China (PRC) companies." However, because the directive contains "security-sensitive information," it has not been made available to the general public. Instead, owners or operators of PRC-manufactured ship-to-shore cranes are instructed to "immediately contact their local Coast Guard Captain of the Port (COTP) or District Commander" to obtain a copy of the directive.

According to Newsweek, in recent years, US officials have expressed national security concerns over foreign-manufactured ship-to-shore cranes, particularly those built by the Chinese state-owned entity, ZPMC. In its announcement, the White House stated that the investment "follows-up on the White House Council on Supply Chain Resilience's efforts to strengthen America's supply chains, particularly by addressing supply chain risks resulting from threats and vulnerabilities inside U.S. ports." The Wall Street Journal reported that Anne Neuberger, US deputy national security adviser for cyber and emerging technology, commented that cranes posed a national security concern "because they are essentially moving the large-scale containers in and out of port, [and] if they were encrypted in a criminal attack, or rented or operated by an adversary, that could have real impact on our economy's movement of goods and our military's movement of goods through ports."

In response to Biden's announcement, House Select Committee on the Chinese Communist Party Chairman Mike Gallagher (R-WI-8),¹ House Committee on Homeland Security Chairman Mark E. Green, MD (R-TN-7), Subcommittee on Transportation and Maritime Security Chairman Carlos Gimenez (R-FL-28), and Subcommittee on Counterterrorism, Law Enforcement, and Intelligence Chairman August Pfluger (R-TX-11) released a joint statement stating that the administration's actions were "the right move," commenting that "[i]t is deeply troubling that the vast majority of ship-to-shore cranes at U.S. ports are manufactured by the Chinese state-owned company, ZPMC, and the operational technology, sourced from various global suppliers, is often installed in China." The statement notes the Biden Administration's announcement "does not end the threat" to US ports, "but it is a meaningful step to counter it." The statement says that the parties "will continue conducting a rigorous investigation into the threats posed by the [Chinese Communist Party]'s access to our ports" and "will continue urging the Biden administration to strengthen the resilience of our critical infrastructure and to resolve vulnerabilities in our supply chains."

The US action on Chinese ship-to-shore cranes demonstrates the continuing concerns over Chinese products in sectors that may have implications for US national security, which itself is an evolving and expanding concept. Companies with Chinese connections in their supply chain, especially those operating in high-profile sectors (e.g., telecommunication and network equipment and devices) and where China has a disproportionally large market share, should monitor relevant US trends carefully and take precautionary measures to guard against related risks.

Footnote

1. Representative Gallagher has announced that he will resign from Congress on April 19. Representative John Moolenaar (MI-R) will serve as the next head of the House Select Committee on the Chinese Communist Party.

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